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

    Furthermore, prices that govern intra-industry trade often termed "transfer prices" may have their own unique characteristics and determinants. US intra-industry exports of foreign MNCs have accounted for about 10% of total US goods exports since 1977. US intra-industry imports of foreign MNCs have accounted for a much larger share of

  2. Free essay

    International Business

    The U.S. has argued that these loans give Airbus an unfair advantage in the marketplace, allowing Airbus to sell its aircraft at artificially low prices and to take risks knowing that the EU government will be there to provide financial assistance.

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

    These steps may be defined or explained precisely in some scenarios or may be relatively unstructured in others. The process is purely objective and can be tamed or tailored according to the requirements of a business work system. Amazon business system is purely internet based, right form selection to purchase and payment.

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

    The European Commission speaks for the member states at almost all of the WTO meetings. And the member states themselves meet in Brussels and Geneva in relation to EU matters. The working group of the EU Council ("The Article 133 Committee", named after Article 133 of the European Community Treaty)

  1. Political Implication of Globalization.

    The European project seemed to be paralyzed. This was partly caused by two ideological debates. The first one was on whether Europe should be an open Europe, or whether it should find its strength in organizing a fortress. The second one dealt with the question whether Europe should be an

  2. Theories of International Development

    Kicking Away the Ladder and in his arguments, he critically enquire the motive of the policies on helping the developing countries when the signatories to the policies used other means to climb the ladder of prosperity. While every country in one way or another do practice protectionism, history tells us

  1. Doing business in emerging economics

    All there would be impossible without help and support from African countries. At the same time, China actively promoted peace and development in Africa, supported and encouraged African countries to equally participating in international affairs. "The founding of the People's Republic of China and the independence of African countries ushered in a new era in China-Africa relations.

  2. The establishment of the World Trade Organisation has led to a significant reduction in ...

    The WTO as an organization (i.e. its member states, acting collectively), 2. The WTO secretariat, 3. The WTO Agreement, or 4. The WTO dispute settlement mechanism. It is important to distinguish between these when devising strategies for responding to human rights-adverse impacts of the WTO, as much of the criticism

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