Cross-national alliances are therefore needed for companies want to pull knowledge in order to survive. It is therefore difficult to achieve technological sovereignty as the scale of complexity in terms of technology in various sectors has combined markets. The growth of these alliances represents a change in the mode of organizational activities. In the 19th century, various economic transactions were set up through trade, market, and portfolio investment. The multinational companies later replaced the market. This resulted in the introduction of direct investment and intracompany trade. Organizational hierarchies were also replaced by networks in this case from mass to supply production and also from integrated organizations to disintegration.
These networks make up a social form of economic interaction whereby trust and reciprocity are essential. Multinationals are involved with hundreds of relationships that link various parts of the organization this reason make the company employ a complex web of relationships. The introduction of the networked economy has resulted in differences in global economics and global politics as well as the geographical scope of economic and political units. As companies decide to expand their markets, they are faced with several contemporary issues.
These include lack of anti-trust laws and accounting standards. This factor has made globalization lack the right standards where people can do business guided by the right rules and regulations. The other issue is the increase in costs and thus demand to rationalize due to the needs of foreign employees. To avoid this problem, companies must employ better strategies for increasing efficiency and reducing costs. Competition poses a major challenge to these companies as it is difficult for them to maintain their viability.
Other challenges involve failure to provide effective services to the customers in the outside world. Good communication with the customers improves return as they gain trust with the company and so will continue buying from them.
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