Blog assignment 4 - Economic Globalization / Park Seoryoung

1. Summary

TNCs are a form of international direct investment. It has branches, subsidiaries, and local subsidiaries overseas, and is an international corporate organization that operates according to headquarters' strategy and supplies human resources, capital and technology. The start of international business is the British East India Company. It had branches, factories, and troops in India and Southeast Asia. Multi-nationals are responsible for 4/5 of the world's industrial production and employ 2/3 of the world's workforce. TNCs are mostly American, European, and Japanese companies, which have a severe regional bias. 

The reason why TNCs are taking place is to overcome the problems of transaction costs such as tax and labor laws in each country and to reduce the tariff costs that burden exports. TNCs should also have a similar organizational culture because they are strongly influenced by the culture, customs and consumer preferences of the local country. Use localization strategy to match culture.

The impact and effect of TNCs on the global economy is that TNCs contribute to the economic growth of developing countries. This is because it will bring in foreign capital and technologies. It also has the effect of lowering prices in developed countries. Just like McDonald's, it also exports its own culture to other countries and affects its culture. Jobs are changing as exchanges become more active with globalization.

2. Interesting points

I think it is desirable for TNCs to use localization strategies to succeed in many countries. If TNCs don't do your localization strategy properly, TNCs won't be able to succeed. It is common around.
Starbucks, a leading multinational company, also failed in France and Australia. If foreign brands enter the country, people will feel more resistance because they are not familiar with it. Therefore, it is necessary to have a detailed understanding of local culture and values. And I agree that people's culture changes with the introduction of multinational companies.

3. Discussion pionts

Although it uses localization strategies, culture will inevitably change when TNCs enter the market. Although there are no TNCs, most of them are big powers if they look at their nationality. Accepting the culture of TNCs is similar to accepting the culture of developed countries. It's called globalization, but isn't it made into a culture? I would like to discuss how we can preserve each country's culture by accepting the culture of TNCs.

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