Transnational Corporations

Question 1

What is a virtuous circle effect?

Answer 1

The arrival of a TNC injects capital such as wages that fuels increased consumer spending and a need for improved infrastructure and services

Question 2

What is a vicious circle effect?

Answer 2

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

Question 3

What is the multiplier effect?

Answer 3

Financial investment into an area can trigger more economic positives such as employment for component business’s, distribution companies and service companies.

Question 4

What are the negative impacts of a TNC upon a host country?

Answer 4

• 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

Question 5

What are the positive impacts of a TNC on an origin country?

Answer 5

Outsourcing allows for maximised profits and therefore is invested back into origin country through taxation by government and the business itself

Question 6

What are the negative impacts of a TNC upon an origin country?

Answer 6

Mostly unemployment is the only problem however this can lead to a viscous circle effect

Question 9

What are some positive impacts of TNC’s on host countries?

Answer 9

• Employment, which is financed with foreign money
• Multiplier Effect
• Virtuous Circle
• New technology, methods and skills

Question 14

How many jobs did Dyson’s decision to relocate its cleaner production from Wiltshire to Malaysia cost?

Answer 14

800

Question 15

What is the case study of a TNC?

Answer 15

Toyota

Question 16

When did Toyota set up a European transplant and where?

Answer 16

1992: Burnaston, GB

Question 17

Why did Toyota create a European transplant?

Answer 17

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

Question 18

What was the name of the European act that established a single European market in 1992?

Answer 18

Single European Act

Question 19

Why was Toyota’s Burnaston plant so effective?

Answer 19

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)

Question 20

What were the positive impacts of Toyota upon the UK?

Answer 20

1) 35,000 jobs created both directly and indirectly

2) Multiplier effect (Workers spending, local suppliers utilised by company, more workers means more housing)

Question 21

What are the negative impacts of Toyota upon the UK?

Answer 21

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)

Question 22

What country experienced a lack of water that was partly due to the activities of Coca Cola?

Answer 22

India

Question 23

Second case study of a TNC?

Answer 23

Wal-Mart

Question 24

What are 3 positives of Wal-Mart on origin country(USA)?

Answer 24

1) Lots of Jobs
2) Low Prices and convenient
3) Investing in “Green Stores”

Question 25

How many jobs did Wal-Mart’s store in Vineland, USA create?

Answer 25

700

Question 26

What are 3 negatives of Wal-Mart upon origin country(USA)?

Answer 26

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

Question 26

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?

Answer 26

In 2004 the state of California paid $86Mn

Question 27

What are 3 negatives of Wal-Mart upon host countries?

Answer 27

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

Question 28

How many hours of Wal-Mart employees work and in what country is this?

Answer 28

In Beximco in Bangladesh the workers reportedly work 80 hours a week despite a 60 hours limit

Question 29

Does Wal-Mart have a store in Hawaii?

Answer 29

Yes

Question 30

What are 3 positive impacts of Wal-Mart upon host country?

Answer 30

1) lots of jobs and some skilled
2) Stable and reliable wages unlike agriculture
3) Support local business
4) Invest on local areas and communities
5) Investing in “green stores”

Question 31

How many employees does Wal-Mart have in Mexico?

Answer 31

209,000

Question 32

How much business does Wal-Mart create for 6000 local businesses in Canada a year?

Answer 32

$8Bn

Question 33

How many Wal-Mart stores in Puerto Rico have invested solar panels?

Answer 33

23

Question 34

How much did Wal-Mart invested into Argentina during 2008 and what impact did this have?

Answer 34

In 2008 they invested $77,000 to local projects in Argentina to reduce hunger that affected 12,000 people