World Trade (AQA A Level Geography)
Revision Note
Written by: Rhiannon Molyneux
Reviewed by: Bridgette Barrett
Coca-Cola – A Global Product
Coca-Cola is an American TNC that manufactures, markets and sells soft drinks
It was established in 1886 in Atlanta where its HQ remains, and now operates in over 200 countries
Two-thirds of Coca-Cola’s revenue comes from overseas and it owns other brands like Fanta and Sprite
Coca-Cola has promoted itself through global advertising campaigns and by sponsoring major sporting events
It is one of the most recognisable global brands and it has many positive and negative impacts on people and environments all over the world
Positive and Negative Impacts of Coca Cola
Positive impacts | Negative impacts |
|---|---|
Coca-Cola and its 225 independent bottling plants employ over 700,000 people around the world | It has been accused of exploiting workers by paying low wages and allowing poor working conditions |
It also creates lots of jobs indirectly through its supply chain, creating a multiplier effect | It contributes to health problems like obesity and diabetes by promoting the consumption of sugary drinks |
It is working to reduce its negative environmental impact by investing in more sustainable packaging and encouraging recycling | It manufactures billions of single-use plastic bottles which contribute to the global plastic waste crisis |
It supports community development e.g. their 5by20 initiative aimed to empower 5 million female entrepreneurs between 2010 and 2020 by providing them with training and resources to start and grow their own businesses | They use an estimated 300 billion litres of water per year which can contribute to water scarcity e.g. there was community backlash and protests against Coca-Cola in India due to groundwater depletion and contamination of local water sources |
Worked Example
Explain how one transnational corporation (TNC) has contributed to the globalisation of the world's economy
[4 marks]
Remember, this answer is a point marked with 1 mark for each valid point made with extra marks for developed points (d)
The command word is ‘explain’
The focus of the question is ‘TNC’
You will gain marks for explaining how the chosen TNC has contributed to increased flows of goods, capital, labour and/or technology and ideas
For full marks, you must make sure that you link to globalisation of the world economy
Answer:
Nike has become one of the world's largest suppliers of sports equipment (1), employing over 44 000 workers in over 50 countries (1d).
Manufacturing helps the social and economic development of these countries through the transfer of skills, technology and the rise in wages (1).
The company’s headquarters and much research take place in Oregon in the USA (1) but its products are manufactured in poorer countries like Indonesia and Vietnam, where labour costs are cheaper (1d).
Components for sports goods are sourced from various different countries around the world (1), including rubber for its trainers from Malaysia and Indonesia and cotton from Turkey and India (1d).
From its global operations, Nike’s annual turnover continues to rise, with profits reaching $14 billion in 2015 (1).
The company has increased its global market and reputation by sponsoring and promoting international sports events and sports stars (1).
Bananas – A Fairtrade Commodity
Fairtrade
Free trade means producers get the price manufacturers and consumers are prepared to pay whereas Fairtrade aims to:
Pay a fair and guaranteed price for a product
Improve working conditions
Pay a Fairtrade premium, which is reinvested in the community
Bananas
Bananas are one of the most produced, traded and consumed fruits in the world
More than 50 million tonnes are produced each year, and over 20 million tonnes of these are exported
Bananas are grown mostly in tropical regions with high temperatures and rainfall
More than 90% of bananas for export originate from Central and South America and the Philippines
Domination by TNCs
The global banana trade is dominated by just a few TNCs such as Chiquita, Dole and Del Monte
They often own or control large plantations, allowing them to dictate terms and prices to smaller growers who depend on TNCs for access to the market
Vertical and horizontal integration enables the TNCs to control the entire supply chain from production to transportation and marketing
This gives them a significant advantage in terms of economies of scale, allowing them to undercut smaller competitors
They also have considerable marketing power, influencing customer preferences e.g. the USA banana market is dominated by Chiquita and Dole which together account for around 70% of the market
Positive and Negative Impacts of the Banana Trade
Positive | Negative |
|---|---|
Bananas provide lots of nutritional benefits and are a staple food for many people in LDE countries such as Uganda where they account for over 60% of calorie intake Employment opportunities throughout the world e.g. over 300,000 people are employed by the industry in the Philippines Export earnings support the economies of major banana-producing countries such as Ecuador and Costa Rica Development of transport and communication infrastructure e.g. building of roads and railways in Honduras to transport bananas from plantations to ports
| Most bananas are treated with chemicals such as pesticides and herbicides to control disease – this affects the health and safety of workers and local communities as well as negatively affects the environment The use of artificial fertilisers is high which can lead to eutrophication The land is cleared to create plantations leading to deforestation leading to loss of biodiversity The exploitation of workers due to low wages and poor conditions e.g. minimum wage for banana workers in Ecuador is $400 per month which is below the poverty line Child labour – children as young as eight were found to be working on banana plantations in Honduras |
Fairtrade bananas
Fairtrade aims to empower producers by promoting better trading conditions for farmers who have been disadvantaged by the global trading system
It does this by ensuring that producers receive fair prices for their products, improving working conditions and investing in community projects such as schools and clinics
The Fairtrade price is typically higher than the market price to cover the costs of sustainable production and fair prices for farmers
Bananas are UK’s most popular Fairtrade product, accounting for over 40% of bananas sold:
This is partly due to supermarkets such as Sainsbury’s, Waitrose and the Co-operative which only sell Fairtrade bananas
The Windward Islands have significantly benefitted from Fairtrade with farmers receiving above market value for their crops when before they struggled to make a living
Fairtrade requires farmers to use sustainable farming practices to protect the environment:
In the Windward Islands, Fairtrade farmers have reduced their pesticide use by 50%
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