Spatial Organization of Transnational Corporations

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Outline the spatial organisation of TNCs (8 marks)

Transnational corporations are companies that work in more than one countries. TNCs can be split into 3 main parts headquarters, research and development and manufacturing. Headquarters and R&D is usually located in the country of origin due where the brand originated from, staff and shareholders being located in this country, the security of the government and complexity of moving. Manufacturing is most likely to be located in another country, due to aspects like low labour costs and lack of tariffs, standards and restrictions, instead of more developed countries like where the company originates from due to increased costs and hence less profit. Nike is an example of this, as a world leader in the manufacturing of sportswear with a 47% market share. Nike is a TNC which originated from the US, employing 30,000 worldwide and contracting a lot more. Nike’s manufacturing is spread across 44 countries in 715 factories. Nike’s manufacturing is mostly based in South East Asia, china alone creates 25% of Nikes products in 185 factories. Over 6000 miles away is Nike’s headquarters in Oregon. Nikes suppliers have rapidly changed since 1989. South Korea has rapidly declined as a supplier from 60% to less than 10%. Due to South Korea becoming a NIC resulting in production and wages being more expensive, which is why it has switched manufacturing to Vietnam to reduce costs in order to maximise profits.

Level 2
5 marks
Named TNC used
Depth in use of case study
Facts and figures including
Knowledge shown
Some understanding
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