1. Summary
In this article, business enterprises, especially transnational corporations (TNCs), are a major component of the global economy.
This aritcle focuses on five problems, that are the scale and geographical distribution of TNCs in the global economy, the reasons and methods of enterprises engaging in transnational activities, the geographical embeddings of transnational enterprises, and the 'Web of Enterprises' and the other actors in the global economy.
Trading companies played a very important role in the development of businesses, increasingly interconnected, they created a business community of international scale. Companies running operations that are not obliged to be loyal to any particular country or community around the world were referred to as "placeless" global companies. The majority of the world's TNCs come from advanced economies. The number of TNCs is undoubtedly growing in developed countries, and the diversity of TNCs is also increasing.
TNC activities are divided into two types: market-oriented investment and asset-oriented investment. The reason for the market-oriented investment will depend on whether a company can reach the saturation point of the domestic market and expand the market beyond its territory for profitability.
On the other hand, the reason companies make asset-oriented investments is that resources for their products and services are geographically disproportionate.Along with institutions and practices, assets are very distributed geographically. For this asset-oriented investment, the historic TNC investment in transnational labour has continued.
There are two ways in which companies engage in transnational activities. One is Green field investment, and , the other is through a contract with another company, merger and acquisition or some kind of strategic collaboration.
Greenfield investment is simply building completely new facilities (administrative offices, factories, research and development facilities, sales and distribution centers, etc.). It increases the productive inventory of both the enterprise itself and the country and community in which it originated. Most notably, strategic cooperation with other companies is the relationship between companies that are otherwise fiercely competitive. This competition reflects a new form of business relationship in the way cooperation and competition interacts.
The growth order of TNCs is as follows. First, it enters overseas markets and is serviced by direct export, usually using local independent sales agents. Next, As local demand increases, TNCs can almost control local demand.
While more and more companies are becoming transnational in the early stages of development, in fact, very few are global companies. The basis of TNC's power lies in its potential ability to leverage resource availability and cost, geographical differences in state policies, and to switch operations between locations. However, this perception of TNC power does not necessarily mean that TNC always has an advantage. All transnational production networks have come under the influence of the regulatory system of world-class organizations. And TNCs try to exploit national and geographical differences in regulatory regimes. Due to its strong regional characteristics, it is difficult for workers to negotiate effectively with the TNC. However, we should always know that TNCs do not have absolute power and can be constrained at any time.
2. Interesting Point
As I was studying globalization theory, I kept thinking that no matter which part of culture or politics I explained, it was possible for the writing to develop in the direction of economic logic. So I was interested in TNC part, that a company that promotes globalization.
3. Discussion
At the end of the article, TNC said that it does not have absolute power. In the atmosphere of this article, the TNC seemed to symbolize great power. But I don't think the world body has enough power to keep TNCs in check, and more so the TNC can exercise economic power in the world and exert stronger power than the world body. What do you think about this?
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