Running Head:

MULTI-NATIONAL BUSINESSES OF THE GLOBALISATION

Analyse and evaluate the advantages and disadvantages for multi-national busines ses of the globalisation of their markets [Name of the writer] [Name of the institution]

Analyse and evaluate the advantages and disadvantages for multi-national busines ses of the globalisation of their markets Introduction 'Globalization' is a favourite catchphrase of journalists and politicians. It ha s also become a key idea for business theory and practice, and entered academic debates. However, what people mean by 'globalization' is often confused and conf using. Here we examine some key themes in the theory and experience of globaliza tion. 'Globalization' is commonly used as a shorthand way of describing the spre ad and connectedness of production, communication, and technologies across the w orld. That spread has involved the interlacing of economic and cultural activity . Rather confusingly, 'globalization' is also used by some to refer to the effor ts of the International Monetary Fund (IMF), the World Bank and others to create a global free market for goods and services. This political project, while bein g significant - and potentially damaging for many poorer nations - is really a m eans to exploit the larger process. Globalization in the sense of connectivity i n economic and cultural life across the world has been growing for centuries. Ho wever, many believe the current situation is of a fundamentally different order to what has gone before. The speed of communication and exchange, the complexity and size of the networks involved, and the sheer volume of trade, interaction a nd risk give what we now label as 'globalization' a peculiar force. That spread has involved the interlacing of economic and cultural activity. Rath er confusingly, 'globalization' is also used by some to refer to the efforts of the International Monetary Fund (IMF), the World Bank and others to create a glo bal free market for goods and services. This political project, while being sign ificant - and potentially damaging for a lot of poorer nations - is really a mea ns to exploit the larger process. Globalization in the sense of connectivity in economic and cultural life across the world has been growing for centuries. Howe ver, many believe the current situation is of a fundamentally different order to what has gone before. The speed of communication and exchange, the complexity a nd size of the networks involved, and the sheer volume of trade, interaction and risk give what we now label as 'globalization' a peculiar force. With increased economic interconnection has come deep-seated political changes poorer, 'peripheral', countries have become even more dependent on activities i n 'central' economies such as the USA where capital and technical expertise tend to be located. There has also been a shift in power away from the nation state and toward, some argue, multinational corporations. We have also witnessed the r ise and globalization of the 'brand'. It isn't just that large corporations oper ate across many different countries - they have also developed and marketed prod ucts that could be just as well sold in Peking as in Washington. Brands like Coc a Cola, Nike, Sony, and a host of others have become part of the fabric of vast

numbers of people's lives. Globalization and the rise of multinational corporations and branding A further, crucial aspect of globalization is the nature and power of multinatio nal corporations. Such companies now account for over 33 per cent of world outpu t, and 66 per cent of world trade (Gray 1999: 62). Significantly, something like a quarter of world trade occurs within multinational corporations (op. cit). Th is last point is well illustrated by the operations of car manufacturers who typ ically source their components from plants situated in different countries. Howe ver, it is important not to run away with the idea that the sort of globalizatio n we have been discussing involves multinationals turning, on any large scale, t o transnational s: International businesses are still largely confined to their home territory in t erms of their overall business activity; they remain heavily 'nationally embedde d' and continue to be multinational, rather than transnational, corporations. (H irst and Thompson 1996: 98). While full globalization in this organizational sen se may not have occurred on a large scale, these large multinational corporation s still have considerable economic and cultural power. Globalization and the impact of multinationals on local communities Multinationals can impact upon communities in very diverse places. First, they l ook to establish or contract operations (production, service and sales) in count ries and regions where they can exploit cheaper labour and resources. While this can mean additional wealth flowing into those communities, this form of 'global ization' entails significant inequalities. It can also mean large scale unemploy ment in those communities where those industries were previously located. The wa ges paid in the new settings can be minimal, and worker's rights and conditions poor. For example, a 1998 survey of special economic zones in China showed that manufacturers for companies like Ralph Lauren, Adidas and Nike were paying as li ttle as 13 cents per hour (a 'living wage' in that area is around 87 cents per h our). In the United States workers doing similar jobs might expect US$10 per hou r (Klein 2001: 212). Second, multinationals constantly seek out new or under-exploited markets. They look to increase sales - often by trying to create new needs among different tar get groups. One example here has been the activities of tobacco companies in sou thern countries. Another has been the development of the markets predominantly p opulated by children and young people. In fact the child and youth market has gr own into one the most profitable and influential sectors. 'The young are not onl y prized not only for the influence they have over adult spending, but also for their own burgeoning spending power' (Kenway and Bullen 2001: 90). There is incr easing evidence that this is having a deep effect; that our view of childhood (e specially in northern and 'developed' countries) is increasingly the product of 'consumer-media' culture. Furthermore, that culture: is underpinned in the sweated work of the 'bothered' children of the so-called ' Third World'. [W]ith the aid of various media, the commodity form has increasing ly become central to the life of the young of the West, constructing their ident ities and relationships, their emotional and social worlds [A]dults and schools have been negatively positioned in this matrix to the extent that youthful power and pleasure are constructed as that which happens elsewhere - away from adults and schools and mainly with the aid of commodities. (Kenway and Bullen 2001: 18 7). Of course such commoditisation of everyday life is hardly new. Writers like Eric h Fromm were commenting on the phenomenon in the early 1950s. However, there has been a significant acceleration and intensification (and globalization) with th e rise of the brand (see below) and a heavier focus on seeking to condition chil dren and young people to construct their identities around brands. Third, and linked to the above, we have seen the erosion of pubic space by corpo rate activities. Significant areas of leisure, for example, have moved from more associational forms like clubs to privatized, commercialized activity. Giroux ( 2000: 10), for example, charts this with respect to young people

[Y]oung people are increasingly excluded from public spaces outside of schools t hat once offered them the opportunity to hang out with relative security, work w ith mentors, and develop their own talents and sense of self-worth. Like the con cept of citizenship itself, recreational space is now privatized as commercial p rofit-making venture. Gone are the youth centres, city public parks, outdoor bas ketball courts or empty lots where kids call play stick ball. Play areas are now rented out to the highest bidder... This movement has been well documented in the USA (particularly by Robert Putnam with respect to a decline in social capital and civic community - but did not e xamine in any depth the role corporations have taken). It has profound implicati ons for the quality of life within communities and the sense of well-being that people experience. Fourth, multinational companies can also have significant influence with regard to policy formation in many national governments and in transnational bodies suc h as the European Union and the World Bank (key actors within the globalisation process). They have also profited from privatization and the opening up of servi ces. As George Monbiot has argued with respect to Britain, for example: the prov ision of hospitals, roads and prisons has been deliberately tailored to meet cor porate demands rather than public need' (2001: 4). He continues: Biotechnology companies have sought to turn the food chain into a controllable c ommodity and [there is an] extraordinary web of influence linking them to govern ment ministers and government agencies. [C]corporations have come to govern key decision-making processes within the European Union and, with the British govern ment's blessing, begun to develop a transatlantic single market, controlled and run by corporate chief executives. (Monbiot 2001: 5) While with globalization the power of national governments over macro-economic f orces may have been limited in recent years, the services and support they provi de for their citizens have been seen as a considerable opportunity for corporati ons. In addition, national governments still have considerable influence in inte rnational organizations - and have therefore become the target of multinationals for action in this arena. Globalization and the multinationals While there does no doubt the growth in scale and scope of multinational corpora tions - the degree of control they have over the central dynamics of globalizati on remains limited. In reality, they are often weak and amorphous organizations. They display the lo ss of authority and erosion of common values that afflicts practically all late modern social institutions. The global market is not spawning corporations which assume the past functions of sovereign states. Rather, it has weakened and holl owed out both institutions. (Gray 1999: 63) While multinationals have played a v ery significant role in the growth of globalization, it is important not to over play the degree of control they have had over the central dynamics. Capitalism, free markets, instability and division Amartya Sen (2002) has argued that 'the market economy does not work by itself i n global relations--indeed, it cannot operate alone even within a given country' . Yet, for some proponents of globalization the aim is to expand market relation s, push back state and interstate interference, and create a global free market. This political project can be seen at work in the activities of transnational o rganizations like the World Trade Organization (WTO), the International Monetary Fund (IMF), and the Organization for Economic Cooperation and Development (OECD ), and has been a significant objective of United States intervention. Part of t he impetus for this project was the limited success of corporate/state structure s in planning and organizing economies. However, even more significant was the g rowth in influence of neo-liberal ideologies and their promotion by powerful pol iticians like Reagan in the USA and Thatcher in the UK. The central paradox of our time can be stated thus: economic globalization does not strengthen the current regime of global laissez-faire. It works to undermine it. There is nothing in today's global market that buffers it against the socia

l strains arising from high uneven economic development within and between the w orld's diverse societies. The swift waxing and waning of industries and liveliho ods, the sudden shifts of production and capital, the casino of currency specula tion - these conditions trigger political counter-movements that challenge the v ery ground rules of the global free market. (Gray 1999: 7) Capitalism is essentially disruptive and ever-changing - and takes very differen t forms across the world. While it produces wealth for significant numbers of pe ople, many others have suffered. The gap between rich and poor has widened as gl obal capitalism has expanded. For example, David Landes (1999: xx) has calculate d that the difference in income per head between the richest nation (he cited Sw itzerland) and the poorest non-industrial country, Mozambique, is now about 400 to 1. 'Two hundred and fifty years ago, the gap between richest and poorest was perhaps 5 to 1, and the difference between Europe and, say, East or South Asia ( China or India) was around 1.5 or 2 to 1' (op. cit.). Strong markets require sig nificant state and transnational intervention. To be sustained across time they also require stable social relationships and an environment of trust. Moreover, they can be organized and framed so that people throughout different societies c an benefit. Conclusion One commentator has argued that there is a very serious case not against 'global ization', but against the particular version of it imposed by the world's financ ial elites. The brand currently ascendant needlessly widens gaps of wealth and p overty, erodes democracy, seeds instability, and fails even its own test of maxi mizing sustainable economic growth. (Kuttner 2002) The gap between rich and poor countries has widened considerably. However, as Sen (2002) has commented, to 's ee globalization as merely Western imperialism of ideas and beliefs (as the rhet oric often suggests) would be a serious and costly error'. References Frank, T. (2002) One Market Under God. Extreme capitalism, market populism, and the end of economic democracy, London: Vintage. 434 + xviii pages. Giroux, H. A. (2000) Stealing Innocence. Corporate culture's war on children, Ne w York: Palgrave. 197 + x pages. Gray, J. (1999) False Dawn. The delusions of global capitalism, London: Granta. 262 pages. Hutton, W. and Giddens, A. (eds.) (2001) On The Edge. Living with global capital ism, London: Vintage. 241 + xi pages. Useful collection of articles from some ke y contributors to the globalization debate such as Castells, Soros and Beck. Klein, N. (2000) No Logo, London: Flamingo. 490 + xxi pages. An exposure of the rise of the brand and consumer capitalism - and the violations of human rights i t has entailed. Landes, D. (1999) The Wealth and Poverty of Nations. Why some are so rich and so me are so poor, London: Abacus. 650 + xxi pages. Leys, C. (2001) Market-Driven Politics. Neoliberal democracy and the public inte rest, London: Verso Books. 280 + viii pages. Monbiot, G. (2000) Captive State. The corporate takeover of Britain, London: Pan . 430 + viii pages.