Does anybody enjoy a Bank of America 800 number that go straight to a Representative?
Answers: MNCs are increasingly known as TNCs.
The advantages that accrue exclusively or mostly to transnational corporations (TNCs) and their primary stakeholders vs. other forms of economic organisation (SMEs, even colossal exporters) are well particular and can be grouped in the following category: financial, organisational, locational, and distributional.
Financial advantages include the ability to bump up capital across multiple market, which should consequently translate into a lower overall cost of capital as ably as lesser exposure to risks from foreign exchange rate fluctuations; and the potential to utilise the workings of transfer pricing to minimise a firm’s overall export tax burden.
Organisational advantages include the potential to make the most of erudition opportunities from internationalised operation through an effective practice management system; and the flair to practice SHRM on a global starting place by hiring the ‘best and brightest’ worldwide and fostering a genuinely cosmopolitan or ‘geocentric’ (Perlmutter, 1969) culture.
Locational advantages include the qualifications to maximise the degree of ‘fit’ between a firm’s unusual activity, process, or function next to the factor conditions prevalent in a given national business system environment. For example, locating research-intensive goings-on in the nouns of telecommunications applications development contained by Scandinavia, or siting low-skill, labour-intensive assembly activities within Mexico or Indonesia. This ability to maximise locational benefit is probably the single greatest advantage the TNC as an organisational form possesses, as it allows it to pursue categorical advantage vs. other forms of financial organisation.
Finally, distributional advantage refers to the TNC’s power to maximise its bargaining power vs. other stakeholder groups – primarily states and workers – which create claims on the firm’s income stream. Internationalisation of its value-chain allows a TNC to place multiple groups of states, labour forces, etc. within competition for its FDI. As a group, TNCs have reasonably effectively fostered a highly competitive flea market for their investment, particularly among nation which do not constitute attractive markets but simply potential export platforms. Most normally, the simple threat of relocating production (or other) activities, if credible, will meet your requirements to discipline recalcitrant parties. This propensity to shift the location of various comings and goings also provides an explanation for why many firms continue a substantial degree of ‘slack’ (or excess capacity) contained by various national operation.
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