TNCs

Question 1

What is a TNC

Answer 1

A company that operates in at least two countries- its organisation is hierarchical

Question 2

Resource extraction

Answer 2

Particularly for mining of materials such as oil and gas

Question 3

Manufacturing

Answer 3

• high tech industries e.g. Computers
• large volume consumer goods e.g. TVs
• mass produced consumer goods e.g. Breakfast cereals and cosmetics

Question 4

Service operations

Answer 4

E.g. Banking, advertising

Question 5

Dyson

Answer 5

In 2002 moved production plant from Wiltshire to Malaysia - cheap labour

Question 6

How can TNCs take advantage of government policies

Answer 6

Lower taxes, subsidies and grants, and less strict legislation on employment and pollution.
Avoid trade barriers by locating production within the markets where they want to sell

Question 7

Japan

Answer 7

Motor vehicle firms attracted to the EU bc of quota restrictions on the import of Japanese made vehicles into Europe.

Question 8

Why are governments keen to attract TNCs

Answer 8

Because inward investment creates jobs and boosts exports which assist the trade balance

Question 9

TNCs serve a global market and they can globalise their manufacturing operations in several ways:

Answer 9

• producing for the country in which the plant is situated
• producing for a number of countries
• integrating production- each plant performs a separate part of a process

Question 10

External economies of scale

Answer 10

• localisation economies (reduced transport costs between firms)
• urbanisation economies (cost savings result from an urban location- enabling linkages to develop between manufacturing and services

Question 11

In recent years there has been a shift of investment towards..

Answer 11

Service industries

Question 12

Largest use of FDI in many countries

Answer 12

Services (shift from manufacturing)

Question 13

What has opened up overseas investment in trade able services

Answer 13

The ICT revolution- information can be sent at little cost, services can be split into components- each of which can be located in countries that are able to provide them most efficiently and cost effectively