Economic Globalization - Park chanyoung

1.     Summary

The boundaries of the nation are being broken through transnational companies and the nation's autonomy is being violated. But this is a stereotype that makes a misunderstanding.

The chartersd trading companies such as East India Company and Hudson Bay Company were increasingly interconnected and played an important role in economic development. As a civilian and merchant capitalist, they created a huge corporate empire on a global scale. The main purpose was trade and exchange, and they are the ancestors of today's world trade and service companies. However, it was not until the late 19th century that the first company to engage in manufacturing and production abroad emerged. Until the eve of World War I in 1914, a number of U.S., British, and European continental manufacturers were gradually becoming transnational. Over the past 50 years, the number of TNCs in the global economy has increased exponentially.

The most comprehensive definition of a modern TNC is 'an entity with the power to coordinate and control operations in more than one country even if it does not own them'. It is impossible to quantify and define in comprehensive terms because it contains many qualitative attributes related to complex relationships between companies operating across national boundaries. TNC is approximately one tenth of the world's total gross domestic product the world and generate one-third of total exports. The majority of the world's top 100 TNCs still maintain more than half of their activities in their home countries. TNCs come in many forms and sizes, from so-called global companies operating in several countries to TNCs operating outside of their home country only in one or two countries. What they all have in common is that they operate in different political, social, and cultural environments. The reasons why businesses expand their businesses abroad, and how they do so, are complex and highly dependent on specific situations. However, while there may be various reasons for TNC activities, we can summarize this into two broad categories: market-oriented investment and asset-oriented investment. Both size and specific characteristics of the market of Firm Relocation in the TNC to continue affecting. Specific market specificities may require direct presence to understand and respond to specific situations. The geographical imbalance in the market is one of the main reasons why companies participate in transnational investment. The second reason is that the assets that an entity needs to produce and sell products and services are also geographically very unevenly distributed. There are two main ways for companies to develop transnational activities. One is a 'greenfield' investment, the other through mergers and acquisitions with other companies, or through some form of strategic cooperation. Greenfield investment is simply the construction of a whole new facility. Add to the productive inventory of the enterprise itself and the countries and communities in which it occurs. Therefore, it is generally the most favored type of investment by the host countries. However, greenfield investment is hardly the most common way to expand abroad. It is dangerous to build a completely new facility, especially one on a considerable scale. That is why an entity may prefer to enter a foreign country through collaboration with an existing firm.

The general TNC development sequence is as follows. First, it is serviced overseas by direct exports by utilizing independent domestic sales agents. Second, as domestic demand increases, TNC exercises close control over overseas markets by establishing its own overseas sales outlets. Can be carried out by establishing entirely new facilities or by taking over local companies.

Places and geography are still fundamentally important in the way companies are produced and how they behave. All business companies, including geographically broad TNCs, are 'produced' through complex embedding processes in which cognitive, cultural, social, political and economic characteristics of the national home base play a dominant role. The TNC is therefore the 'owner' of these characteristics, which interacts with the location-specific characteristics of national and local communities to achieve unique results.

So, like most companies, TNCs can be regarded as dense networks at the heart of the network. There is a wide variety of ways that TNC's internal networks are organized and geographically configured, and how they connect to vendors and customers' external networks. Diversity is affected by some of the industry environments in which the company operates, including specific history of the enterprise, cultural and administrative legacy in the form of accepted practices built over a period of time, competition in character and complexity, technology, and regulatory structure. Depending on the nature of geographical distribution dispersed in different political, cultural and social environments, TNCs are much more difficult to coordinate and control than companies with activities limited to a single national space: require more sophisticated organizational structures. The TNC has many geographical options for production activities. One is to focus production in a single location. While globally focused production creates economies of scale, it increases transportation costs and reduces corporate knowledge of distant markets. Secondly, specifically to produce for local and national markets. The economies of scale are limited by the size of the market. The third is to create a professional production structure for the local market. Finally, the production process is subdivided and each part is placed in a different location. It's a transnational vertical production integration.

Transnational corporations are undoubtedly the most important factor in the modern world economy. There is no doubt that their importance is increasing. More companies are becoming transnational in the early stages of development. Both the TNC and the organizational and geographic areas of the transnational production network are very complex and dynamic.

International regulatory agencies such as the WTO have a huge impact on the geographic impact of transnational production networks. Similarly, international institutions that establish technical standards play an important role. In some cases, they help operate transnational networks by introducing coding standards.

2.     Interesting point

It was interesting how companies expanded their reach across the transnationals. One was the Greenfield investment and the way to take over or merge existing companies. Depending on the situation and purpose of each country trying to advance, the two methods had their own advantages and disadvantages.

3.     Discussion point

What way should transnational companies want to enter Korea? Why is the method effective?

Economic globalization - Jang Yerim

1. summary
 The business corporation – specifically the transnational corporation (TNC) – is the central actor in economic globalization.
 (1) the scale and geographical distribution of TNCs in the global economy .
 As essentially colonial and merchant capitalists, the East India Company and the Hudson’s Bay Company, created vast business empires at a world scale. However, the first firms to engage in manufacturing production outside their home country did not emerge until the second half of the nineteenth century. by the eve of World War I, in 1914, considerable numbers of US, UK and some continental European manufacturing companies were becoming increasingly transnationalized.
 Using a more restrictive definition, based on ownership criteria alone, UNCTAD (2004: 8) estimates that around 61,000 TNCs currently carry out international production in over 900,000 foreign affiliates. These operations represent roughly one-tenth of total world gross domestic product and generate one-third of total world exports. And the top 100 (less than 0.2% of the total number of TNCs worldwide) accounted for 14% of the sales of foreign affiliates worldwide, 12% of their assets and 13% of their employment in 2002.
 (2) why and how corporations engage in transnational activities.
①MARKET-ORIENTED INVESTMENT
 A firm may have reached saturation point in its domestic market.
 Increasing profitability may well depend, therefore, on being able to expand its market beyond its home territory.
②ASSET-ORIENTED INVESTMENT
 Traditionally, it was the geographical localization of many natural resources that drove much of the early development of TNCs. Firms in the natural resource industries must, of necessity, locate at the source of supply. And there are human resources or assets. The skills and knowledge embodied in people in a particular regional environment with specific social and cultural composition. It includes the intention of using cheap, unorganized labour in developing countries. Such assets are geographically very unevenly distributed.  But it is not only labour costs that are the major driving force. Except in those industries where unskilled – and, therefore, cheap – labour is important, it is other attributes of human capital that have become more significant. In particular, it is increasingly the availability of well-educated, highly skilled and strongly motivated workers located in ‘quality’ communities that are exerting a very strong influence on TNCs.
 (3) the geographical embeddedness of transnational corporations.
 Contrary to much of the received wisdom on the global economy, place and geography still matter fundamentally in the ways in which firms are produced and in how they behave. All business firms, including the most geographically extensive TNCs, are ‘produced’ through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part.
 (4) the ‘webs of enterprise’ manifested in transnational production networks.
 All business firms are constituted as, and embedded within, highly complex and dynamic networks of production, distribution and consumption. Such networks have become increasingly extensive geographically and controlled. TNCs, therefore, like firms in general, can best be considered as ‘a dense network at the centre of a web of relationships’ (Badaracco 1991: 314). By the very nature of their dispersed geographical spread across different political, cultural and social environments, TNCs are far more difficult to coordinate and control than firms whose activities are confined to a single national space.
 Characteristically, the corporate headquarters of TNCs invariably remain in the firm’s home country (often in the community in which the firm originated).
 Compared with corporate headquarters and R&D facilities, there is no doubt that production activities have become more dispersed geographically in the search for key assets and/or proximity to markets.
 A number of geographical configurations of TNC production activities are apparent (Dicken 2003a: 246–50). One option is to concentrate production at a single location. Such globally concentrated production generates economies of scale in production but increases transportation costs and lessens the firm’s knowledge of distant markets. A second option is to produce specifically for a local/national market. Here economies of scale are limited by the size of the market. A third option is to create a structure of specialized production for a regional market (such as the European Union). A fourth possibility is to segment the production process and to locate each part in different locations: a form of transnational vertical integration of production.
2. interesting point & Discussion
 Now that globalization is going faster than ever, I often wonder, who is the real driver of the global community? As the boundaries of a country fade away, and as the government's grip is significantly weakened, Transnational Corporations are stepping in.
 There have often been cases of Transnational Corporation dominating state power, and now there is even concern that the global community's main player may be a TNCs.
And, TNCs are increasingly acting like countries all over the world. Will this trend proceed faster? Is there an appropriate alternative to preventing the tyranny of TNCs?

Economic Globalization

Summary:

Peter Dicken, the writer of Economic Globalization: Corporations, explains depiction and explanation of the nature and significance of transnational corporation(TNC) in the era of economic globalization in five categories.

 

THE SCALE AND GEOGRAPHICAL DISTRIBUTION OF TRANSNATIONAL CORPORATIONS

 

The ancestors of today's global trading and service companies are chartered trading companies like the East India Company and the Hudson's Bay Company, which emerged in Europe after 15th century.

However, the first company which engage in manufacturing production was emerged in the latter half of the 19th century. After the World War I, especially during past 50 years, the number of TNCs in the world economy has grown exponentially. The most comprehensive definition of a modern TNC is ‘a firm which has the power to coordinate and control operations in more than one country, even if it does not own them’. These are global corporations, the 'placeless' giants whose operations span the globe and which owe no allegiance to any particular country or community. TNC has all forms from global corporations operating in scores of countries to TNCs operating in only one or two countries outside their home base. Their common feature is that they operate in different political, social and cultural environments.

TNC activity is conventionally measured using statistics on foreign direct investment (FDI). ‘Direct’ investment is an investment by one firm in another with the intention of gaining control over that firm’s operations. During the past two decades, FDI has grown at an accelerating pace and it's growth has consistently outpaced growth of world trade. This is a clear indicator of the increasing significance of TNCs as the leading integrating force in the global economy. There is an increasing diversity of TNCs in the global economy.

WHY (AND HOW) FIRMS ‘TRANSNATIONALIZE’

1. MARKET-ORIENTED INVESTMENT

Much of their investment continues to be market-oriented. A firm may have reached saturation point in its domestic market. Or it may have identified new markets that require a direct presence in order to serve them efficiently. Like this both the size and the particular characteristics of markets continue to influence the locational decisions of TNCs.

2. ASSET-ORIENTED INVESTMENT

The assets that firms need to produce and sell their products and services are also geographically very unevenly distributed and, therefore, may need to be exploited in situ. Assets like human resources are very unevenly distributed geographically. It is really only in the past 50 years or so that these kinds of assets have come to play a significant role in transnational investment. n particular, it is increasingly the availability of well-educated, highly skilled and strongly motivated workers located in ‘quality’ communities that are exerting a very strong influence on TNCs.

3. Modes

There are two major ways in which firms develop transnational activities: one is through what is known as ‘greenfield’ investment; the other is through engagement with other firms, through either merger and acquisition or some form of strategic collaboration. Many firms, especially US and UK firms (though not only these) have preferred to merge with, or to acquire, another firm to establish, or to expand, their presence in a particular overseas location. Another widely used mode of TNC expansion is to enter into a strategic collaboration with one or more other firms. Many companies are forming not just single alliances but networks of alliances, in which relationships between partner firms are increasingly multilateral, rather than bilateral, polygamous rather than monogamous. Advocates of strategic alliances claim that by cooperating, firms can combine their capabilities in mutually beneficial ways. Critics point to the potential risk of losing key technologies to competitors. 

A sequence of TNC development?

First, overseas markets are served by direct exports, normally utilizing local independent sales agents.

Second, as local demand grows, it may become desirable for the TNC to exert closer control over its foreign markets by setting up overseas sales outlets of its own. This may be achieved either by setting up an entirely new (greenfield) facility or by acquiring a local firm (possibly the previously used sales agent itself).

The nature of TNC networks in general is a critical influence on the potential for development of firms seeking to operate beyond their home territories.

GEOGRAPHY MATTERS: THE EMBEDDEDNESS OF TRANSNATIONAL CORPORATIONS

Contrary to much of the received wisdom on the global economy, place and geography still matter fundamentally in the ways in which firms are produced and in how they behave. All business firms, including the most geographically extensive TNCs, are ‘produced’ through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part. TNCs, therefore, are ‘bearers’ of such characteristics, which then interact with the place-specific characteristics of the countries and communities in which they operate to produce a set of distinctive outcomes. There are inherent obstacles to convergence among social systems of production of different societies, for where a system is at any one point in time is influenced by its initial state. Systems having quite different initial states are unlikely to converge with one another’s institutional practices.

‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS

All business firms are constituted as, and embedded within, highly complex and dynamic networks of production, distribution and consumption. Such networks have become increasingly extensive geographically and controlled – or, at least, coordinated – primarily by transnational corporations. By the very nature of their dispersed geographical spread across different political, cultural and social environments, TNCs are far more difficult to coordinate and control than firms whose activities are confined to a single national space.
In addition to the question of a TNC’s organizational architecture there is the related, though not identical, issue of the geographical configuration of its activities. Developments in transportation and communications technologies, as well as in production process technologies, have facilitated the transformation of the geographical extent over which a TNC can separate out its different functions as well as their precise geographical configuration. Because different functions – administration, R&D, production, marketing, sales – have different locational requirements, and because these requirements can be satisfied in different types of location, TNCs tend to develop distinctive spatial patterns for each function. Hence, their internal corporate division of labour is expressed in a distinctive external division of labour, although such patterns show enormous variation between different types of TNC and also between different industries.
Changes to a firm’s geographical configuration often occur as a result of the firm’s decision on what to produce for itself, in-house, and what to externalize to independent suppliers. The ‘make or buy’ decision has become particularly critical as competition has intensified and as firms strive to increase their efficiency to enhance or maintain profitability. TNCs, therefore, are highly dependent on other firms for many of their needs.
All the elements in transnational production networks are regulated within some kind of political structure whose basic unit is the national state. International institutions exist only because they are sanctioned by national states; sub-national institutions are commonly subservient to the national level, although, of course, the situation is more complex in federal political systems.
TNCs do not always possess the power to get their own way, as some writers continue to assert. States still have significant power vis-à-vis TNCs, for example to control access to their territories and to define rules of operation. In collaboration with other states, that power is increased (the EU is an example of this). So, the claim that states are universally powerless in the face of the supposedly unstoppable juggernaut of the ‘global corporation’ is nonsense; the question is an empirical one. TNCs may be powerful – but they do not possess absolute power.

What was interesting/what did you learn:
It was interesting to explain why the TNC came up. It was also impressive that the beginning of the TNC appeared earlier than I expected.

I have a perception that the TNC was an international company, so it was interesting that the TNC was also geographically constrained.

Discussion Point:
What are some examples of political structures that regulate TNC?

Economic Globalization - Jaehyeon Seo

Sorry, I'll do it as soon as I can.

Economic Globalization - Jinsu Bae

I will add more text later ;c

Economic globalization/SHIN MIN KYEONG

1. summary

Amidst the cacophony of opinions on economic globalization, there is a clear consensus that the business corporation . specifically the transnational corporation (TNC) . is the central actor: the primary shaper of the global economy.

The development of companies with interests and activities located outside their home country was part and parcel of the early development of an international economy.

 As essentially colonial and merchant capitalists, they created vast business empires at a world scale.

However, the first firms to engage in manufacturing production outside their home country did not emerge until the second half of the nineteenth century. Nevertheless, by the eve of World War I, in 1914, considerable numbers of US, UK and some continental European manufacturing companies were becoming increasingly transnationalized (see Dunning 1993). Since then, and especially during the past 50 years, the number of TNCs in the world economy has grown exponentially.

Most of that activity is generated by a much smaller number of very large TNCs: the top 100 (less than 0.2% of the total number of TNCs worldwide) accounted for 14% of the sales of foreign affiliates worldwide, 12% of their assets and 13% of their employment in 2002. (UNCTAD 2004: 9)

There are what have come to be called global corporations. The reasons why business firms extend their operations outside their home countries, and how they do that, are complex and highly contingent on particular circumstances.

Despite recent developments in TNC activity, much of their investment continues to be market oriented.

A firm may have reached saturation point in its domestic market (an issue clearly related to the overall size of the national market). Increasing profitability may well depend, therefore, on being able to expand its market beyond its home territory.

The geographical unevenness of markets is one major set of reasons why firms engage in transnational investment. The second set of reasons derives from the fact that the assets that firms need to produce and sell their products and services are also geographically very unevenly distributed and, therefore, may need to be exploited in situ.

Initially, it was the attraction of cheap . and usually unorganized . labour that was the primary attraction for firms in certain industries, such as textiles, garments, footwear, toys and consumer electronics. The so-called 'New International Division of Labour’.

There are two major ways in which firms develop transnational activities: one is through what is known as 'greenfield’ investment; the other is through engagement with other firms, through either merger and acquisition or some form of strategic collaboration.

Advocates of strategic alliances claim that by cooperating, firms can combine their capabilities in mutually beneficial ways.

Contrary to much of the received wisdom on the global economy, place and geography still matter fundamentally in the ways in which firms are produced and in how they behave. All business firms, including the most geographically extensive TNCs, are 'produced' through an intricate process of embedding in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part.

There are inherent obstacles to convergence among social systems of production of different societies, for where a system is at any one point in time is influenced by its initial state.

By the very nature of their dispread geographical spread across different political, cultural and social environments.

In addition to the question of a TNC’s organizational architecture there is the related, though not identical, issue of the geographical configuration of its activities. Developments in transportation and communications technologies, as well as in production process technologies, have facilitated the transformation of the geographical extent over which a TNC can separate out its different functions as well as their precise geographical configuration.

Changes to a firm’s geographical configuration often occur as a result of the firm’s decision on what to produce for itself, in-house, and what to externalize to independent suppliers. The geographical extent of such transnational production networks is highly variable. In fact, few such networks can be described as being truly ‘global’. A marked recent trend, however, is for such networks to have a strong regional dimension, that is, networks organized on a multinational scale of groups of contiguous markets (Rugman and Brain 2003).

There is, in other words, a territorial asymmetry between the continuous territories of states and the discontinuous territories of TNCs and this translates into complex bargaining processes in which, contrary to much conventional wisdom, there is no unambiguous and totally predictable outcome.

2. opinion

The inequality of globalization is related to the geographical inequality of economic development. As long as the profit comes from buying and selling cheaply, relying on the difference between production cost and selling price, capital accumulation is bound to depend on the time and space difference of the production element price or quality, as noted by Kartani Gojin. In other words, the time difference between the labour's employment costs and the price of the produce produced later by the labour force, or the geographical differences in price/characteristics of labour, land, raw materials, funds, etc. Countries or businesses are actively trying to create and maintain these differences, which is one factor in the development of geographical inequality in the economy. For example, in the 1960s and 1980s, the Korean nation tried to curb wage increases through blatant labor oppression to keep low export prices, while import barriers allowed local companies to profit exclusively from the domestic consumer market. Thus, capitalistic globalization has a tendency to homogenize social, cultural, political and economic conditions, as well as to promote differentiation or maintain existing differentiation. What is actually happening is therefore a mixture of Western culture/standard and local culture/standard rather than unilateral globalization to meet Western standards, and outside culture and culture are accepted and digested in a local context.

Now, given that differences between countries, regions and cultures are still significant in this so-called era of globalization, we can see that there may be other alternative time and space structures besides globalization, and there will also be many different forms of globalization itself reflecting the unique context of each country, region and culture. For example, in the U.S., which places more importance on prices than quality of labor on industrial production organizations and has strong influence on financial capital, the U.S. actively pushed for overseas relocation of manufacturers and overseas investment of financial capital, but in Japan, which places importance on quality of labor and has strong influence on manufacturing industries, it is inevitable that it will be more prudent to relocate manufacturing companies abroad. In Europe, meanwhile, the above-mentioned multinational corporate strategy (production and sale completed within national boundaries) seems to be quite dominant, rather than the transnational corporate strategy. It can also be fully observed that the reduction, de-regulation, investment liberalization, privatization and market opening of state intervention, which is characterized by neo-liberalistic globalization and called the so-called "global standard," are not applied consistently. For example, in the U.S., the government does not actively intervene or allow foreigners to easily privatize industrial sectors that are strategically important (e.g., defense, information and communication industries, etc.). Thus, globalization is the process of transnational re-structuring of space and space in various forms.

After all, neo-liberalistic globalization, the U.S. and its sympathetic powers, transnational capital, and transnational governing bodies such as the World Trade Organization, the International Monetary Fund and the World Bank are described as one special political and economic project and strategy as a result of restructuring under the market opening and "global standard" that forces a small number of interests on weak countries as inevitable. It is not just a given, an independent variable that explains our future mechanically. Globalization is not inevitable and depends on struggle and negotiation. Of course, because their power is so strong, it may seem as if neoliberal globalization is inevitable in some ways. But it should be remembered that what makes it seem all the more inevitable in a country of considerable economic size like Korea is domestic politicians, bureaucrats and capital who sympathize and cooperate with this particular logic of globalization. So instead of just accepting the logic of politicians and businesses that globalization benefits and if it doesn't, we should first ponder who will benefit and who will lose.

 

 

Economic Globalization – Eric de Jong

Summary:

The writer of ‘Economic Globalization: Corporations, Peter Dicken, starts the article of by saying this article is written to provide a more balanced view and explanation of the significance of transnational corporations in economic globalization and provides and explanation of the complex phenomenon of economic globalization. Dicken focuses on five issues to elaborate:

THE SCALE AND GEOGRAPHICAL DISTRIBUTION OF TRANSNATIONAL CORPORATIONS

Economic globalization started as early as the 15^th century with for example the Hudson’s Bay Company. These companies played a huge role in the development of interconnected economies and can be viewed as the ancestors of global trading and service companies.

However not until the early 20^th century companies were not manufacturing production outside their country. Since then the number of transnationalized TNC’s has grown exponentially.  A TNC is a company which has the power and resources to carry out and control operations in more than one country, even if it’s not their property.

Some TNC’s, like GM and Royal Dutch Shell, have grown more powerful than nation-states. Dicken counters this though by saying that it is based on misleading statistical arguments. A common denominator of TNC’s is that they operate in different political, social and cultural environments. The activity of a TNC can be measures using statistics on foreign direct investment (FDI), these investments have the intent to take over another firm’s operations. FDI has consistently been growing since the ‘80s, this is a good indicator for the significance of TNC’s on the global economy. The origination of TNC’s becomes increasingly diverse in the global economy.

WHY (AND HOW) FIRMS ‘TRANSNATIONALIZE’

The reasons behind the transnationalization of firms can be seen in market-oriented investments and asset-oriented investments.

Much of the TNC investments are market-oriented because their own domestic market may have been oversaturated, it has identified new markets or access to their market has been restricted due to new regulations. It could be for political and/or cultural reasons that a TNC decides to position itself strong in a certain market.

Investments of TNC’s could also be explained by asset-orientation. The assets that the TNC needs to produce and sell their products might ,geographically, be very unwell distributed therefore they may need to situate themselves more local. This for example, was what drove the development of many startup TNC’s in the early days involved in the production and processing of natural resources, such as energy and agricultural products.

GEOGRAPHY MATTERS: THE EMBEDDEDNESS OF TRANSNATIONAL CORPORATIONS

The place and geography very much matter in how firms are produced and behave. Even the most geographically extensive TNC’s carry much of their characteristics, such as cognitive, cultural, social, political and economic, based on their home stations location. The author argues that also the place where the TNC’s operate influences the way they operate and produce different forms of business organization. Economic coordination and governance are embedded in their social systems. Dicken argues though that the interconnectedness of our global economy makes for influences across boundaries that could affect the configuration and behavior of businesses.

‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS

TNC’s control a large portion of the networks that are embedded within business firms, the network of connections of production, distribution and consumption. How they control these networks is based on their history, their heritage and the nature and complexity of the industries environment in which it operates.

Because of these geographically widespread characteristics across cultural, political and social environments a TNC is difficult to control and therefore requires an intricate organizational architecture. The configuration of TNC’s activities is based on different functional and locational requirements and make for a distinctive spatial pattern for each function. Things like the headquarters of the TNC and R&D facilities mostly remain the firms home country, although some kind of R&D facilities are widely spread. Sales and marketing tend to be in the locations of the targeted key markets. The production part is sensitive to the different, technical, needs of the sector they’re working in.

What was interesting/what did you learn:

I thought it was very interesting to read that no matter how geographically extensive a firm is, they will always retain characteristics based on their home location. You can see this in all kinds of ways, in the way they sell products or themselves or in the way they govern themselves. It is so interesting to see that behavior is so connected to the original space and place.

Discussion Point:

As you have probably read, TNC’s have a big portion of power in the world, probably even more than we can see. Do you think that TNC’s have a bigger control in our world governance than we know?

Economic Globalization: Corporations -NA SU IN

1.summary

 

INTRODUCTIN

In an economically globalized society, there is a view that national boundaries are being broken down by globalized companies, a stereotype that causes a highly misleading. Therefore, the purpose of this article is to explain the nature and significance of the Transnational Corporation (TNC) in the course of economic globalization.

 

THE SCALE AND GEOGRAPHICAL DISTRIBUTION OF TRANSNATIONAL CORPORATIONS

The number of TNCs grew very fast, and the companies generate one-third of the world's total exports. However, very few of the 100 major TNCs can be considered global companies within geographical scope. TNCs have all forms and sizes, and the common thing is that they operate in different environments. Most of the world's top 100 TNCs come from developed countries. FDI in developing countries is very small and concentrated in a small number of countries. Nevertheless, the number of TNCs originating from the leading developing countries is undoubtedly growing. There is an increasing diversity of TNCs in the global economy.

 

WHY (AND HOW) FIRMS ‘TRANSNATIONALIZE’

1. MARKET-ORIENTED INVESTMENT

TNC investment is becoming market oriented. Because the increase in profits depends on whether it can expand into overseas markets. In other words, the size and characteristics of the market affect the location determination of the TNC.

 

2. ASSET-ORIENTED INVESTMENT

Advances in transportation and communication technologies have increased the ability of enterprises to access resources in other areas on an ever-greater scale. Cheap labor used to play the biggest role, and now the value of well-educated, skilled cheap workers has increased. This can be seen through transnational investment in East Asia, India, etc., where such workers exist.

 

3. MODS.

Greenfield investment is the construction of a completely new facility, the type of investment most favored by the host countries. But at the same time, it's very dangerous. Thus, companies prefer to enter overseas areas through mergers and acquisitions with existing firms and strategic cooperation between companies. Most strategic alliances exist among competing companies, and new types of business relationships mean new competitive relationships. In a way where cooperation and competition interact, partner companies appear to develop with each other.the proliferation of such alliances has greatly increased the complexity and variety of TNC operations in the world economy.

 

A sequence of TNC development?

The development sequence of the commonly identified TNCs is: First, overseas markets are served by direct exports, normally utilizing local independent sales agents. Second, as local demand grows, it may become desirable for the TNC to exert closer control over its foreign markets by setting up overseas sales outlets of its own. Importantly, the TNC's business processes cannot be interrupted or rotated for simple reasons, so there is a development order in which companies must have a dominant position in the domestic market.

 

 

GEOGRAPHY MATTERS: THE EMBEDDEDNESS OF TRANSNATIONAL CORPORATIONS

In the global economy, places and geography are still very important. TNCs interact with regional characteristics of countries and communities to produce distinct results. The origin of the TNC has a dominant influence. Forms of economic coordination and governance cannot easily be transferred from one society to another, for they are embedded in social systems of production distinctive to their particular society. The management performance of a company is formed by the production system of society. Obstacles must exist in the process of converging between production systems in different societies, and these differences promote the new system. Thus, it can be seen that the diversity of the TNCs is related to where the entity develops.

 

‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS

All Corporations are composed of complex production, distribution and consumption networks, and are becoming more widespread, controlled and coordinated mainly by transnational enterprises. There are many different ways of organizing the TNC's internal network, which has a variety of interrelationships. Advances in transport and communication technologies led to a shift in the geographic scope of the TNC, and were able to make unique changes. The TNC continues to carry out restructuring, reorganization. The geographical extent of such transnational production networks is highly variable. The latest network, however, has a network consisting of adjacent markets on a multinational scale. This is because geographic accessibility in itself is a powerful stimulus to operational integration. It is true that transnational corporations are now the most important factor in the global economy, and that transnational corporations continue to increase. TNCs exist in various forms, and what is important in diversity is rules. Large TNCs and transnational network organizations are very complex. But companies in "location" are all increasingly connected to transnational networks. Inevitably, this creates tension between the TNC and other major actors in the global economy, such as the state, the community, the labor, the consumer, the civil society. The international regulatory body greatly influences the geographical influence of transnational production networks, and makes it possible to operate transnational networks by introducing appropriate international standards. On the other hand, the TNCs are more flexible and flexible so that they can cross the borders between countries, taking advantage of differences in regulatory regimes. However, the TNC may also have restrictions on freedom of action. TNCs may be powerful – but they do not possess absolute power.

 

2. interesting point

I found out exactly what kind of company tnc is. It was also interesting to see that it could be changed in a fluid and flexible manner by obstacles that appeared due to differences in local area, society, culture, etc.

 

3. discussion

Is there currently a way to effectively increase FDI in developing countries?