Last Updated 02 Aug 2020

Transnational Corporations

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During the earlier days, trade was only done on the local level by accommodating direct exchange of goods and services of only limited market players. However, as developments in commerce occurred as a response to the growing marketplace, international trade has emerged. These changes led to indirect exchange which suited the needs and preferences of the traders. If trade used to have barter as a medium, today the medium is money. Along with these developments are also advancements in the field of aviation and computer and communications technologies, which further expanded the areas for trade.

In addition, transportation developed, enabling man to go to far places and conduct business. All of these have further intensified the economic globalisation around the world (Gnazzo 2006). As trade became a worldwide affair, and the pursuit of profit became far and wide, the circumstances have led to transnational globalisation (Gnazzo 2006). Transnational corporations or multinational corporations have operations in more than one country at a given time. Some economists believe that ownership, nationality mix of headquarter managers, and business strategy are the key criteria of transnational corporations (Iowa State University).

Transnational corporations (TC) have an important role in the globalization process. In fact, they have been one the reasons why globalization pushed through. Many authors have agreed that transnational corporations have an important role to play in the globalisation process (Reyno). In fact, these corporations are important in understanding the global changes in economic and societal terms. Other authors also believe that transnational corporations and their activities “are one of the two dominant causes of the contemporary globalisation process” (Ietto-Gillies 2002: 4).

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In addition, transnational corporations have something to do with the quantitative aspects of globalisation and in other qualitative aspects as well (Ietto-Gillies 2002:7). These corporations are involved in cross-border transactions, thus affecting their qualitative and quantitative manifestations. In addition, transnational corporations have the highest active participation because transnational corporations can do the planning, organizing and controlling activities in different countries. For these reasons, these corporations can shape and influence globalisation (Ietto-Gillies 2002:10).

One transnational corporation is Airbus, whose globalisation has something to do with gaining market access and at the same time “enlarging capabilities and resources. ” In addition, the Airbus’ president envisioned job creation and job security in Europe (Airbus S. A. S 2006). Just recently, Airbus expressed its proposal to invest $1 billion in India to expand its engineering and information technology (IT) activities. This was a part of Airbus’ globalisation plans which will carry on for 10 years (LiveMint 2009).

Another transnational corporation which is contributing to globalisation is the California-based Intel Corporation, which has planned to expand not just within the United States but to other countries as well. In fact, Intel established its new company in China in 2005. Intel has expressed its plan to expand the research efforts of the company in China. The company has also planned to hire more than 1,000 workers in Shanghai, where the R&D facility is located. The expansion of Intel in China is a part of Intel’s emerging market focus. It was reported that 75% of the company’s business resulted from international markets.

In addition, Intel considers China as one of the fastest growing markets for their products and services. Expanding their market outside the United States will mean a big profit for Intel; in addition, the company can offer jobs to the host country. Furthermore, Intel can look for growth outside the United States, whose economy at the time was sluggish. Intel also wanted to take advantage of the growing technology consumption in China (BR Staff 2005).

List of References

Airbus S. A. S. (2006) Welcome to the show [online] available from <http://www. airbus.com/en/myairbus/events/ila_berlin_2006/index. html> [accessed 26 March 2009] BR Staff (2005) Intel invests $345m in US fabs, expands R&D in China [online] available from http://www. cbronline. com/article_news. asp? guid=AE47E1F9-2C75-4FD0-8159-7F1CEFC07F4D [accessed 26 March 2009] Gnazzo, D. V. (2006) Transnational corporations: The New World Order [online] available from <http://www. financialsense. com/fsu/editorials/gnazzo/2006/0209. html> [accessed 26 March 2009] Ietto-Gillies, G. (2002) Transnational Corporations: Fragmentation Amidst Integration.

London: Routledge. Iowa State Univeristy (n. d. ) Multinational corporations [online] available from <http://www. econ. iastate. edu/classes/econ355/choi/mnc. htm> [accessed 26 March 2009] LiveMint (2009) Airbus plans to invest $1bn in India in 10 yrs. [online] available from <http://www. livemint. com/2009/03/24162900/Airbus-plans-to-invest-1-bn-i. html> [accessed 26 March 2009] Reyno, J. E. (n. d. ) Globalization, transnational corporations and the civil society [online] available from <http://www. redem. buap. mx/t3jaime. htm> [accessed 26 March 2009]

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