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International business in emerging markets ( ) - Essay Example

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International business in emerging markets ( )

In this age of free trade and globalization, international business has evolved to occupy a very significant position in world economics. Transnational is a contemporary term synonymous to multi-national companies. Broadly speaking these transnational companies run their business in different countries of the world and plays a major role in controlling the economic assets of those countries by owning equity capital stake. Transnational companies are characterized by their enormous financial resources, vast technical resources and extensive global reach. They evolved in the late 19th century as a consequence of changing environmental forces and rising demand for global efficiency, national responsiveness and worldwide learning. (Pries L., 2001)
To get a clear picture, the organizational characteristics can be divided into three broad heads viz., configuration of assets and capabilities, role of overseas operations and development and diffusion of knowledge. TNCs or MNCs have their operations decentralized and are nationally self-sufficient. The top executives of these companies keep a keen eye on the various economies of the world and takes timely initiatives to exploit opportunities. Knowledge is developed and retained within each unit but technology is brought from the center. Though international companies can better leverage the knowledge and capabilities of the parent company, cost intensive resource configuration and operating systems make it less viable in the totality. Transnational companies work on a broader perspective of business and over time has redefined the way the world conducts business. It strives to achieve global competitiveness and international flexibility in business. (Bartlett C.A. and Ghoshal S., 1998)

Transnational companies recognize workforce efficiency and innovation as two very important parameters fro achieving global competitiveness. As such while certain resources are best centralized within the parent company operation, some others are decentralized. Centralization is not necessarily at home. Products that are primarily labour intensive might have their production plants built in low wage countries like Singapore and Mexico. Such flexible arrangements complement the benefits of economies of scale; helps lower the cost of inputs and also provide ready access to scarce resources. Decentralization, on a local-for-local basis, also helps reap potential economies of scale and protect against exchange rate shift. (Bartlett C.A. and Ghoshal S., 1998)

Advantages of doing business in developing countries

The transnational compa ...Show more

Summary

Pries L., (2001), New Transnational Social Spaces, Published by Routledge, ISBN 041523736X, 9780415237369, retrieved November 23, 2008, from http://books.google.co.in/bookshl=en&id=KAZ_zu2wMIkC&dq=transnat%C4%B1onal+companies&printsec=frontcover&source=web&ots=lV8N8pANJ8&sig=a1DiajRYqX7YsKZyirwPNvaGaNc&sa=X&oi=book_result&resnum=5&ct=result#PPR6,M1 11
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