Transnational Corporations Flashcards
What is a virtuous circle effect?
The arrival of a TNC injects capital such as wages that fuels increased consumer spending and a need for improved infrastructure and services
What is a vicious circle effect?
The loss of a TNC from an area means that companies and business’s that benefited loose their main customer and so go out of business and so unemployment and consequently consumer spending falls into decline
What is the multiplier effect?
Financial investment into an area can trigger more economic positives such as employment for component business’s, distribution companies and service companies.
What are the negative impacts of a TNC upon a host country?
- Bigger business’ with improved methods mean that smaller companies cannot compete and so go out of business
- TNC’s may produce a large amount of pollution and may use land that results in the destruction of habitats or farmland
- Labour exploitation of a cheap workforce without unions
- Urbanisation as younger people more to urban areas for work leads to a rural ageing population
- Not all generated capital is invested into host country
What are the positive impacts of a TNC on an origin country?
Outsourcing allows for maximised profits and therefore is invested back into origin country through taxation by government and the business itself
What are the negative impacts of a TNC upon an origin country?
Mostly unemployment is the only problem however this can lead to a viscous circle effect
What are some positive impacts of TNC’s on host countries?
- Employment, which is financed with foreign money
- Multiplier Effect
- Virtuous Circle
- New technology, methods and skills
How many jobs did Dyson’s decision to relocate its cleaner production from Wiltshire to Malaysia cost?
800
What is the case study of a TNC?
Toyota
When did Toyota set up a European transplant and where?
1992: Burnaston, GB
Why did Toyota create a European transplant?
Because in 1992 tariffs and quotas between countries in Europe were removed. Toyota then located a transplant in the UK to take full advantage of this free market by supplying to countries that it knew would buy their cars
What was the name of the European act that established a single European market in 1992?
Single European Act
Why was Toyota’s Burnaston plant so effective?
1) Sophisticated UK infrastructure
2) Motivated Workforce (Team effort and generous wages)
3) Skilled Workforce due to intense training programs and a rotational job basis so that the workers muscle groups wouldn’t become fatigued
4) Efficient methods of production (Japanese Style)
5) Government incentives
6) Multiplier effect (Toyota creates an area of good investment)
What were the positive impacts of Toyota upon the UK?
1) 35,000 jobs created both directly and indirectly
2) Multiplier effect (Workers spending, local suppliers utilised by company, more workers means more housing)
What are the negative impacts of Toyota upon the UK?
1) Some components are still Japanese even though they are supposed to be bought local
2) British car manufacturers put out of business as a result of efficient Japanese methods (e.g Rover bought by a Chinese firm)
What country experienced a lack of water that was partly due to the activities of Coca Cola?
India
Second case study of a TNC?
Wal-Mart
What are 3 positives of Wal-Mart on origin country(USA)?
1) Lots of Jobs
2) Low Prices and convenient
3) Investing in “Green Stores”
How many jobs did Wal-Mart’s store in Vineland, USA create?
700
What are 3 negatives of Wal-Mart upon origin country(USA)?
1) Poor Working conditions: Cheap wages and no benefits
2) Dominate the market leading to local competition going out of business
3) Goods are produced cheaper in foreign countries leading to local business going out of business
4) Greenhouse gases from the store and many people in the cars going to Wal-Mart
In what year did the state of California have to pay which amount to Wal-Mart employees due to cheap wages and poor working condition?
In 2004 the state of California paid $86Mn
What are 3 negatives of Wal-Mart upon host countries?
1) Local businesses unable to compete and so go bust
2) Not all profits retained and invested in to the host country
3) Poor working conditions
4) Loss of culture
How many hours of Wal-Mart employees work and in what country is this?
In Beximco in Bangladesh the workers reportedly work 80 hours a week despite a 60 hours limit
Does Wal-Mart have a store in Hawaii?
Yes
