Economic globalization

1.     Summary

In these days, almost of large firms aims to global market. Like the movement of political globalization(expending international political spectrum), Economic globalization makes the movement of transnational corporations. This chapter shows 5 issues of TNC.

The scale and geographical distribution of transnational corporations

In 16th century, the East India Company and the Hudson’s Bay Company created vast business work at a world scale. Of course, they could be an ancestors of today’s global trading and service but there were no companies which manufactured their products in oversea, until 20th century. In 1914, many western companies(US,UK and European) became to increasingly transnationalized. Recently(past 50years), the number of transnational corporations is extremely increased. The term of TNC in today is ‘a firm which has the power to coordinate and control operations in more than one country, even if it does not own them’ but it is not enough definition to quantify in aggregate terms. Because it is on the complex relationships. In aggregate terms of TNC activity is conventionally measured using statistics on foreign direct investment (FDI). And most of activities belong to some largest TNCs.

Why (and how) firms ‘Transnationalize’

This is complex to describe one way. But we can classify into two categories :market-oriented investment and asset-oriented investment. Market-oriented investment view explains that profitability depends on expanding of market beyond its home territory. And view of asset-oriented investment focuses on geographical unevenness. Asset for produce and sell products are not evenly distributed in geographical view.

Also, there are two major ways to develop transnational activities. One is greenfield investment which is the way to make new facilities for produce. It is classified into foreign direct investment so it’s risky but it creates employment. The other one is through engagement with other firms, typically merge, this way has opposite effect of greenfield.

Geography matters: The embeddedness of transnational corporation

 Geography matters are fundamentally in the ways that corporations are produced and in how they behave. Variety environments like cultural, political, cognitive, social matters affect all activities of TNCs. With the globalization, geography matters are more complex formed. But there is no placeless type. Each company tried to adapt specific situations and it is continued to make up the new intrinsic economic environment.

‘WEBS OF ENTERPRISE’: TRANSNATIONAL PRODUCTION NETWORKS

 Today’s businesses are composed of very complicated process. All transnational corporations have the complex network for developing their business. They are related by resource, produce facility and channel to customers. It is also same in single nation company but it is much important to TNC. Because it is much difficult to systematize and control the situation.

THE POWER RELATIONSHIPS BETWEEN TNCs AND OTHER ACTORS IN THE GLOBAL ECONOMY 

 TNC shows various influence in vast area and it is definitely main movement of economic globalization. But it works in complex fields and it’s potential is came from availability and cost of resources and also other social factors local policies. So the way of TNC is not unbeatable and even they cannot support form nation’s protect. Aside from the discussion of power, clearly TNC has a potential to lead the era of globalization.

2.     What did I learn

 I think whole concepts in class are related. Globalization is caused by extension of each entity’s influence. Cultural globalization is like the movement of dyestuff in waterborne phenomenon and political globalization felt as interaction for coexistence. Economic globalization is the most reasonable concept. The first priority aim of Firm is maximizing profit. In the past, there are no rules or guideline of international trade, so it is difficult to work about international business. But nowadays international rules are established and traffic communication developed as enough to active in vast area. If TNC has a difference, it is they don’t belong to specific nation. From now on, the interaction between international organization is more complex. And I think we have to more concern about each products and issues.

3.     Discussion point

 I want to discuss about actual activities of TNC in Korea. I learn about TNC’s process in the text but I still have no idea about actual influence to my life. Maybe most of large companies which lead Korea are almost TNC now. And I wanna talk about effect from changing into TNC with classmates.