What is the nature and role of transnational corporations?

Question 1

What are common characteristics of TNCs?

Answer 1

1. They maximise global economies of scale by organising production to reduce costs
2. They source raw materials or components at the lowest cost
3. They outsource production to emerging economies

Question 2

Describe the spatial organisation of TNCs.

Answer 2

• TNCs often operate within North America and Europe but there are very few TNCs operating in central Africa and Russia.
• TNCs tend to be hierarchal, with the head office registered in the country of origin or a country with a low corporation tax

Question 3

Describe the spatial distribution of research and development in TNCs.

Answer 3

Often takes place in HICs with highly skilled scientists and engineers and world-class universities.

Question 4

What are branch plants?

Answer 4

Any factories or firms near the base of a supply chain/command chain where the manufacturing of components takes place.

Question 5

Describe the distribution of branch plants in TNCs.

Answer 5

Anywhere a reliable product can be efficiently produced without threats to long term continuity.

Question 6

Describe the spatial distribution of assembly processes in TNCs.

Answer 6

Often occurs in HICs and now in emerging economies close to the major market for the final product.

Question 7

What is vertical integration in terms of TNCs?

Answer 7

Where the supply chain of a company is owned entirely by that company.

Question 8

Why would TNCs invest in vertical integration?

Question 9

What is horizontal integration in terms of TNCs?