ITGS Syllabus

Thursday, January 04, 2007

Topic 191

International commerce: management of transnational corporations, business concentration by Su Chen

International commerce refers to business all over the world. As we learnt in Economics, trade is beneficial for everyone. And that's why all the countries today are involved in trade with at least one other country. This is what international commerce is. However, it doesn't only refer to trade. It refers to outsourcing of jobs too. For example, a big issue today is the outsourcing of jobs in America to Indians and Chinese! That's international commerce too. Basically anything to do with money and trade and business related that has an impact internationally!

What are transnational corporations?
These are corporations that "operate in more than one country or nation at a time." They have become some of the most powerful and political entities in the world today. These corporations have far more power than the nations they operate in. An example of transnational corporation is General Motors and Ford whose combined revenue equals the total GDP of sub-Saharan Africa! Many Japanese trading companies are transnational too and enjoy huge revenues.

Overall, fifty-one of the largest one-hundred economies in the world are corporations. Transnational corporations hold ninety percent of all technology and product patents worldwide, and are involved in 70 percent of world trade. More than half come from just five nations: France, Germany, the Netherlands, Japan and the United States. But despite their growing numbers, power is concentrated at the top. i.e., the 300 largest corporations account for one-quarter of the world's productive assets. The United Nations has justly described these corporations as "the productive core of the globalizing world economy."

One might ask how is all this related to ITGS? Well, how do you think that these companies keep in touch with each other? How does one branch of general motors keep in contact with the other branch of general motors in some other country? Through technology, through the use of video and audio conferences and of course, e-mail.

Business concentration is related to transnational companies because business concentration mainly refers to where the business is concentrated. In case of transnational companies, the business isn't concentrate in just one place or country. The business is based all over the world and managing such a huge business can be a very overwhelming task! That's where technology comes in and helps different branches of one company keep in touch with each other.

Business concentration, perhaps, also refers to the fact that the "power is concentrated at the top i.e. the 300 largest corporations account for one-quarter of the world's productive assets." Even though there are hundreds of thousands of corporations, only 300 of them are at the top!


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