Explain what you understand the term Transnational Corporation to Essay

Explain what you understand the term Transnational Corporation to mean. Using specific examples of these organisations, assess what contribution they have made to the development of Globalisation - Essay Example These include; product marketing, personnel, financial matters as well as production strategies. The policies may have host country orientation or parent country orientation (Held, D and Mcgrew, 2000 pp.122-127). A transnational corporation may be owned by citizens of one, two countries or more. In another situation, a corporation may establish branches in different countries in order to reduce the cost of transporting raw materials in order to reduce the final cost of the products that is added to the consumer price. A corporation may also establish branches in countries that import its products in order to escape import tax that may be enforced by the importing country against foreign corporations. An example of this is when external levy was enforced against outsiders by the European Community, corporations from the United States engaged in Foreign Direct Investment in order to evade these tariffs (Howard Perlmutter, 1969 pp.36-38). Fluctuating exchange rates are also a factor that leads to the establishment of transnational corporations in order to avoid losses that are associated with these rates. This phenomenon arises when corporations produce at a high value of the local currency and then the value falls during exportation. They opt to establish a subsidiary industry in the importing country. Competition is also a factor that gives rise to transnational corporations. A corporation X in one country may be producing the same products as another corporation Y in a different country, both competing for a common market Z. corporation X may tackle this competition through purchasing company Y and other such corporations in several countries, thereby becoming a transnational corporation. An example is when both Monarch in Germany and Opel in Canada were purchased by GM which gave rise to GM Germany and GM Canada respectively (Hill, Charles W L, 2008 pp 24-31). Lower