The focus of this research paper will be on transnational companies (TNCs), which are not just doing business across borders, but rather have the individual characteristic of direct production and to a large extent also direct business activity in a foreign country. (Gillies: 2012) What strategies TNCs choose in order to pursue their target of directness will be demonstrated in this paper.
Table of Contents
1. Introduction
2. How firms internationalize
2.1 The Product Life Cycle
2.2 Different Ways of TNC progress
2.3 Born Global Firms
3. Why firms internationalize
3.1 Market Access
3.2 Lower Production Costs
3.3 (Natural) Resources
3.4 Transnational Strategy
4. Case Study: Volkswagen
5. Conclusion
Objectives and Research Focus
This research paper examines the drivers and mechanisms of internationalization for transnational companies (TNCs). It aims to answer whether a universal pathway for internationalization exists and what economic incentives motivate firms to expand across borders, specifically analyzing these dynamics through the lens of the automotive industry and a detailed case study of Volkswagen.
- Theoretical analysis of internationalization paths (Product Life Cycle vs. flexible progression).
- Examination of "Born Global" firms as a contemporary business phenomenon.
- Categorization of primary internationalization drivers including market access, production costs, and resource utilization.
- Strategic assessment of "Transnational Strategy" combining global integration and local responsiveness.
- Practical application through a case study on Volkswagen's historical and structural evolution into a TNC.
Excerpt from the Book
1. Introduction
“I hear people say we have to stop and debate globalization. You might as well debate whether autumn should follow summer. In the era of rapid globalization, there is no mystery about what works – an open, liberal economy, prepared constantly to change to remain competitive.” (Tony Blair, see Lule, p. 25)
This quote adequately summarizes that globalization is a temporal phenomenon, which is irreversible and which therefore needs to be seen as an accomplished fact. (Lule: 2012) With regard to the business world, increased competition forces companies to identify new markets and to cut costs while at the same time maintaining profit by forcing down prices through the standardization of their products and the production process itself. International competition and international trade are no new phenomena but the process of globalization intensified and accelerated these appearances. (Hamilton; Webster: 2012)
The proper handling of competitors is certainly not the only reason for going international. The aim of this paper is to categorize other reasons of internationalization and to identify possible ways of going international. The aim of this paper is to answer the following questions: 1. Is there a best possible way for internationalization? 2. What economic incentives play a role when a firm decides to go international?
Summary of Chapters
1. Introduction: Outlines the irreversible nature of globalization and sets the research focus on why and how transnational companies expand, establishing two central research questions.
2. How firms internationalize: Evaluates traditional sequential models like the Product Life Cycle against more flexible, modern trajectories and the specific characteristics of "Born Global" firms.
3. Why firms internationalize: Analyzes the key economic drivers for international expansion, specifically market access, cost-cutting through offshoring, resource location, and the implementation of a transnational strategy.
4. Case Study: Volkswagen: Integrates practical findings by tracking Volkswagen's transition from a distribution-oriented company to a globally integrated transnational corporation using platform strategies.
5. Conclusion: Summarizes the key findings, reiterating that no single path to internationalization exists and that success depends on balancing global strategy with local responsiveness.
Keywords
Globalization, Transnational Companies, TNC, Product Life Cycle, Born Global, Market Access, Offshoring, Natural Resources, Transnational Strategy, Volkswagen, Platform Strategy, Internationalization, Competitive Advantage, Foreign Direct Investment, Global Integration.
Frequently Asked Questions
What is the fundamental focus of this paper?
The paper examines the processes and motivations behind the internationalization of transnational companies (TNCs) within the modern global economy.
What are the central thematic areas covered?
Key areas include the traditional and modern processes of internationalization, the specific business model of "Born Global" firms, motivational economic factors, and the implementation of transnational strategies.
What is the primary research goal?
The primary goal is to determine if there is a "best" path for internationalization and to categorize the economic incentives that drive firms to operate across national borders.
Which scientific methods are applied?
The paper utilizes a literature-based conceptual framework, comparing established economic theories (like the Product Life Cycle) with modern business practices, supplemented by a qualitative case study analysis.
What topics are discussed in the main body?
The main body covers the sequential development of firms, barriers to market entry, cost-efficiency strategies like offshoring, and the strategic balance between global coordination and local responsiveness.
Which keywords define this research?
Key terms include Transnational Companies (TNC), Product Life Cycle, Born Global, Global vs. Local Strategy, and Market Access.
How does the Volkswagen case study illustrate the theory?
It demonstrates the historical shift from basic exports to complex, globally integrated production networks and explains the transition using Volkswagen’s implementation of a platform strategy.
What conclusion does the author reach regarding the "best" way to internationalize?
The author concludes that there is no singular, universal process, as companies must adapt their internationalization strategy based on their specific structure, objectives, and market pressures.
- Quote paper
- Nadine Hänsel (Author), 2012, How and why transnational companies internationalize, Munich, GRIN Verlag, https://www.grin.com/document/211038
