1. Transnational corporations (TNCs) operate across national borders through complex internal and external networks of relationships. 2. TNCs internationalize primarily for market access and to obtain resources like natural resources, labor, and knowledge. They enter foreign markets through exports, foreign direct investment, licensing, franchising, and management contracts. 3. As networks within networks, TNCs organize their internal operations and configure their external relationships based on industry forces, their own history and culture, and their home country influences. Their geographical embeddedness impacts how they operate globally.

1. 1
TRANSNATIONAL
CORPORATIONS
By
Mohammad shafiq Obeidat
Wilmington University
DBA

2. 2

3. 3
Agendas
Why firms transnationalize
How firms transnationalize
TNCs as ‘networks within networks’
Configuring the TNCs’ internal networks
TNCs within networks of externalized
relationships

4. 4
Transnational Corporations
A TNC is a firm that has the power to
coordinate and control operations in
more than one country, even if it does
not own them

5. 5
Why firms transnationalize
Pursuit of profit A firm’s profitability is the
key barometer to its business
firms may have a variety of motives other than
profit, such as increasing their share of a market,
becoming the industry leader, or simply making the
firm bigger. But, in the long run, none of these is
more important than the pursuit of profit itself.

6. 6
Although a firm’s motivation for engaging in transnational
operations may be highly individual we can classify them into
two broad categories
Market orientation allows firms to locate inside particular
markets and tailor make production
- Three attributes of markets are especially important:
-Market size (per capita income)
- structure of demand(incomes rise )
- Accessibility (transportation)

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Export-import trade
Foreign direct
investment
Licensing
Franchising
Management contracts

8. 8
Asset orientation allows access to various
assets such as Natural resource ( Oil industry
)knowledge of labour (costs, productivity,
skills)
- Access to knowledge (technologies)
- Access to labour ( wages, skill levels,
location, gender, union membership )

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10. 10
How firms transnationalize
Firm must have strong domestic position to
expand geographically
- Product cycle
How firms start in new market
setting up new facility
Merging with local firm

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TNCs as ‘networks within networks’
TNCs come in ‘all shapes and sizes’, two basic
characteristics apply to all of them
- TNCs are networks within networks
structured through a myriad of complex relationships, transactions , exchanges
and interactions within their own internal corporate network and between
that network and those of the other key actors with whom TNCs must
interact
-

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TNCs organize and configure their networks arises
from a number of interrelated influences
- The nature and complexity of the industry
environment in which the firm operates ,including the nature
of competition, technology, regulatory structures etc.
- The firm’s specific history and geography,
its culture and administrative heritage in the form of accepted practices built
up over a period of time, producing a particular ‘strategic predisposition’17
characteristics derived from its home-country embeddedness.

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The geographical embeddedness
of TNCs
Home-country influences
The rate of globalization is accelerating.
Regionalization is taking place,
resulting in trading blocs.
The participation of countries in world
trade is shifting.

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The Composition of Trade
Between the 1960’s and the 1990’s the
importance of manufactured goods
increased while the role of primary
commodities (i.e. rubber or mining) had
decreased.
More recently, there has been a shift of
manufacturing to countries with
emerging economies.
There has been an increase in the area
of services trade in recent years.

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The Current U.S. International
Trade Position
Exports and Imports of Goods and Services per Capita
for Selected Countries
Country Exports per Capita Imports per Capita
Australia
Brazil
China
Japan
Kenya
United Kingdom
United States
$4,296
379
222
4,165
91
4,767
3,472
$4,525
428
199
3,622
125
5,500
4,962

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The Impact of International
Business on the United States
U.S. international business outflows are
important on the macroeconomic level in
terms of balancing the trade account.
On the microeconomic level, participation
in international business can help firms
achieve economies of scale that cannot be
achieved in domestic markets.

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Average Plant Salary and Wages
(per worker, dollars per hour)
0
5
10
15
20
25
30
All Plants Small Plants Large Plants
$perhour
Non-Exporters Exporters

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Globalization
Because of globalization, for the first
time in history, the availability of
international products and services can
be accessed by individuals in many
countries, from diverse economic
backgrounds.

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The Structure of this Book
Part One introduces the importance of international
business and its global linkages.
Part Two presents the environment of international
business, addressing culture, policies, politics, and
law.
Part Three provides coverage of the theory of
international trade and investment and presents
balance of payments issues.
Part Four discusses markets, financial systems,
economic integration, and emerging market
concerns.

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The Structure of this Book
(cont.)
Part Five presents the strategy considerations
surrounding international business.
Part Six targets the operational issues surrounding
international business, using an implementation-
oriented perspective.
Part Seven concludes the book with a focus on the
future of the field and the reader’s career.