TNCs

• What is a transnational company (TNC)?

  A company operating in multiple countries
• What is outsourcing?

  Contracting another company for work
• What does offshoring mean?

  Moving part of operations to another country
• What is westernisation?

  Adopting systems of the west
• What is glocalisation?

  Adapting products for local markets
• What are the characteristics of TNC ownership?

  • USA dominates TNC ownership
  • Western Europe, East Asia, North America also significant
  • Asian countries and BRIC nations are increasing in dominance
  • China and USA dominate the top 10 TNCs
• What are the reasons for the growth of TNCs?

  • Avoid trade tariffs
  • Find lowest cost production locations
  • Gain export platforms
  • Exploit favorable foreign exchange rates
  • Access foreign markets easily
  • Utilize resources in foreign countries
• How does Mini exemplify the division of labor in TNCs?

  • Originally British, now manufactures globally
  • Exhaust systems made in the UK
  • Wing mirrors produced in Germany
  • HQs located in the USA, Canada, and other countries
• What is the spatial organization of BP as a TNC?

  • BP employs 79,800 people worldwide
  • Headquarters located in the UK
  • Operates in 25 countries for exploration and production
  • 17,200 retail sites in 50 countries
  • Lubricant products produced in approximately 70 countries
• What roles do TNCs play in global change?

  • Agents of global change
  • Link countries through goods production
  • Connect people by shaping consumption patterns
  • Invest internationally and expand through mergers
• What is glocalisation in TNCs?

  • Maximizing profits by adapting products
  • Example: McDonald's changing menus in different countries
  • India: vegetarian options due to cultural beliefs
  • Japan: unique flavors like green tea milkshake
• What is vertical integration?

  • Supply chain entirely owned by the company
  • Provides control over supplies and costs
  • Example: BP jointly owns oil pipelines
• What is horizontal integration?

  • Diversifying operations by expanding at the same production stage
  • Example: Kraft Foods merging with Cadbury and Heinz
• What are the costs and benefits of TNCs for host countries?

  Benefits:

  • Generates jobs and income
  • Brings new technology
  • Has a multiplier effect

  
  

  Costs:

  • Exploitation of resources
  • Negative environmental impacts
  • Economic leakage
• What are the costs and benefits of TNCs for origin countries?

  Benefits:

  • Cheaper goods
  • Specialization in higher-skilled jobs

  
  

  Costs:

  • Loss of manufacturing jobs
  • Deindustrialization
  • Structural unemployment
• How has the location of the world's largest TNCs changed over time?

  • 20th century: dominance by the west
  • Mid-20th century: TNCs in USA and Europe
  • 1970s-1980s: Japan's rise with companies like Sony and Toyota
  • 21st century: Shift to China and Asia Pacific
• Who are the main beneficiaries of globalization?

  • Newly industrializing economies
  • TNCs expanding in multiple sectors
  • International organizations like World Bank and WTO
  • Regional trading blocs benefiting from trade agreements
• What are the economic consequences of globalization?

  Pros:

  • Lower consumer prices
  • Fast growth in MINT economies
  • Economies of scale
  • Higher profits

  
  

  Cons:

  • Trade barriers
  • Unequal growth
  • Diseconomies of scale
• What are the political consequences of globalization?

  Pros:

  • Creation of trade blocs
  • Improved international relationships

  
  

  Cons:

  • Political disagreements, e.g., Doha talks
• What are the social and cultural consequences of globalization?

  Pros:

  • Introduction of new tastes and cultures
  • Access to new products
  • New labor opportunities

  
  

  Cons:

  • Loss of cultural identity
  • Outsourcing impacts jobs and businesses
• What are the environmental consequences of globalization?

  Pros:

  • Transfer of technology impacting the environment

  
  

  Cons:

  • Increased waste and pollution
  • Spread of diseases and pandemics
  • Over-exploitation of natural resources