• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

A changing nature of international business.

Extracts from this document...

Introduction

Since the 1980's, there is a changing nature of international business. MNC's needed a transformation to follow this change, that is why international business networks appeared. According to Casson and Cox (1997), network can be defined as : " A set of linkages which either directly or indirectly connect every member of a group". This essay will first deal about the network concept (as a "high trust co-ordination mechanism linking independent owners"), then the classification and the components of a network will be analysed, and finally the network concept seen as an explanation of international business. In network, there is the implication of close but non exclusive relationship. Autonomy and choice are emphasised. So, what do we mean by network? Network is a solution (J. Child & D. Faulkner, 1998) to reduce uncertainty (with good relationship and solidarity), to provide : flexibility, capacity (with links inside the networks between firms), speed (to take rapidly advantage of opportunities), access to resources and skills not owned by the company itself (a company can finish a project using abilities and skills of other in the network), information. ...read more.

Middle

In addition, what are the different components of a network? First, the geography of the TNC's is composed by , for example : the headquarters (corporate or regional), the Research and Development and the production process (Dicken, Global Shift). Besides, network is the centre of different relationships. Some of the most important are the one which appear firstly in subcontracting (industrial or commercial one). It enables the principal firm to avoid new investment, to externalise risks and costs for example. For the subcontractor the advantage is to get access to certain unattainable market. Secondly, the international strategic alliances, which are not mergers, are divided in three types: the research oriented, the technology oriented and the market oriented. These alliances enable firms to get an easier access to the markets, to technologies and to share cost. Another interesting point is the connection between the organisational dimension of TNC networks and the geographical dimension. First there is the Hymer model (Appendix 2) ...read more.

Conclusion

Moreover, some external factors favour networks. Indeed, governments are favouring networks by creating free trade areas or making agreements (firms are involved in networks by making alliances, sub-contracting...).There is also the implication of some international institutions like the WTO. This latter has for purpose to make the world as a single market, so firms and countries would be connected each other in the area of international business. To conclude, with the above definition of the networks, their core elements and their different ways to be successful, we can understand better why the network concept can be seen as an explanation of international business. Nowadays, it will be very difficult for a firm (which wants to be an international one) to survive without integrating a network. Indeed, it is very hard to trade internationally if you stay in your own sphere. Networks are part of the international business which tend to lead to the inter-dependence idea. Indeed, countries' and firms' networks are present and they form the today's world. (1029 words) 1/4 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Political & International Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Political & International Economics essays

  1. the electronic business system of Amazon.com, Inc

    These participants include but are not limited to suppliers, vendors, staff colleagues of Amazon and others involved in the work system Principle #4: Create value from information; every company has information about its customers, suppliers and other participants. This information needs to be used in order to create value from it.

  2. Theories of International Development

    However the challenge for Chang and other the critics of the Washington Consensus according to Rodrik9 is on providing an alternative set of policy guidelines for promoting development, without falling into the trap of having to promote yet another impractical blueprint that is supposed to be right for all countries at all times.

  1. The World Trade Organisation ("WTO").

    Governments are prohibited from giving instructions to try to influence the panelist on matters related to the dispute before the panel. Article 11 of the WTO states that the panel shall "make an objective assessment of the matter before it, including an assessment of the facts and the applicability of and conformity with the relevant covered agreements".

  2. MNC and TNC: Does the distinction make a difference?

    MNCs thus have two characteristics. First, they coordinate economic production among a number of different enterprises and internalize this coordination problem within a single firm structure. Second, a significant portion of the economic transactions connected with this coordinated activity take place across national borders.

  1. Free essay

    International Business

    And also this will cause the job losses in the Airbus which is not good in the interest of the EU. Apart from employment and technological advancement, the company generates tax revenue for all the countries it operates in also matters in relation with EU to help Airbus.

  2. Doing business in emerging economics

    China defeated anti-China motion on human rights in the United Nations meeting and Taiwan's "return to the United Nations" attempts in the United Nations General Assembly and succeeded in biding to hold the 2008 Olympic Games and World Expo in 2010.

  1. What does Dicken (1986) mean when he argues that internationalisation is best viewed as ...

    The earlier colonial powers were Spain and Portugal with their acquisitions in the Americas. They later became semi-peripheral and the North West of Europe, e.g.England, the Netherlands and France became the core economic leaders dominating the new world trading system.

  2. Political Implication of Globalization.

    The more worrying feature of the new global corporate structures is their capacity to devastate national labor markets by transferring their operations to cheaper locations overseas. The huge expansion of finance capital markets has been a spectacular feature of the new economic landscape.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work