Economy of a transnational company, Internationalization and...

The Economy of a Transnational Company

Internationalization and Globalization of International Business

Internationalization and globalization of the world economy are a complex process, the nature and consequences of which require in-depth study. It should be noted that some scientists are skeptical about the concept of "globalization" and deny the significance of this process. However, most economists, realizing its objectivity and irreversibility, tend to develop a systematic and theoretically sound scientific understanding of it. The concept of "globalization of the economy" They use them to describe the increased internationalization of markets for goods and services, means of production, financial systems, competition, technology, corporations and industries. Globalization is seen as a process that creates favorable prerequisites for the growth of capital mobility, the faster spread of technological innovation and the growing interdependence and interdependence of the development of national markets.

In the most general case, the globalization of the economy is understood as the process of growth of economic integration based on the acceleration of scientific and technological progress and the transition to an information society, as well as the deregulation and liberalization of international trade, as well as increasing the mobility of factors of production.

Key terms:

international business; internationalization of capital; transnationalization of production; product life cycle model; transaction costs; the internalization model; network model; international production; an eclectic paradigm of international production; international franchising; globalization as a modern stage of the internationalization of business.

Factors causing internationalization of business

The problem of internationalization of business attracts in recent years the increasing attention of both economists and practitioners of different levels. And it is not surprising: internationalization of business affected all more or less significant companies of the world economy; the intensity of this process increases, making it virtually irreversible.

What factors compel a particular company to make a decision about the internationalization of its business? Is this decision the result of an economic calculation of its positive consequences for the company or a forced reaction to negative external circumstances? We will try to answer these questions.

All factors that push the company on the way of internationalization of its business, can be conditionally divided into two groups:

- the factors caused by the specifics of the company and the individuals working in it;

- factors associated with the external environment.

The first group of factors includes ambitions, targets, strategy, past experience of the company, and the second group is related to the level of taxation, government regulation, cost level, and also the potential for profitability and growth.

The decision to exit a particular national company to the foreign market is, as a rule, quite difficult, requiring a definite push by an act, which may be the result of an action, for example, "intra-firm" circumstances and forces:

- the motivation for the functioning of the company;

- success in the national economy;

- the role of the company's management.

The decision to internationalize a company's business can be influenced, apparently, by external forces, for example:

- an advantageous proposal that can not be ignored (for example, a proposal from a foreign government);

- competitive effect, when companies follow competitors to other markets, in particular, external markets;

- Strong competition from foreign counterparts.

Let's consider in more detail internal and external factors that may influence the company's decision to internationalize its business.

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