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The Benefits and Drawbacks of Global Brands


500 words draft







Name: Mariana Mello dos Santos
Teacher: Peter Bennion
Student Number: 200904062
Course: Chemical Engineering
Group: Red
Date: august/2014




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Society is living in the era of globalization, an era where the whole
world is connected. There are no more borders among countries, there are no
more barriers to prevent the spread of consumption. The volume of goods,
services and investments crossing national borders has expanded faster than
world output for more than half a century (Hill, 2011). According to Hill (2011)
over $4 trillion in foreign exchange transactions are made everyday, more
than $15 trillion of goods and $3.7 trillion of services are sold across national
borders.
An element key of these large financial transactions caused by the
process of globalisation are the multinational corporations. Gray (1999) states
that around a quarter of world trade occurs within multinational corporations.
These huge companies have too much power and exert an extraordinary
influence on society just because of one simple word: the brand. In the middle
of 1980 management theorists developed an idea followed by most
companies that successful corporations must primarily produce brands, as
opposed to products (Klein, 2000).
The power of brands is in to cross borders and be recognized
globally. To achieve this aim they invest heavily in advertisement and cares
enough about its reputation to work hard to remedy any problems that the
customer may has later (Anholt, 2005). Due to it a customer feels safer buying
a product with a famous name than buying an unbranded one even if both of
them have the same quality. However, there is a price for this safety and
frequently the branded product cost much more.
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Socially, multinational corporations strongly invest in advertisement as
was said before because is the only way in which consumers who own
everything they want can be stimulated to continue consuming as if they still
needed things (Anholt, 2005). Nonetheless, global brands need to generate
huge profits and for reach them a large number of companies establish or
contract operations in countries and regions where they can exploit cheaper
labour and resources. For example, in 1998 a survey made in China showed
that manufacturers for companies such as Nike, Adidas and Ralph Lauren
were paying as little as 13 cents per hour nevertheless the living wage in that
area is around 87 cents per hour (Smith and Doyle, 2002). On the other hand,
some company owners may argue that multinational corporations also help
society and developing countries creating a large number of jobs as was
showed in a research from United States that Dell Computers Texas
operations employ 12500 people directly and are responsible for creating
some 30000 jobs in total (Anholt, 2005).