Role & Nature of TNCs
- Transnational Corporations (TNCs) are companies that operate in multiple countries, locating their headquarters, production and sales in different countries
- They are important agents of globalisation creating longer and more frequent connections between countries
- 80% of global trade is linked to TNCs which can operate in primary, secondary, or tertiary industry
- TNCs lead to increased flows of FDI this help to spread cultures and ideas globally
- The dominance of western owned TNCs has led to Westernisation
- The ownership of TNCs is dominated by superpowers and emerging superpowers
Top Ten TNCs by Revenue 2022
TNC | Industry | Headquarters | State-owned |
Walmart | Retail | USA | No |
Amazon | Retail | USA | No |
State Grid | Electricity | China | Yes |
China National Petroleum | Oil and Gas | China | Yes |
Sinopec Group | Oil and Gas | China | Yes |
Saudi Aramco | Oil and Gas | Saudi Arabia | Yes |
Apple | Electronics | USA | No |
Volkswagen | Automotive | Germany | No |
China State Construction | Construction | China | Yes |
CVS Health | Healthcare | USA | No |
Power of TNCs
- The nature of TNCs means that they:
- Have power over choosing their location this influences
- Trade patterns
- Global patterns of economic growth and decline
- Are able to spread risk by having factories and offices in many locations
- This reduces the impact on the TNC of any natural hazard, national economic issues or political events
- Can afford to invest in technology and machines reducing labour costs
- Are able to subcontract manufacture which reduces labour costs because they are not employing people directly so avoid on costs such as sick/holiday pay, pensions
- Apple subcontracts manufacture to companies like Foxconn
- Can invest in research and development which increases profits on new products but they also patent the products meaning they earn royalties
- Kraft foods have almost 10,000 patents, and Pfizer have been granted almost 50,000 patents
- Have power over choosing their location this influences