[ Reading Assignment 4 ]

 1. Summary

Writer argues that it is misunderstood to think that global corporations infringe on autonomy nation-states. In this point of view, he explained how we approach and understand TNC in processes economic globalization.

Since 19C, manufacturing production outside their home country is increased. following numbers of US, UK and some continental European manufacturing companies started to  become transnationalized following World War I. Because the notion of TNC includes qualitative characteristics like complex relationship between different companies, it is difficult to measure TNC quantitatively. 

Taken together, TNC is measured with FDI: foreign direct investment. It is a direct investment that occurs across national boundaries. FDI was expanded in past years. The world’s TNCs originate from the developed economies is given a great deal of weight on the all of TNCs.

There are two motivations behind companies that choose transnationlizing. First, they choose market-oriented investment. They make decision through analyzing the trend of market. Second, they choose asset-oriented investment. The resource to produce and sell their products and services is geographically distributed.

Also, There are two ways of developing transnational activities. First, they manage a business through greenfield investment. It is to build new facilities that can increase its domestic economy. However, this investment is unsuitable for overseas expansion. Second, they engage with other companies. It is a strategic collaboration between the firms. Strategic collaboration is usually focused on specific business solution, not being merged into one firm’s identity. Expansion of this alliance increased complexity and diversity of TNCs.

In international business literature, first of all, TNCs earn their spot on the their domestic market. The sequence is as follows. First, through local independent sale agents, global markets are served with export. Second, as local demand is increased, It is useful to build foreign sales outlets of its own to control its foreign markets. However, this sequence is not always observed.

For a variety of reasons, the process may be stopped or ‘short- circuited’. The important thing is that ,in new TNCs produced different sequence in which companies should not be large with dominant domestic market position to make inroads into overseas market, particularly in the knowledge-intensive industries.

It is fundamentally important to behave and be produced in place and geography. Because TNCs are produced following embeddedness process in which the cognitive, cultural, social, political and economic characteristics of the national home base play a dominant part. Also, TNC’s home country appears to remain the dominant influence.

Controlling TNCs is more difficult than firms that work in single national space. Because TNCs have characteristic like geographical, political, cultural and social environments. Apart from problem of organizational architecture, there are some matters of geographical configuration of its activities. So, TNCs tend to develop geographical tactic. Although such tatics and patterns turn difference up between different types of TNC and industries, their internal corporate division is showed in a distinctive external division of labour.

We can generalize TNCs. First, the headquarters of TNCs stay in the firm’s home country charateristically. Second, conversely, sales and marketing functions tend to be scattered in key markets, while production functions are related to the technical needs. Third, TNCs is dependent on each other. So specific relationships between TNCs as customers or suppliers are flexible. In the three ‘triad regions’ of Europe, North America and East Asia, the Transnational production networks are prominent. These nations have networks : NAFTA, EU.

These network makes tension between TNCs and other main agents In grobal economy unavoidably.  TNCs do not always have advantages, and they are impacted by multi-scalar regulatory systems. The national state remains significant among the multiplicity of regulatory institutions, and allowing for the expansion of the international.

Therefore, we should watch out the point of view that TNCs always prevail, while conceding the power and impact. As many recent events demonstrate, TNCs cannot be free from restriction perfectly.

2.Interest / learn

“What is the relation between economy and globalization?”

My answer for the main question of reading assignment 4 is as follows. The relation between economy and globalization is explained with transnational corporation. these corporation move

If there is a place and opportunity to gain their profits, these corporation move anytime, anywhere over the world. This economic activity have effects on domestic and foreign economy. 

Before I read this text, transnational corporation have entire freedom, regardless of greater regulation. But now I learned TNCs cannot be free from restriction perfectly.

3.Discussion

Several Uniqlo stores in korea are closing down due to ‘NO Japan’ boycott. Many other Japanese transnational corporations in Korea face similar situation. I think this situation shows relation between economy and globalization. Do you know aother example of relation between economy and globalization?

Source : https://www.mk.co.kr/news/business/view/2020/12/1278685/