Advanced Placement (AP) Human Geography Practice Exam

What characterizes transnational corporations (TNCs)?

1. Companies that operate solely within one nation

2. Global corporations with facilities and processes spread across several countries

3. Local businesses that rely on national supply chains

4. Firms that focus exclusively on digital products

The correct answer is: Global corporations with facilities and processes spread across several countries

Transnational corporations (TNCs) are characterized by their operations that extend across multiple countries, combining global reach with local knowledge and operations. They typically have facilities, production, and processes in several nations, allowing them to optimize their costs, access different markets, and take advantage of local resources. This international framework enables TNCs to leverage diverse economic conditions, regulatory environments, and consumer markets, contributing to their competitiveness and growth. The emphasis on functioning in various countries allows TNCs to engage in global trade, manage risks associated with market fluctuations, and respond to consumer demands that vary by region. This global integration is key to their operational strategies, which often involve establishing subsidiaries and branches worldwide to facilitate production, distribution, and service delivery effectively. In contrast, options that mention operating solely within one nation, relying on national supply chains, or focusing exclusively on digital products miss the hallmark of TNCs as entities that operate on a global scale, which is essential to their business model and success.