IGCSE Geography / Globalisation and migration

Transnational corporations revision notes

Edexcel International GCSE Geography (4GE1), chapter 8: Globalisation and migration, specification point 8.1b. Free lesson.

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A transnational corporation (TNC) operates in more than one country, placing different parts of its business where they work best. TNCs link economies through trade, investment and production, but they depend on other factors such as transport and communication.

What makes a company a TNC?

A transnational corporation (TNC) is a company that operates in more than one country. It usually has its headquarters in one country and factories, offices or shops in others. The key word is operates: a firm that only sells goods abroad is an exporter, not a TNC. Headquarters are where the company's main decisions are made.

Where TNCs put different parts of the business

A TNC divides its activities between countries. Each part is located where the workers, costs or customers suit it best. Headquarters are usually in a developed country, where the big decisions are made. Research and design need skilled, highly paid workers, so they are usually in a developed country. Manufacturing means making goods. It needs many workers at low cost, so it often takes place in an emerging country. Sales take place near customers, so shops and offices can be found around the world.

How Nike links countries

Nike shows how one TNC can organise a production chain across several countries. Its headquarters are near Beaverton, Oregon, in the USA, a developed country with a very high HDI. Nike keeps its brand but pays other firms to make its goods. This is called contracting out. In 2025, Nike's sales were about US$46 billion and it employed about 78,000 people itself. It used about 400 factories, which were owned by other firms. Most of its shoes were made in Vietnam, Indonesia and China.

Why TNCs spread across countries

Countries offer different advantages to companies. A TNC may choose a location because it lowers costs, provides supplies or gives access to customers. Cheap labour: wages are lower than in the home country, so goods cost less to make. Raw materials: nearby crops, minerals or oil mean less transport and a more secure supply. New markets: operating near millions of new customers can increase sales. Trade barriers: a tariff is a tax on goods coming in from outside. Making goods inside a country or trade bloc avoids that import tariff. Incentives: governments may offer…

How far do TNCs drive the global economy?

A strong discuss answer explains both sides before reaching a judgement. TNCs are a major force, but they rely on conditions created by governments and improvements in transport and communication. Trade: about 80% of world trade was in chains linked to TNCs in 2013. However, tariffs had to fall first, through the WTO and trade blocs. Investment: when a TNC builds a factory abroad, it is making foreign investment. Governments decide whether to let the company in. Production: TNCs spread production chains across countries, but this is only possible with container ships and the…

How to support an exam answer

Use a named TNC and a figure as evidence. Avoid vague labels such as “poor countries”. Use terms such as developed, emerging or developing instead. For example, Nike has its shoes and clothes made in about 400 factories. Most of its shoes come from Asia, so its production chain links many economies.