1)Geographical distribution of multinational corporations
The start of a multinational corporation was an accredited trading company that emerged in Europe since the 15th century, such as the East India Company and Hudson Bay. Trading companies have played an increasingly important role in the evolution of an interconnected political economy. The company's main goal was trade and today it has become a source of world trade and services. They created a huge corporate empire on a global scale. A comprehensive definition of this multinational corporation (TNC) is "a company with the ability to coordinate and control operations in many countries, even if they do not own it." But since the 19th century, businesses have changed. A considerable amount of trade-focused European, American, British, and European manufacturing companies have been transformed into transnational countries since 1914, just before World War I. Over the next 50 years, the number of multinationals has increased exponentially.
It estimates that there are 61,000 TNCs using definitions based only on UNCTAD ownership criteria. This TNC accounts for one tenth of world GDP. TNC activities are generally measured using foreign direct investment (FDI) statistics. FDI surpassed the growth of world trade between 1986 and 2000. This indicates that the importance of multinational corporations is increasing in the global economy. FDI occurs mainly in developed countries and also in developing countries.
2)Why (and how) firms ‘transnationalize’?
Motivation
The reasons why business entrepreneurs expand their business outside their home country and the way they operate are complex and have different conditions depending on the particular situation. There are two types of investment methods for investment.
Market-oriented investment
The domestic market where the company is located may have already reached saturation. Therefore, in order to increase profitability, the market must be able to expand beyond the scope. Therefore, both the size and the nature of the market continue to influence the decision making of regional multinationals.
Asset-oriented investment
The geographical imbalance in the market is one of the reasons why companies make transnational investments. It is also because the assets required to produce and sell products and services are also geographically dispersed. Most of the early multinational companies were engaged in the field of natural resources. However, due to sluggish transportation and communication technologies, the company was forced to use unevenly distributed resources. This has improved the ability of enterprises to access a wide range of distributed assets.
This trend has become prominent in the case of human resources and assets. Human resources are very valuable for multinational corporations. So, multinational corporations react sensitively to changing labor costs. That is why multinational corporations are trying to get good, cheap labor. In this respect, transnational investment in East Asia is drawing attention. Because it has combined advantages with emerging market economies and relatively low costs.
Mode
There are two ways for companies to try transnational activities. First is greenfield investment. Greenfield investment is building a whole new facility. By definition, it is added to the productive stock of both the company itself and the country / community in which it occurs. For this reason, host countries are generally the most preferred type of investment. For example, there are a series of new assembly and parts factories built by Toyota and Honda in Japan in the 1980s and 90s in North America and Europe.
However, Greenfield is not the most common way to go overseas. In fact, most of the global FDI growth in recent years has been driven by mergers and acquisitions (M & A). In this process, companies join together to form an alliance network. They focus on strategic alliances and doing business. A regular partner becomes one of the competitors of the company. There is a goal that a single company can not do. In order to achieve this goal, companies have to enter into a contract with each other. It is criticized for losing core technology. However, the proliferation of partnerships is also expected to greatly increase the diversity of TNC operations.
3)Geography matters: The embeddedness of transnational Corporations
Geography and place are fundamentally important for the way the company is produced and for its action. Firms are dominant by their political and economic characteristics. The TNC has these characteristics and interacts with the local characteristics of the area and the community to produce a unique set of results.
Companies have a unique corporate culture by geographically located countries. It tends to behave strategically. However, the correlation of the global economy appears beyond the borders and is affecting the way companies operate.
4)‘Webs of enterprise’: Transnational Production Networks
A corporation is a non-independent organization composed of highly complex and dynamic production, distribution and consumption networks. TNC is also considered to be a 'dense network at the center of relationships'. However, because of the diversity of geographical features, the TNC is much harder to control than a typical company. The network that is the subject of the TNC is at the head office, but the TNC distributes the city-specific network according to each function. Because the TNC must respond quickly to changes, it ensures that the network is constantly and fluidly changed. There are four options for this. The first option is to focus production on a single location. The second option is specifically designed for local / national markets. The third option is to create a production structure specific to the local market. The fourth option is to subdivide the production process and place each part in a different location.
2.What was interesting?
It was the geographical characteristics of multinational corporations that were interesting to read. At the time of globalization, I thought that the geographical characteristics would be rather weak. However, it was interesting that there are still many factors that are caused by geographical characteristics and geographical problems of multinational corporations. Next, a new term, FDI, was interesting. FDI is simply a direct investment in the enterprise. The TNC is driven by the direct investment of these people. This investment is happening all over the world, and a company with a lot of investment can be trusted.Direct investment from the EU was cut in the third quarter. In July, direct investment in just eight months was only about $ 200 million. This seems to be due to the disinfectant problem of 'oxy'. Even half of the $ 200 million is indemnity for victims, making it difficult to see it as a real investment. After I realized how important FDI is in this article, I realized that it was a serious situation. We also knew that people's investments could be changed by trust. http://biz.chosun.com/site/data/html_dir/2017/09/08/2017090801932.html
3.Discussion point
The economy is a constantly changing entity. The present economy can be changed into a different shape at any moment. In this situation, multinational corporations are trying to build their influence. But there are many problems in the process. Typically, multinational corporations employ people in East Asia for cheap labor. The corporation pays them those wages and uses their labor power. These structures hold them in such a way that they can not escape from this dominant position. I would like to discuss the solution of this problem.
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