TNCs

Question 1

What is the key idea of TNCs?

Answer 1

TNCs are major drivers of globalisation, FDI, and the global economy

Question 2

What are characteristics of TNCs?

Answer 2

● Operate in multiple countries
● Production in LICs
● Aim to maximise profit by exploiting economies of scale and cheaper production costs abroad.
● Can have complex supply chains, outsourcing parts of production
● Often have global brands and marketing strategies
Can have complex supply chains, outsourcing parts of production

Question 3

What are the types of TNCs

Answer 3

● Horizontally integrated: Same stage of production across countries.
● Vertically integrated: Different stages of production in different countries (e.g., raw materials in one country, assembly in another

Question 4

What are the economics reasons for TNCs growth?

Answer 4

● Cheaper labour and land in LICs 》lower costs
● Access to new markets 》 increase sales
● Trade agreement and free trade zones 》 easier to operate globally

Question 5

What are the technological reasons for TNC growth?

Answer 5

Improved transportation 》easier to move goods and people
Improved communication technology 》coordinate HQ

Question 6

What are political reason for TNC growth?

Answer 6

● Government incentives (tax breaks, grants, relaxed regulations
● Political stability attracts investment

Question 7

What is the global distribution like for TNC?

Answer 7

● HQ usually in HICs
● Manufacturing/assembly often in LICs or NEEs
● Sales network worldwide

Question 8

What are the positive economic impact of TNCs?

Answer 8

● Create jobs in LICs/NICs. 👷‍♂️
● Invest capital → FDI, infrastructure development.🌁💰

Question 9

What are negative economic impact of TNCs?

Answer 9

● Can undermine local businesses → most profit to HQ
● Contribute to global inequalities

Question 10

What are the positive social impact of TNCs?

Answer 10

● Can improve living standards with employment.
● Investment in local services (healthcare, education)

Question 11

What are negative social impact of TNCs?

Answer 11

● Spread Western culture → cultural homogenisation
● Sometimes exploit workers → poor conditions, low pay.

Question 12

What are the positive environmental impact of TNCs?

Answer 12

Some TNCs adopt CSR (Corporate Social Responsibility) policies to mitigate environmental damage.

Question 13

What are negative environmental impact of TNCs?

Answer 13

Can cause pollution, deforestation, resource depletion.

Question 14

What are negative political impact of TNCs?

Answer 14

● Influence local government policies → lobbying, tax incentives.
● Can shift power away from local businesses and governments toward global corporations

Question 15

What is the relationship between Globalisation and TNCs?

Answer 15

TNCs are both drivers and beneficiaries of globalisation:
● Drivers: spread goods, services, capital, culture
● Beneficiaries: exploit global supply chains, reduce costs, access markets.

Question 16

What are some strategies that TNCs use?

Answer 16

● Global branding
● Glocalisation 》adjust products to culture, taste, or regulation.
● Supply chain optimisation 》 locate production for cheapest costs or fastest delivery.
● Mergers & acquisitions 》 absorb local firms to expand market share.