Corporations – They can’t be that big

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The information network; the mass of information communicated and placed in a space we call the internet has become a foundation of our current society. The creation of information networks have led to many things one of which is greater labour flexibility. Work can now be brought into the home and we now have the creation of home offices. Another thing that has arisen from information networks which is the focus of today’s blogpost is it has allowed the proliferation of Multi-National Corporations or in short MNC’s.

MNC’s not only hold a lot of power in the financial market, but they also hold a great deal of influence in politics. This is due partially to their sheer asset/capital size. Because they just own so much, they have a large effect on the many countries which they are based in. It is only through the creation of today’s information network where information can be sent by the simple action of a mouse click that has allowed intra-national companies evolve into large Trans-national corporations. Analysts have calculated that if the American retail company Wal-Mart was a country it would be ranked as the 25th largest economy in the world in terms of GDP. That means that Wal-Mart will have a net worth greater than 157 other countries. The scale and scope of these MNC’s have been increased exponentially due to their ease to communicate and pass on information around the globe. Just take General Electric for example. GE is an American mega-company that not only provides energy services as the name may indicate, but also has a finance, technology infrastructure and industrial consumer division. It is estimated that GE has total accumulated assets in excess of $700 billion. However, what is most interesting is that most of its assets are located outside America with around $500 billion worth in assets abroad which makes up around 70% of its total net worth.

Companies of this scale may not have been possible 100 years ago before the creation of the information network. The transaction costs to manage and operate a company of this size would not be feasible. Only now can companies like these operate efficiently on a global scale. The transfer of money from one nation to another can now be executed whenever needed allowing for faster and more efficient investments and decision making. So the next time you see a Wal-Mart or maybe one of the many McDonalds out there just remember that they are a product of the information system that we so heavily rely on today.

Image source: http://bit.ly/16zdVOw

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