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?