Unit 4: Globalisation Case study

Superpower China

Superpower USA

ASEAN (Association of Southeast Asian Nations)

UN (United Nations)

EU (European/economic Union)

WTO (World Trade Organisation)

OECD (Organisation for Economic Co-operation and Development)

NAFTA (North-American Free Trade Agreement)

NDB - BRICS

Bangladesh (Remittances)

Colombia (Remittances)

Starbucks (FDI & outsourcing)

Type

• Foreign Direct Investment

• Outsourcing of production

• Global sourcing

What happened

• Starbucks invests directly in retail stores worldwide (FDI)

• Coffee beans sourced from LICs (e.g. Latin America, Africa)

• Roasting, branding, and profits concentrated in HICs

Why firms did this

• Access to cheap raw materials

• Brand control

• Global market penetration

Impacts

• Benefits: employment in producer countries, global market access

• Costs: unequal value capture, tax avoidance, limited gains for farmers

Exam sentence

Starbucks illustrates how outsourcing within global supply chains allows TNCs to capture most profits while producers in LICs receive a small share of value.

Toyota (FDI & outsourcing)

Type

• Foreign Direct Investment (FDI)

• Global outsourcing within supply chains

What happened

• Toyota invested directly in overseas manufacturing plants (e.g. UK, USA, Thailand)

• Established assembly plants close to major consumer markets

• Outsourced components (engines, electronics, parts) to suppliers in Japan and LICs/MICs

• Used just-in-time (JIT) production to minimise costs and inventory

Why Toyota did this

• Reduce production and transport costs

• Avoid tariffs by producing inside target markets

• Access skilled but lower-cost labour

• Increase flexibility in global supply chains

Impacts

• Benefits:

  • Job creation in host countries

  • Technology transfer and skills development

  • Growth of local supplier networks

• Costs:

  • Profits repatriated to Japan

  • High vulnerability to supply-chain disruption (e.g. COVID-19, chip shortages)

  • Pressure on local suppliers to cut costs

Exam-ready sentence

Toyota demonstrates how FDI and outsourcing allow TNCs to reduce costs and access global markets, while increasing host-country employment but maintaining corporate control over profits and decision-making.

Switzerland (Physical Environment & Global Interactions)

1. Natural resource availability (enabling interactions)

• Mountainous Alpine environment → steep gradients + high rainfall

• Ideal for hydroelectric power

• Hydropower provides ~60% of electricity

• Enables energy-intensive, high-value industries (pharmaceuticals, precision engineering)

• Lack of fossil fuels pushed Switzerland into finance and services, integrating it into global networks

2. Geographic isolation (limiting effects at different scales)

National / regional scale

• Alps act as a natural barrier

• Historically limited trade, migration, and transport

• Increased costs of moving goods and people

Response

• Heavy investment in transport infrastructure

• Gotthard Base Tunnel connects northern and southern Europe

• Maintains Switzerland’s role as a key European transit state

3. Global scale

• Politically neutral and outside the EU

• Relies on bilateral trade agreements

• Political stability attracts TNC headquarters and international organisations

One-sentence exam summary

Switzerland’s physical environment both restricts and enables global interactions, as Alpine barriers limit accessibility while hydropower resources and advanced transport infrastructure support high-value global economic integration.