GEOG 101 Chapter Notes - Chapter 7: Externalization, Starbucks, Independent Business
Document Summary
A firm that controls and coordinates the activity of other firms in more than one country. The commodity chain approach is sometimes criticized as being too linear and/or being too focused on moving from production to consumption. May not draw enough attention to the various relationships between firms along the way. Also helps to explain challenges and vulnerabilities that tncs face. Two types of transactions in the production network: 1) internalized transactions: value-added activities that occur within the legal and organizational boundaries of a particular tnc. 2) externalized transactions: business relationships that exist between independent firms, some of which may be tnc"s; they are subject to pressures of price competition and other factors beyond the control of the tnc. Engaging independent firms to produce goods or services specifically for the principle firm. Some or all of the final product may be produced. E. g. customer service through external call centres.
