Дипломная работа: The Experience of transnational corporations’ development in the conditions of world financial crisis

Distinctive lines of the transnational corporation are:

1) annual turnover is usually higher than $ 100 million;

2) have branches in more than 6 countries;

3) on the international status of the firm shows an indicator such as size percent of its sales, its products sold outside the country of origin of the company;

4) structure of its assets, in some foreign researches to the international corporations carry the companies having 25 % of actives abroad

The development of transnational corporations has passed historically a number of stages. In the first period of the origin of TNCs (the end of XIX century.), they have undergone very significant transformation. TNCs’ first generation has been largely associated with the development of raw materials of former colonies, which gives the basis to define them as «the national-raw transnational corporations».

According to its organizational and economic forms and mechanisms of functioning, there were cartels, syndicates and the first trusts. Then on the world stage there were trust types of TNCs which were associated with the production of military-technical products. Having started its activity in the period between two world wars, some of those second generation TNCs maintained their position in the global economy and after World War II. They produced weapons and ammunition.

In the 60th years, an increasingly prominent role of TNCs has begun to play the third generation, which was widely used to achieve scientific and technological revolution. These techno-consumer companies: corporations and conglomerates.

In the 60 – 80th years in the activity of TNCs organically incorporated the elements of national and foreign production: realizations of goods, management and organization of personnel, research of marketing and after-sales service.

The third generation of transnational corporations promoted to spread the achievements of scientific and technological revolution in the peripheral areas of the world economy and, most importantly, economic preconditions for the occurrence of international production with a single market and the information space, the international capital market and labor, scientific and technical services. Their goal was to conquer markets, sources of raw materials and spheres of application of capital.

In the early 60's the global transnational corporations of the fourth generation have gradually appeared and have affirmed. Their distinguishing features are:

· planetary vision of the markets and implementation of competition on a global scale, section of the world markets with a few global multinational corporations;

· coordinate the actions of their affiliates on the basis of new information technologies;

· flexible organization of each production site, adaptability corporate structure, uniform accounting and auditing;

· integration of its subsidiaries, factories and joint ventures into a single global network management, which, is integrated with other networks of TNCs;

· implementation of economic and political influence in the state in which they operate TNCs.

Their strategy is characterized by their innovative aggressiveness, dynamism and a withdrawal from single industry structure, constant improvement of internal corporate structure, aiming at the conquest of the key global economic position in the production and marketing.

As for the structure of transnational corporations, it is following:

A parent company is an incorporated or unincorporated enterprise, or group of enterprises, which has a direct investment enterprise operating in a country other than that of the parent enterprise. An affiliate enterprise is an incorporated or unincorporated enterprise in which a foreign investor has an effective voice in management. Such an enterprise may be a subsidiary, associate or branch.

A subsidiary (an affiliate) is an incorporated enterprise in the host country in which another entity directly owns more than a half of the shareholder's voting power, and has the right to appoint or remove a majority of the members of the administrative, management or supervisory body.

An associate is an incorporated enterprise in the host country in which an investor owns a total of at least 10%, but not more than half, of the shareholders’ voting power.

A branch is a wholly or jointly owned unincorporated enterprise in the host country which is one of the following: a permanent establishment or office of the foreign investor; an unincorporated partnership or joint venture between the foreign direct investor and one or more third parties; land, structures (except structures owned by government entities), and /or immovable equipment and objects directly owned by a foreign resident; or mobile equipment (such as ships, aircraft, gas- or oil-drilling rigs) operating within a country, other than that of the foreign investor, for at least one year.

A joint venture involves share-holding in a business entity having the following characteristics: the entity was established by a contractual arrangement (usually in writing) whereby two or more parties have contributed resources towards the business undertaking; the parties have joint control over one or more activities carried out according to the terms of the arrangements and none of the individual investors is in a position to control the venture unilaterally.

1.2 The evolution of a Transnational Corporation

Economists did not actually coin the phrase “transnational corporation” until the 1960s. Even before that time, however, studies were being conducted into the history and evolution of transnational corporation organization. When these studies were finally executed, it was shown that TNCs had different internal organizational structures based on geographic location—even at their earliest stages in development. The growing role of transnational corporations (TNCs) in the world economy began to speak only in the second half of XX century.The uncontrolled activities of transnational corporations are main key reasons for the imbalances in the global economy. In general, there are five stages in the evolution of the transnational corporation. These stages describe significant differences in the strategy, worldview, orientation, and practice of companies operating in more than one country. One of the key differences in companies at these different stages is in orientation.

Stage One—Domestic

The stage-one company is domestic in its focus, vision, and operations. Its orientation is ethnocentric. This company focuses upon domestic markets, domestic suppliers, and domestic competitors. The environmental scanning of the stage-one company is limited to the domestic, familiar, home-country environment. The unconscious motto of a stage-one company is: “If it’s not happening in the home country, it’s not happening.” The world’s graveyard of defunct companies is littered with stage-one companies that were sunk by the Titanic syndrome: the belief, often unconscious but frequently a conscious conviction, that they were unsinkable and invincible on their own home turf.

The pure stage-one company is not conscious of its domestic orientation. The company operates domestically because it never considers the alternative of going international. The growing stage-one company will, when it reaches growth limits in its primary market, diversify into new markets, products, and technologies instead of focusing on penetrating international markets.

Stage Two—International

The stage-two company extends marketing, manufacturing, and other activity outside the home country. When a company decides to pursue opportunities outside the home country, it has evolved into the stage-two category. In spite of its pursuit of foreign business opportunities, the stage-two company remains ethnocentric, or home country oriented, in its basic orientation. The hallmark of the stage-two company is the belief that the home-country ways of doing business, people, practices, values, and products are superior to those found elsewhere in the world. The focus of the stage-two company is on the home-country market.