Transport moves people and goods, digital technology coordinates information, and MNCs organise operations across countries. These drivers can reinforce one another.
An overseas factory needs more than a video call. It may need investment, materials, trained staff and a route to customers. Faster communication can help coordinate these activities, while transport connects their physical locations.
The drivers often work together. Improved transport and communication make overseas operations easier to manage. An expanding MNC then creates more movements of money, goods, people and knowledge through its own operations and suppliers. A supply chain is the network of people, businesses and activities that produces something and delivers it to a customer.
To explain a driver, connect a specific change to an easier cross-border activity. More jobs or higher sales may be impacts, but naming them alone does not explain how a connection was created. Which driver matters most depends on the activity: an online service has different immediate needs from a shipment of fresh food.
Worked example: Coordinating a furniture order
A furniture company runs a design office in Singapore and owns a factory in Vietnam. The factory uses a shared ordering system and a regular shipping route to deliver furniture to an independent retailer in Australia.
- The company's overseas factory links investment and production across countries. Its Australian retailer is a customer, not necessarily a company-owned operation.
- The shared system lets the office, factory and retailer coordinate designs, quantities and delivery dates. Digital technology carries this information.
- The shipping route moves the furniture. Faster messages would not replace it, just as a ship would not tell the factory which design to make.
- The combined links support a coordinated supply chain. Showing how each link works is stronger than simply listing the three drivers.
Watch out for this
One driver explains every global connection, so the others can be ignored.
Identify what the activity needs. A physical product may require coordinated information, production and delivery; an online service may rely more directly on digital connections. Explain the relationship in the case.
Check your understanding
A Singapore tutor can now teach students in Peru through stable video calls and shared exercises. Which explanation best identifies the main immediate driver in this case?
- MNC growth, because all overseas customers turn a tutor into an MNC.
- Larger container ships, because every service must be physically shipped.
- Digital technology enables the lesson and exchange of exercises across borders without either side travelling.