1. Summary
This chapter will talk about
globalization from an economic perspective. The world is becoming more and more
interdependent, and today most are targeting the global market. Globalization
operates in the political, cultural and economic sectors. Amid the disagreement
over economic globalization, there is a clear consensus that transnationals
(TNCs) in particular are the major economic players in the world. Therefore,
this chapter focuses on multinational corporations (TNCs). The TNC is at the
center of the discussion about economic globalization. It focuses on five
related issues. The purpose of this chapter is to provide a subtler description
and explanation of the nature and importance of the TNC.
The TNC grows during the First World
War in 1914. Since then, especially in the past 50 years, the number of
multinationals in the global economy has increased exponentially. The
definition of the TNC in this chapter is as follows: 'A company that has the
authority to coordinate and control business in more than one country', but it
is difficult to quantify. The reason is because of the complex relationship.
The total amount of TNC activity is normally measured using foreign direct
investment (FDI) statistics. FDI is an investment that goes beyond national
boundaries.
The reasons why businesses expand
business outside their home country and how they are very complex. However, it can
be classified into two categories. It is market-oriented investment and
asset-oriented investment. Despite recent developments in TNC's activities,
much of the investment is market-oriented. In order to increase profitability
from a market-oriented investment perspective, it is important to expand the market
beyond its own territory. An asset-oriented investment perspective focuses on
geographic disparities. The assets that companies need to produce and sell
products and services are geographically dispersed.
There are also two main ways in which
companies develop transnational activities. One is a 'greenfield' investment
and the other is through an agreement with another company through mergers and
acquisitions or strategic collaborations. Greenfield investment is building an
entirely new facility. This is in addition to the company itself and the
productive stock of both that country and the community. In fact, in recent
years, most of the world FDI growth has been driven by mergers and acquisitions
rather than greenfield investments. For example, in the late 1990s, a British
telecom company took over a US company. There have been numerous cross-border
mergers.
Every business enterprise consists of
complex, dynamic production, distribution and consumption networks. These
networks are geographically broadly controlled by transnational corporations.
Therefore, TNC has a complex network like a corporation. In addition, due to
the geographical characteristics of the different political, cultural and
social environments, the activities of multinational corporations are more
difficult to coordinate and control than a company limited to a single national
space. Therefore, a more sophisticated organizational structure is required.
2. Interesting point / What did I
learned
Before I heard this lecture, I did
not know about TNC. As I read this article, I learned a lot about TNC and its
history. One interesting thing is the time of the appearance of TNC. I was very
surprised that a TNC appeared in the 15th century. It is because the
multinational corporation thought that it is the tendency of modernity. Also,
because the TNC is associated with other countries, its size is much larger and
more complex than I thought. Thus, TNC affects their country and the world. The
TNC's role in the globalized world as it is now being even more important, not
only because of its impact on the country but also because of its impact on the
whole world. Multinational corporations should consider the adverse effects of
the global economy and pay attention to their role in the global economy. And
as time goes by, I think economic and cultural divisions are becoming more
difficult. It was interesting to read this article and to learn about
globalization, especially in economics.
Let's take a look at our case. There
are many domestic companies such as ‘Samsung Electronics’ and ‘Hyundai Motors’
in Korea's multinational corporations. There are also many multinational
corporations such as the United States, Britain and Japan that have entered
Korea. Examples include ‘GM Daewoo’ and ‘Daiso’. I have never encountered these
multinational companies while I was using these companies' products. However,
after learning TNC, I thought that I should pay more attention to these
companies, products, and related issues.
3. Discussion
You learned a lot about the TNC in
this chapter. Economic globalization has a lot to do with us. Economic
globalization is increasing our convenience, but there are also side effects.
If so, what are the side effects of the TNC that the students think? Also, if
there are side effects, what solution do you think? If you want to share more
comments, please leave a comment below.
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