TNC's Flashcards
what are TNC’s
countries that operate in at least 2 countries
what is the spatial organisation of TNC’s
- flexible
- headquarters in a major city
- research and development
what are the characteristics of TNC’s
- organised production to reduce costs
- sourcing raw material at low cost
- controlling key supplies
- recognisable branding
- outsourcing
what is outsourcing
‘cost of saving strategy’ used by companies who arrange goods/ services to be produced/ provided by other companies
why do they operate in 2 countries
- avoid trade barriers
- find location with lowest production costs
- reach foreign markets
- exploit minerals/ resources avaliable
what is the primary sector
wherever the unexploited materials are
what is the secondary sector
manufacturing regions of developing countries due to low labour costs and strong work ethic
what is the tertiary sector
language is key for example call centres
what is vertical intergration
supply chain by the company, they have control over supplies which reduces cost
what is horizontal intergration
improving links between different forms in the same stage of production
what are the postives of TNC’s in host countries
- jobs
- helps economy
- improves infrastructure
- improves living standards
- ‘multiplier effect’
- new skills
what are the negatives of TNC’s in host countries
- slave labour
- poor working conditions
- low wages
- money goes back to TNC’s
- competition with local businesses
- loss of culture
- exploitation
what are the positives of TNCs
- cheaper production
- lack of laws
- more money
- greater access to more resources
what are the disadvantages of TNC’s
- in ethical
- controversial
- areas prone to hazards
- social and environmental consequences
what are the advantages of TNC base
- benefit economies
- high wages
- services
- cheaper goods
