Dynamic Strategy – Practitioner: How Transnational Companies are affected by Globalization
This article explores the affects of globalization to a transnational company, to the country, and how it the economic and possibly the political environment can affect the business decisions.
Transnational companies tend to have the majority of the goods and services that are being exported worldwide. They also are important to the local community in aspects of performance, knowledge, and competitiveness, so they become a important part of that country’s economic environment.
This article also explores the positive and negative sides of globalization to both the country and the company. Some countries who have succeeded in globalization may have experienced a boost in their exports, which results in the company developing at a faster pace . When a country develops too quickly some of the advantages of globalization can be left out. Some examples would be the quality of education the people could receive, the legal aspects of their economy could be stronger, and even the whole legal system could be more consistent. However, the country will see more capital and have new jobs for the people; however some important rewards are left out. The article uses China as an example. When they eliminated the trade barriers in the open market, they did receive a quicker response to have a higher economic development; however the quality of the products being exported may have been decreased.
Concerning the current global economic crisis, it may seem that many developed countries are on the rise of economic recovery, but are they out of the woods of another recession? It may be believed that the international coordination with polices of the transnational company will be vital for the recovery to be a success. A transnational company can easily be persuaded to take advantage of a developing country in ways that will only benefit the company, if this kind of managerial thinking continues or become contagious to other transnational companies, this can result in catastrophic consequences of the world economy, thus it is up to the managers of the transnational company to be ethically responsible and respect the county’s needs. There is no guarantee that another recession will not affect a transnational company, however the decision that the managers are making today will ultimately affect the economic outcome of that company.
Reference:
International Journal of Management Cases; Dec2011, Vol. 13 Issue 4, p286-290, 5p
I agree the managers in this type of situation will be a key factor in how the transnational company will affect the economics for the inhabited country. I also think that even if they were solely trying to make a profit for the company itself it will have a reverse affect because it will be one of the cause leading the country into another economic crisis or will maintain a lower standard of living in the area. Yet, the transnational company has a lot of potential if it were to engage with the environment and citizens of that nation.
ReplyDeleteThe topic of Globalization amazes me. It has been a topic of on going debate for such a long time. I think it is safe to say that we all need transnational companies so that we can boost economies across nations. I also believe many would say that only to a certain extent though since some companies don't think of their social economic responsibility as you said in your blog, to where it becomes a downfall affecting countries around the world.
ReplyDeleteRachel, I agree with the article. For me, globalization has occurred via 2 processes, it has made culture increasingly international in nature, and has increased the concentration of wealth into the hands of the world’s elite. This has allowed the dominant cultures of the West to dominate most other nations, and created a greater gap between the worlds rich and poor. Social Scientists, particularly anthropologists, pay close attention to how globalization is affecting the world’s impoverished populations, and speculate on how globalization can be used to solve some of the world’s problems, rather than exacerbate them.
ReplyDeleteI did not realize that there could be a negative side to globalization. This article brings up an interesting point, that fast development countries can leave out some important factors such as quality of education and legal regulations. On the contrary, there will be new jobs and more capital for these countries. I feel that new jobs and more capital in the long run could combat the disadvantage left out due to the fast pace development. If an individual has a good paying jobs, they can properly educate their children and have a better standard of living.
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