Economic Globalization : Corporations

1. SUMMARY

Business corporation is primary in global economy. In this, it provide depiction and explanation of nature and significance of TNC.

 

1) The scale & geographical distribution of transnational corporations

The activity companies was part of development of international economy. For essential colonies and capitalista, people created vast business empires. Main reason is trade and exchange. The most reasonable definitions is that TNC have power to coordinate and control operation. They operate in different political, social and cultural environments. It is measured using statistics on FDI. There are direct, foreign, portfolio investments. The majority of TNC is originated from the develped economics. TNC from leading developing countries is growing.

 

2) Why & how corporations engage in transnational activities

- Motivations : 2 reasons

   (1)  Market-oriented investment

• Firm reached in domestic market. Increasing profitability depend on being able to expand market beyond home. Access to market is restricted because of political regulatory structures. Size and particular characteristics of markets influence TNC.

   (2)  Asset-Oriented investment

• Geographical unevenness of markets and geographically unevenly distributed are important reasons. Originally, Firms in natural resources locate at source of supply. But, now it move to market. Development in transportation and communication technologies increased ability to access asset. TNC have potential to shift to changes in labour costs. Circumstance that highly skilled workers locted in quality comunicaties is important.

 

- Modes : 2 ways to develop activities

  (1)  What is known as greenfield investment

• Building of new facilities add productive stocks. FIrm prefer to establish presence in oversea location through existing firm.

 

  (2)  Through engagement with other firms, merger and acquistion of collaboration.

• : By cooperation, firms can combine capabilities in beneficial ways.

3) Geography Matters - The embeddedness of transnational corporations

All business firms are produced and convey through process of embedding that cognitive, social, political and economic characters. There are obstacles to social system of different societies.

 

4) Webs of enterprise - Transnational production networks

: All business firms are embedded with networks. It becomes increasingly geographical and controlled. TNC is considered as dense network at the center of web relationship. TNC reguire sophisticated organizational architecture.

 

2. INTERESTING

In the past, firms in the natural resource industries must locate at the source of supply. But thatnks to technology and development of transportation, it changed format. Indeed, there are systems that manage resources. Administrator supervise resource, Mediator provide information of resource with advertisement and E-market. And customers of firms can enjoy. These days, roles of mediator are much more importatn.

 

3. DISCUSSION

The paragraph that TNC choose underdeveloped countries was interesting. In respective of underdeveloped country, it is good issue that they give some places to work and motivate economy. But, on the other hand, TNC from developed countries can exploit labours. How to prevent exploitation from TNC firms in underdeveloped countries? We have to think about this and have precautions.