• 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?

    Intra-industry trade may response differently to changes in economic conditions than trade between unrelated parties. For example, it may at least in the short term be more insulated from competitive forces in certain markets, or from overall changes in prices, exchange rates, or general economic conditions.

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

    as its platform, but the back bone of the company are the approximate strength of 17000 employees of which gets the company going. Hence the efforts absorbed by technology are minimized to a great extent. Principle #6: Deploy infrastructure as a genuine resource; many a companies fail to succeed in spite of sound infrastructure and operational structure.

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

    The objective is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective.36 The Dispute Settlement Body then monitors how adopted rulings are implemented. Any outstanding case remains on its agenda until the issue is resolved.37 According to

  2. Theories of International Development

    I agree with Chang's view that Washington Consensus might be an attempt to prevent the developing countries from adopting the same policies that developed countries used in their time. If this allegation is substantiated, then this constitutes a serious constrain on the developing countries' capacity to generate economic development8.

  1. Political Implication of Globalization.

    and all problems connected to that. They consider globalization as a threat. At the same time they fear globalization to be inevitable, a fact of life. There is a good reason to translate the fears and worries about globalization into a new motivation to realize Europe.

  2. Free essay

    International Business

    But later on the agreement was cancelled by US. Task Two If we critically assess the arguments put forward by the American and the European sides then there are number of important issues needs to be consider before making any decision on the dispute between Airbus and Boeing.

  1. 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.

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

    countries? increasing ability to trade with each other and to reap the benefits of trade. GATT?s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition.

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