International Expansion and Transition to the Network Structure of the Multinational Companies and Their Social Consequences

Daniela Ettaleb, Bohumil Vítek
2015 Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis  
ETTALEB DANIELA, VÍTEK BOHUMIL. 2015. International Expansion and Transition to the Network Structure of the Multinational Companies and Their Social Consequences. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 63(1): 201-205. Economic globalization is associated with growing interconnectedness, interdependence and the integration of businesses into a single economic system, improving the competitiveness of businesses, and places new demands and requirements on fi rms.
more » ... rements on fi rms. Companies that wanted to survive in a new, dynamic and competitive environment had to apply new development strategies, whose main motto was to reduce costs and to create greater fl exibility on the global market. Many large companies managed huge cost reductions in the globalized economy through international expansion to the industrial periphery and semi-periphery countries (developing countries and Central and Eastern Europe) and through the transition from a pyramidal organizational structure to a network structure. The control centre of companies in a network organization deprives hierarchical and pyramidal corporate structures, rather temporarily joins a network of small suppliers, subcontractors and service providers. In the business environment networks are more fl exible and adaptable than fi rms with a hierarchical structure. They are highly eff ective because they allow signifi cant reductions in the operating costs of the company. On the other hand, the network structure of relations has a number of social consequences, such as the reduction in the number of employees, the rise in nonstandard employment contracts and the abolition of responsibility.
doi:10.11118/actaun201563010201 fatcat:yp42mxiytremjezity2vuliiba