MNCs are large corporations that operate in various countries. They usually set up subsidiaries or acquire other companies
Important
MNCs drive globalisation through their supply chains that are global in scope. A supply chain is a network of individuals and companies involved in creating a product and delivering it to the customer
Note
subsidiaries are companies / businesses controlled by another one (that is, the parent company)
Raw materials from suppliers transported to factories to produce goods → finished goods are stored in warehouse until orders are placed → goods are then transported to distribution centres or retailers to be delivered to customers → products are delivered to retailers for sale → customers buy products from online / retail stores
MNCs such as Starbucks → links numerous people and activities across diff. places in the world through its supply chain. → this has created global interconnections and interdependence
Example
STARBUCKS
Raw Materials
- coffee beans are sources from more than 30 countries across Latin America, Africa and Asian
Factories
- beans are transported to roasting facilities in different cities in the US and India
*Distribution
- Warehouses pack and store roasted coffee for distribution to retailers
Consumers
- In 2022 → Starbucks distributed roasted coffee to more than 35000 stores across world.
- Consumers can also buy Starbucks products, such as coffee sachets and ground coffee powder, at supermarkets as well
Global span of MNC’s operations such as Starbucks’ result in → movement of people, goods and services across globe
- MNCs may choose to operate in diff. countries due to advantages such as more affordable supply of raw materials or labour and the right skills at a lower cost
- When MNCs set up subsidiaries in other countries → they increase the interconnections between people, activities, and goods throughout the world. At the same time, they facilitate the exchange of ideas between countries.
With the increasing web of operations owned by MNCs within and between countries, MNCs thus drive globalisation as more interdependent and interconnected relationships are established.