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Flashcards in TNCs Deck (33)
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1

what makes a company a TNC?

a TNC is a company that operates in 2 or more countries

2

hiw is sony an example of a TNC?

Sony manufacture in china and india but sell across Europe

3

how ar TNCs linked to trade?

very important to global economics
in 2013 80% of trade was linked to TNCs

4

do TNCs operate within one industry?

no

5

what are the three industries that TNCs can operate in?

primary
secondary
tertiary

6

what is the primary industry and an example?

the extraction of natural resources
shell

7

what is the secondary industry and an example?

the manufacturing of goods
sony

8

what is the tertiary industry and an example?

providing services such as insurance
aviva

9

why do TNCs operate in 2 or more countries?

to avoid trade tariffs (import and export tax)
to reach foreign markets
exploit resources (labour etc)
lowest production costs

10

who does spatial organisation connect countries?

creates a global supply chain as parts of the business are in different areas of the world

11

where are the headquarters of a tnc normally located? why

in big cities due their development and how connected they are in terms of transport and communication
skilled workers

12

where is research and development located and why?

usually in the same area as the headquarters or in areas with highly educated people such as scientists or to take advantage of univeristy research

13

where are factored located and why?

normally in LICs where production costs are cheaper
can also be where their product is made in order to avoid tax

14

where does Nissan have a factory and why is it here>

Nissan has a factory in the UK because they see products here so they the avoid import and export tax

15

why is it inportant to have good spatial organisation/

can take advantage of the global supply chain
labour
raw materials
tax

16

what does building supply chain do to the TNC?

makes it an economies of scale

17

how do TNCs expand?

through linkages and intergration

18

why would TNCs want to expand?

in order to take control of the industry and become globally recognise

19

what are the two types of integration?

vertical and horizontal

20

what is vertical intergration?

example

this is where a company entirely owns its whole supply chain which can be done through acquisition, merging and FDI
they have sole control over stocks, production and trade

shell now own every part from refining the oil, to transporting and then its petrol stations

21

what is horizontal integration?

example

when a company takes over and acquires another company at the same stage of production (e.g. two retail stores join)
giving the company a broader capability

disney and pixar in 2006
kraft foods and cadburys in 2010 giving them a more diverse base in the market

22

when did kraft acquire cadbury?

in 2010

23

when did disney merge with pixar?

2006

24

what the types of linkages?

mergers
acquisitions
using subcontractors
FDI

25

what are mergers?
exmaple

when two companies agree to become one
usually of similar size to increases their impact in the market
dinsey and pixar

26

what are acquisitions?

when one company decides to buy another usually of smaller size
1999 ford bought the swedish brand volvo

27

what is using subcontractors?

companies use foreign countries in order to manufacture products without actually owning the business
nike does not always make products in their own stores

28

who is FDI a linkage?

if HSBC acquire a bank in india they are then investing money there and linking the two places

29

what is the multiplier effect?

TNCs can create this when they first are created
more jobs
more money
local businesses benefit
government raise tax

30

who to TNCs make it easier for local businesses?

they can use them for trading purposes e.g. providing products or buying raw materials