Economic Globalization
2015048731 Jiyoung Kim
1. Summary
As economic globalization progresses. Transnational corporations have become an important factor in the global economy. Multinational corporations are increasing. transnational corporations are eliminating national boundaries and creating profits worldwide.
Until the late 19th century, there were no companies engaged in manufacturing or production in countries other than their home countries. But after the First World War, American, British and European manufacturing companies increasingly broke the national boundaries. Since then, the number of multinationals in the global economy has increased dramatically. A multinational corporation is a company that has the authority to coordinate and control operations in many countries, even if it is not owned. We are often seen in our daily lives. For example, there are Starbucks, McDonald's, Uniqlo, Adidas and Nike. There are now many transnational corporations, so there is no comprehensive data, and they can not be quantified as a whole. By definition of ownership, about 61,000 multinational companies are currently producing over 900,000 international production. transnational corporations account for about one tenth of world GDP and account for one-third of global exports. transnational corporations are operated by global corporations, worldwide. However, it is also called irresponsible large corporation that does not require loyalty to a specific country or community. A transnational corporation is a company, but more powerful than a country.
Transnational corporations can be divided into market - oriented investment and asset - oriented investment. transnational corporations are market-oriented. Companies have expanded their business beyond their own territory to increase profitability. Market size and characteristics continue to affect transnational corporations. The geographical imbalance in the market is why companies are engaged in transnational investment. As companies' products and services are geographically unevenly dispersed, businesses are increasingly changing internationally.
transnational corporations are made through greenfield investment, mergers and population or cooperation. Greenfield investment is building new facilities such as offices, factories, and research and development facilities. But building new scale facilities is risky. Therefore, transnational corporations prefer to be located in overseas branches through relationships with existing companies. One widely used way to expand a transnational corporation is to form strategic alliances with other companies. Many companies form a single alliance as well as an alliance network. Strategic alliances focus on specific business problems, It is a contract that allows a company to pursue specific strategic goals and achieve the goals that the company can not achieve on its own.
Transnational corporations develop sequentially. It is provided by direct exports utilizing local independent stores in overseas markets. Then, as local demand grows, overseas sales agents are established. Then, invest in greenfields or take over a local company. transnational corporations are difficult to control because of their geographical characteristics, which are dispersed in different political, cultural and social environments. So, a sophisticated organizational structure is needed. The company has separated various functions and configurations through the development of production process technology and transportation and communication technology. Various functions such as management, R & D, production, marketing, and sales perform at different locations
Transnational corporations consider markets for regional and national markets and create specialized product structures. We also segment the production process and identify each part by location. In other words, it takes the form of productive vertical integration. transnational production networks organized on a regional scale are evident in most parts of the world, but mainly in Europe, North America and East Asia. NAFTA has been established in North America and Europe has the EU. East Asia does not have a regional political system, but the division of labor in the region consists of four countries. transnational corporations have a huge impact on the world. transnational corporations seem to be dominant, but can be constrained by freedom of action. transnational corporations can be powerful, but they do not possess absolute strength.
2. Interesting point
Greenfield investment by transnational corporations was interesting. Greenfield investment has the effect of expanding local production and employment compared to M & A by directly buying paper from target countries and building factories and business sites, but it is costly and takes a long time to produce. An example of greenfield investment is Vietnam. transnational corporations are emerging as global production bases by constructing factories. This allowed Vietnam to expand employment for its citizens and transnational corporations to use cheap labor. Samsung Electronics' smartphone production map in Korea is in Vietnam. It accounts for more than half of Samsung Electronics' total smartphone production.
3. Discussion point
A transnational corporation is a special form of international direct investment that does not simply have a branch or subsidiary abroad, but also has a manufacturing industry or a sales company as a local corporation that acquired local citizenship. Because of these characteristics, transnational corporations have problems of irresponsible management. There is an irresponsible management incident of transnational corporations such as Oxy and Volkswagen where our country became a problem. These transnational corporations have performed irresponsible management such as not paying attention to the health and environment of consumers while recording high sales in Korea. Is there a way to limit the irresponsible management of transnational corporations?
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