Reading Assignment 4: “economic globalization” ( Araie Muna)

1.

 

The first part (the introduction) talks about how people usually think transnational companies “control” the whole world's economy. But Dicken wants to explain that this idea isn't entirely true. It it said that this text is going to give more details about these big companies and how they fit into the world's economy. It will focus on five things:

-       how many of these big companies there are and where they are. 

-       Why they work in different countries.

-       How connected they are to the places they work.

-       How they work together with other companies.

-       How much power they have compared to other groups in the world economy.

 

The second part therefore goes right into it, with the scale and the location of it: 

It talks how transnational corporations started working in other countries long ago, mostly doing trade before starting manufacturing overseas around 1800. By 1914, many US, UK, and European companies were already going international. Now, around 61,000 TNCs run businesses in over 900,000 foreign places, making a big part of the world's money and exports. But most of this comes from a small number of big TNCs. These companies operate in different countries, mostly from rich ones, with less investment happening in developing countries.

 

The third part focus on why and how they transnationalize:

It explains that firms have different reasons and ways for companies to expand globally . Even though there seem to be many reasons, they mostly fall into two groups: one is about selling things in new places (market-oriented), and the other is about getting more things like factories or resources (asset-oriented).

 

- Market oriented: 

TNCs invest in new markets to make more money and grow beyond their home country. They do this because they might have already sold as much as they can in their own country, and expanding to new places could bring more profit.

 

 

- Asset-oriented:

Businesses invest outside their home countries for two main reasons: to tap into markets in new places and to take advantage of unequal distributed resources needed for production. This often involves setting up new facilities or collaborating with existing firms. 

Many companies prioritize either creating entirely new facilities (known as greenfield investment), acquiring existing businesses, or forming alliances with competitors. 

These strategies help companies access new markets, share risks, and pool resources. The development of these international operations can follow a sequence from exporting to establishing production facilities abroad, although this pattern is not always followed, especially by newer, knowledge-based companies.

 

Then it talks about how geography matters in Transnational Corporations: 

Geography remains important for how companies function and behave. Transnational corporations (TNCs) are shaped by their home country's culture, politics, and economy, influencing how they act in different places. For instance, American, Japanese, and German companies show distinct behaviors and decision-making due to their home country's characteristics. Despite global changes, TNCs' organizational forms differ and are influenced by their unique societal systems and histories. While TNCs adapt to external pressures, they retain their distinctiveness tied to their origins. Therefore, diverse national backgrounds lead to varied business practices among TNCs, fostering diversity instead of uniformity in the global business landscape.

 

The last part talk about webs of enterprise: transnational production networks ;

These companies are not on their own, they are part of extensive networks encompassing production, distribution, and consumption, largely controlled by TNCs. Their configurations, both internally and externally, vary due to historical factors, cultural heritage, and industry environments. TNCs, dispersed across diverse geographical areas, require intricate organizational structures and tend to concentrate certain functions in specific locations based on market demands and production needs.

These corporations are constantly changing, restructuring to adapt to changing circumstances, which often leads to tension with stakeholders like governments and labor. TNCs' geographical configurations and their relationships with suppliers play pivotal roles in their operational efficiency. While these networks are global, many exhibit strong regional dimensions, especially evident in Europe, North America, and East Asia. However, these networks interact with various regulatory systems, resulting in complex negotiations between TNCs and states, undermining the notion of TNCs having absolute power.

 

2.

I found it interesting that these companies started going to other countries a long time ago, mainly for trading stuff. It's good to know that these big companies even though they make tons of money and have a huge say in how things work, they also have to follow rules set by governments, which means they don't always get their way.

 

3.

 

The text talks about how companies keep their special traits from where they're from. But it would be interesting to know more about how fast changes in the world might make these differences weaker or stronger. Things like new technology or more countries working together might either make these traits less important or even more unique over time. Exploring this could help us understand how these companies might change in the future.