TNCs Flashcards
Why might TNCs produce products abroad?
- cheaper production costs
- access to raw materials
- reduce barriers to trade
- tax evasion
What is vertical integration?
when a company buys up other parts of the supply chain for the same product
What is horizontal integration?
a company buying other/rival companies in the same industry/offering the same product/service
Give an example of lower costs as a reason for outsourcing production
Hewlett-Packard in Malaysia
Why does Shell (source country: Netherlands) operate in Nigeria?
to exploit raw materials (oil)
Why did Nissan produce cars in Sunderland?
to have access to EU market
What are 3 positives of outsourcing for the host country?
- job creation
- taxes
- supplier companies may grow
What are 3 negatives of outsourcing for the host country?
- health and safety being ignored
- low wages
- profits go to HQ country
What is the multiplier effect?
a knock-on effect
What is agglomeration?
increasing business size by taking over other business, often in a nearby location
What are TNCs?
companies with operations in at least 2 countries, with headquarters based in 1 country but business operations in a number of others.
can come from NEEs
What does global economies of scale refer to?
bigger companies can achieve lower costs (eg buying in bulk)
What is glocalisation?
the changing of a product/service to better suit the location (eg/ McCurry in India)
