TNCs

Question 1

Definition

Answer 1

Corporations with operations in more that one country

Question 2

How many people worldwide do they employ?

Answer 2

40 million

Question 3

What percentage of the worlds trade do they control?

Answer 3

Over 75%

Question 4

Reasons for growth

Answer 4

1. Locational advantages of being in different coutries. (Cost of land, labour, avaliabilty of resources and access to a wealthy market)
2. Being a large corportation - favoured terms, more knowledge about labour markets and finance.
3. Advances in communications and transport. - There is now a worldwide demand for goods and distances have ‘shrunk’ dues to transport development

Question 5

Heirachy (Case study: Nike)

Answer 5

• HQ and R&D in MEDC - Oregon, USA

- Branch plants in LEDC - Asia - shifts production to least cost location (Japan - Taiwan - Vietnam)

Question 6

Positive impacts on host country

Answer 6

1. Creates employmen, upwards spiral (Eg. Nissan employs 4500 people in Tyneside directly.)
2. Introduces new working methofd (Eg. JIT and quality control) to increase efficiency and productity.
3. May lead to increase in exports (eg. Nissan exporting cars to the EU reduces the trade defecit)

Question 7

Negatives impacts on host country

Answer 7

1. Can harm the environment. (Eg. BP Deep horizon disaster - 4mil barrels spilled)
2. Cause human death (Eg. Union Carbide in Bhopal, India. In 1984 toxic gas released killing 2500 people)
3. Explotation of workers (Eg. Nike 45 workers share $1.60 for a $70 pair of shoes)
4. Civil War ( Eg. Rio Tinto in Paua New Guinea. Mining operation - civillians fought againt gov. army as it was a major contributor of GDP

Question 8

Positive impacts on country of origin

Answer 8

1. Increased income for employees and production costs are lower.
2. Increased profits so benefits share holders through dividence
3. Potential to enter new markets (Eg. Dyson in Japan and Malaysia)

Question 9

Negative impacts on country of origin

Answer 9

Creates unemployment in both the industly and component suppliers. (Eg. Dyson lost 800 jobs.) Less disposable income - downward spiral