Globalization & multinationals
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Globalization & multinationals

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Basic slides about Globalization and Multinationals

Basic slides about Globalization and Multinationals

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  • More employment means more wages given and more given means more people are eligible for the payment of taxes <br /> Not only employee pay taxes, the companies also ay a hugh amount of taxes <br />

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  • 1. ““Multinational are big, irresponsible, monopolisticMultinational are big, irresponsible, monopolistic monsters bent on destroying anything that stands in themonsters bent on destroying anything that stands in the way of profits.”way of profits.” Prepared by: Akshat Agarwal, Faizan M. Syed & Haoying Tian
  • 2. ContentsContents  Definition of globalization  Discussing the “real rulers” of the world  Globalization and free trades effect  Arguments of Multinationals  Multinationals friend or foe?
  • 3. DefinitionDefinition A “buzz” word ◦ A process by which the people of the world are unified into a single society and function together. This process is a combination of economic, technological, socio-cultural and political forces. Source: Sheila L. Croucher
  • 4. The “real rulers” of the worldThe “real rulers” of the world Tool of information Defines us as humans 5 major media companies own 95 % of media
  • 5. The “real rulers” of the worldThe “real rulers” of the world Media ◦ In 1945, 80 % of US media outlets were independent. In 2008 23 corporations own more than 80 % of the US’s media outlets. ◦ 35,000 media outlets ◦ CNN gets to 110 million viewing households worldwide ◦ The rich world’s coverage of the Third World – has decreased
  • 6. The “real rulers” of the worldThe “real rulers” of the world 24/7 coverage ◦ Watching every move “Hand in hand”
  • 7. The “real rulers” of the worldThe “real rulers” of the world 33 % of world output & 66 % of world trade Tax competition Market withdrawal
  • 8. The “real rulers” of the worldThe “real rulers” of the world Cost of transport and communication Increase in foreign operations
  • 9. What is Free Trade? Free Trade is a system in which the trade of goods and services between or with in countries flows unhindered by government-imposed restrictions
  • 10. Benefits of Free Trade Non-tariff barriers Regulatory legislation and quotas Free Market
  • 11. Benefits of Free Trade According the report of ADF, because of the Australia-Thailand free trade agreement has been implemented, Australia can make a 140 millions dollars profit from selling dairy and Thailand can also save more than 50 millions dollars for the dairy import. Source:http://www.foodqs.com/news/gjspzs01/2004112514358.htm
  • 12. Benefits of Free Trade In 1960’s Hong Kong established a policy of no tariffs on imports, no subsidies to exports, no fixing of prices or wages, absolutely minimal regulations, low taxes (a maximum average of 15 percent on personal income) and government spending.
  • 13. Benefits of Free Trade In 1960, GDP per capital (1995 prices) in Hong Kong was only $2,247 - less than one-third Britain's $7,906. By 1994, Hong Kong’GDP per capital had multiplied nearly eight- fold, to $17,832 - one-third higher than Britain's $13,430. Source: National Center For Policy Analysis
  • 14. Globalization, ‘free trade’ and employment ‘Free trade’ leads to comparative advantage shifting the employment to cheaper labour and lower regulation in the third world. Comparative advantage leads to specialization, which means focusing on fewer industries. This means that some industries grow while workers get laid off in other industries, making them move to lower-paying jobs. Globalization leads to free movement of labour. This means that when industries in some countries are getting laid off, workers can just move to the specialized country. (Source: O’Sullivan, Economics)
  • 15. Protectionist policies Import ban Quotas and voluntary export restraints Tariffs Free movement of labour is not occurring on a bigger scale in most part of the world. Globalization, ‘free trade’ and employment
  • 16. Globalization, ‘free trade’ and employment Comparative advantage also leads to lower prices of products. Due to protectionist policies, workers in the non specialized industry have to accept lower wages in same country. The advantages of lower prices is bigger than the disadvantages of unemployment an lower wages in the economy.
  • 17. Definition of Private Equity In finance, private equity is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange. There is a wide array of types and styles of private equity and the term private equity has different connotations in different countries Source: http://www.epi.org/content.cfm/briefingpapers_bp147
  • 18. What are the advantages of private equity? 1. Simplicity 2. Alignment of management and ownership 3. Dividend policy of a private equity firm 4. Capital structure Source: Harold Bierman, Private Equity: Transforming Public Stock to Create Value, 2003
  • 19. Argument of Private Equity Firms According to Tom White’s takeovers by ‘private equity’ firms leads to destroy jobs Private equity firms are investment funds that tend to focus on buying companies that are undervalued or poorly managed, in order to turn them around and sell at a profit. To do that, they combine their own capital with borrowed money. This can work, if the firm that’s been bought out can earn money fast enough to pay the interest on the borrowed money. On the contrary, research for the World Economic Forum shows that private equity lay off more old and create more new jobs, but rarely go bankrupt.
  • 20.  Their management changes seem to be making an impact. In the United States, every year just 1.2% of private equity-owned firms are being forced into bankruptcy.  In contrast, about 1.6% of firms issuing bonds go bankrupt. Argument of Private Equity Firms Source: Do takeovers by ‘private equity’ firms destroy jobs? Monday, January 28, 2008 Tom White and; Private equity defends job record by Tim Weber
  • 21. “Globalization is the bane of some and a boon for others, but however much it shakes us up as it shakes itself out, it is something that we must inevitably deal with”.
  • 22. Benefits for MNC’sBenefits for MNC’s Government provides them with tax benefits Get cheaper labour as compared to home country Cost of raw material is low Leverages in the rules and regulations Setting up cost is low as compared to home country Special grants and benefits offered by the state government for land, etc.
  • 23. Advantages of MNC’s to host countryAdvantages of MNC’s to host country Through globalization i.e. mergers in the LDC’s, companies get a financial strength to carry on their business. Like Air India in India is looking for a merger.  Setting up of new business provides poor societies with employment. MNC’s introduce new technology and techniques of manufacturing to the developing nation
  • 24. Advantages of MNC’s to host countryAdvantages of MNC’s to host country Brings more sophisticated managerial techniques that these countries lack MNC’s further help the developing economies to develop by stimulating the economy with its products and services.
  • 25. Disadvantages of MNC’s to host countryDisadvantages of MNC’s to host country Growth of the developing nations thus gets dependent on the developed once Country depends on the MNC’s Disrupts the local communities when the factories are relocated or closed Taking advantage of there size they exploit the workers and the environment in the developing nation
  • 26. MNC’s are just devastating the small and locally owned business i.e. why they are some times said ‘Monopolistic Monsters’ Disadvantages of MNC’s to host countryDisadvantages of MNC’s to host country
  • 27. Friend or foe?Friend or foe? Opec’s influence Microsofts innovation
  • 28. QUESTIONS OR COMMENTS?QUESTIONS OR COMMENTS? Thank you for your time and attention