Booklet 4 - Key Terms

Question 1

Vertical Integration

Answer 1

Where one company owns or controls multiple stages in production and consumption. Buying the producer of the good that is uses to manufacture.

Question 2

Horizontal Integration

Answer 2

Process of a business enlarging or varying its range of products or field of operation. Buying competitors in the sam industry.

Question 3

Truncation/Vertical Disintegration

Answer 3

TNCs bypass production and supply completely by sourcing products and raw materials from already established suppliers, rather than directly producing or employing to produce. E.g. Apple uses Foxconn in China to assemble iPads

Question 4

Glocalisation

Answer 4

Products or services that are distributed globally but which are fashioned to appeal to the consumers in a local market. E.g. McDonalds with the McItaly in Italy

Question 5

Agglomeration

Answer 5

When companies in similar industries locate near to each other because of the benefits gained by sharing ideas and resources

Question 6

Hierarchal Model

Answer 6

Imposes top-down decision making. the top are initiating change, the bottom carry it out.

Question 7

Spreading of Locational Risk

Answer 7

When a TNC finds it an advantage ti distribute their business in a range of countries so that union disputes, government instability and financial uncertainty in any one country does not disrupt overall production.