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Geography: Global Systems + Global Governance > Transnational Corporations > Flashcards

Transnational Corporations Flashcards

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1
Q

What are transnational corporations?

A

Companies that produce sell out are located in 2 or more countries.

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2
Q

How much of global trade is due to TNCs?

A

80%

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3
Q

What is the primary industry?

A

Extracting natural resources

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4
Q

What is the secondary industry?

A

Making material goods

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5
Q

What is the tertiary industry?

A

Providing services

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6
Q

Do TNCs have political influence and why?

A

They bring investment, jobs and new technology giving them political influence.

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7
Q

How do TNCs bring countries together?

A

Their special organisation
Headquarters: cities in developing nations
Research and development: cities and towns near consumers
Factories: less developed countries

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8
Q

What is a merger?

A

When 2 companies of similar size agree to become one bigger company forming a link in where the countries operate.

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9
Q

What is an acquisition and how does it form links between countries?

A

When one company buys another smaller company.

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10
Q

How do TNCs use subcontractors?

A

Use foreign companies to manufacture products without actually owning the businesses.

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11
Q

What is vertical integration?

A

When a company takes over other parts of its supply chain. This means they own each step of the supply chain.

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12
Q

What is horizontal integration?

A

When a company merged with another company with the same production stage. Eg: Disney took over Pixar.

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13
Q

Give an example of a TNC in a primary industry.

A

When TNCs invest in countries with natural resources that they can extract. Eg: shell acquired BG Group to gain access to oil reserves in Brazil.

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14
Q

Give an example of a TNC in a secondary industry.

A

TNCs often invest in countries with low labour costs and cheap land. For example, Toyota invests in Indonesia due to low labour costs.

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15
Q

Give an example of a TNC investing into a tertiary industry.

A

TNCs often invest in countries with well educated populations. Eg: insurance form Aviva invested in Canada.

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16
Q

How do TNCs have an impact global trade?

A

-Intra-firm trading
-Multiplier effect when a new factory is built it increases income of the local area which is invested back in the local country.
-Make it easier for local companies to become part of their global supply chain.

17
Q

How do TNCs use and benefit from global marketing?
Give an example.

A

They have a lot of money to spend on advertising and large marketing departments.
Eg: Coca-Cola

18
Q

How do TNCs adapt to local markets? What is this called?
Give an example

A

Glocalisation is when companies gain knowledge of local markets and adjust their marketing accordingly.
Eg: McDonald’s have a McCurry in India

19
Q

What is the largest TNC in retail?

A

Walmart

20
Q

What is the spatial distribution of Walmart production?

A

Headquarters: America
Manufacturing: China (developing)

21
Q

What are the economic impacts of Walmart in America?

A

+Employment
+Low prices
-Decline in manufacturing industry
-Loss of local business

22
Q

How many stores does each Walmart create?

A

80 jobs

23
Q

How has Walmart caused a decline in the manufacturing industry?

A

Walmarts suppliers are mainly outside of the US so it’s cause a loss of manufacturing jobs in the US.

24
Q

How has Walmart caused a loss of local business?

A

Walmart stores can cause smaller businesses in the area to shut down as they can’t match the low prices.

25
Q

What are the social impacts of Walmart in the USA?

A

+Provides a wide choice of products at a low cost
+Open 24 hours a day
-Many jobs are poorly paid with few benefits like health care.
-Accused of having poor working conditions like long and irregular hours.

26
Q

What are the environmental impacts of Walmart on the USA?

A

-Walmart produces a lot of polluting gases
+Opened new green stores that run on renewable energy

27
Q

How does Walmart affect its host country socially?

A

+Offers skilled jobs in less developed countries.
+Walmart donates millions of dollars in countries where it operates.
-Working conditions may be poor.

28
Q

What are the economic effects of Walmart in its host country?

A

+Creates lots of employment opportunities.
+Local companies supply Walmart with goods.
-Local suppliers forced to accept low prices for their products
-Profits are sent back to the USA
-Local companies cannot compete

Geography: Global Systems + Global Governance (9 decks)

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