Reading4 : Economic Globalization - hyojin Lim

 



1. summary

It provides a more subtle description and explanation of the nature and importance of TNC in the process of economic globalization, an approach firmly based on the empirical reality of highly differentiated geography.

- Size and Geographic Distribution of Multinational Enterprises
Overall, TNC activity is traditionally measured using foreign direct investment (FDI) statistics. A 'direct' investment is one company investing in another company for the purpose of controlling the operation of another company. A 'foreign' direct investment is simply a direct investment that occurs beyond national boundaries, i.e., when a company in one country purchases a dominant investment in another country or when a company establishes a branch or subsidiary in another country.

- market-oriented investment
The unique nature of a particular market may require a direct presence to understand and meet such a particular situation. It may be desirable for the TNC to appear strongly embedded in the local market, not only for political reasons but also for cultural reasons.

- an asset-oriented investment
The geographical imbalance of the market is one of the main reasons why companies participate in transnational investment. The second reason stems from the fact that the assets required for an entity to produce and sell products and services are geographically highly unevenly distributed and may need to be utilized in the field.

- Mode
Place and geography are still fundamentally important to the way businesses are produced and the way they behave. All enterprises, including the most geographically extensive TNC, are 'produced' through a complex embedding process in which state-based cognitive, cultural, social, political, and economic characteristics play a dominant role.


2. Interesting things

Organizationally and geographically, how TNC's internal networks are organized and how they are connected to the external networks of suppliers and customers is very diverse. This diversity arises primarily from the following interrelated influences: • Specific history of the enterprise, including characteristics derived from its origin, cultural and administrative heritage built in the form of practices accepted over a period of time by generating specific 'strategic preposition'. • Nature and complexity. Provides information about the industrial environment in which the company operates, including the nature of competition, technology, and regulatory structure.
Due to the nature of geographical distributions distributed in different political, cultural, and social environments, TNCs are much more difficult to coordinate and control activities than companies whose activities are confined to a single national space.


3. Discussion point

What do you think is an important part of the transnational production network?



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