Globalisation . . is not a serious idea. We, theAmericans invented it as means of concealing ourpolicy of economic penetration into other nations’ J.K. Galbraith 1970
By the end of this class you will have had the opportunity to: Consider the emergence of globalisation Consider the implications of globalisation Consider the implications for small countries such as Aotearoa New Zealand
Those who do not read and understand history are doomed to repeat it." - Harry TrumanHistory never repeats itself. Man always does." — Voltaire
GlobalisationWhat do we mean by globalisation?Why and how has globalisation occurred?What are the characteristics of globalisation?Who are the ‘globalisers’? How do they spread their ideas?
For those who want to know more…seek out….Guns, Germs and Steel by Jarred DiamondClimate Wars by Gwynne DyerLook up: Blue Gold: World Water Wars PBS videos
History first: Imperialism, empires andglobalisationImperialism : The policy of extending a nations authority by territorial acquisition or by the establishment of economic and political hegemony over other nations. Development of monopoly capitalismIndustrial capitalism and bankingExport of investment from the centre (USA) to the peripheryControl of foreign marketsAn example: the British empire
Pax Americana. Globalisation: In this modern sense, the term has come toindicate the military and economic reach of the United States in relation to other nations So is globalisation a form of ‘Americanisation’? Or more?
What do we mean by globalisation?‘Business without borders’, unhindered by national boundaries, .The ‘Americanisation’ of the world? American products, designs and politics dominating the world ( the ‘new’ empire?’)The Transnational franchisders: McDonalds, KFC, Starbucks, Dunkin Donuts, Disney, Sky, CNN, GM, GE, Apple, Microsoft, Levis, the Oscars, CSR, Oprah, Letterman and on and onAmerican values, products, and debt are being globalised ($1.4 trillion 2009)Backed by immense military might e.g Libya, Iraq, Afghanistan and on and on…
The financial cost of the Iraq war to the American people but what about the cost to the Iraqi people? March 16, 2003 Meet the Press interview of Vice President Dick Cheney reported that "every analysis said this war itself would cost about $80 billion, recovery of Baghdad, perhaps of Iraq, about $10 billion per year. We should expect as American citizens that this would cost at least $100 billion for a two-year involvement.".  . As of February 2010, around $704 billion had been spent To whom did this vast sum of money go? Halliburtan http://www.boston.com/news/world/articles/2008/03/06/top_iraq_co ntractor_skirts_us_taxes_offshore/
American arms suppliers in Iraq A = nuclear program, B = bioweapons program, C = chemical weapons program, R = rocket program, K = conventional weapons, military logistics, supplies 1 Honeywell (R, K) 2 Spectra Physics (K) 3 Semetex (R) 4 TI Coating (A, K) 5 Unisys (A, K) 6 Sperry Corp. (R, K) 7 Tektronix (R, A) 8 Rockwell (K) 9 Leybold Vacuum Systems (A) 10 Finnigan- MAT-US (A) 11 Hewlett-Packard (A, R, K) 12 Dupont (A) 13 Eastman Kodak (R) 14 American Type Culture Collection (B) 15 Alcolac International (C) 16 Consarc (A) 17 Carl Zeiss - U.S (K) 18 Cerberus (LTD) (A) 19 Electronic Associates (R) 20 International Computer Systems (A, R, K) 21 Bechtel (K) 22 EZ Logic Data Systems, Inc. (R) 23 Canberra Industries Inc. (A) 24 Axel Electronics Inc. (A)
(cont)International activities which enable firms to enter new markets, exploit technological and organisational advantages as well as reducing business costs and risks, and achieving increased economic integration of their activates.Examples: Fisher & Paykel, Haier, Lenova
Why do organisations want to globalise?Economies of scaleEconomies of scopeCutting cost of resources
Economies of scale and scopeEconomies of scale have meant that volumes produced at home far exceed the sales that companies can achieve at home, forcing them to go internationalOpportunities exist for economies of scope through worldwide communication and transportation networks. e.g. DHL Trading companies handling the products of many companies can achieve greater sales and lower unit costs
Reducing costsGetting access to cheap resources (see China Blue)Transnationals need more than simply lower labour costs; they need access to markets e.g. Asia’s growing middle classChina and India have a potential market of 2.4bAccess to technology
Major issuesRelationships – and conflict - between states – Iraq and USA, India and ChinaSustainability as nations develop on the back of fossil fuels e.g. ChinaChina’s appetite for resources driving up world prices and itrs global search for resourcesDeveloped nations ‘outsourced’ their pollution e.g. waste plastic back to ChinaChanging peoples’ perceptions of who they are; ‘guest workers’ in the Middle East to illegal Latino immigrants in USAManaging displaced workers and their families e.g. Afghans in PakistanLeading to multiculturalism of organisations and communitiesNew challenges and opportunities for the ‘global manager’
Conflicts between transnationals and nationsTransnationals want:Unrestricted access to resources and marketsControl of all aspects of the firm on a worldwide basisMaximise shareholder value and minimise taxesEstablishing headquarters in low-tax havensLight regulatory frameworks and minimal government expenditures i.e. low taxes needed
(Cont)Think in terms of global competitivenessExpect governments to offer grants and subsidies for their investmentGovernments to cover the costs of basic infrastructure they need; R & D, universities, communication , transportation networks etcLook for tax incentivesPrivileged access to domestic markets via public contracts eg. Health, telecommunicationsIndustrial policies that suit them e.g. labour laws
Democratic governments want:To be re-elected!Electors look for lower taxes while still wanting more social services e.g. Health spendingStrong economies and sound stream of tax revenueWant external sources of investment, technology and knowledge which transnationals can supply to create global competitiveness in the national economy.Want transnationals to increase the extent of their local activities
The conflict? There are no allies in business, just interests Many transnationals are far richer and have more power than small national governments Exxon Mobils 2007 profit: $25.3 bn 2011: $41.1 Billion buut pays estimated 17.6 Percent tax rate e.g. poor Pacific states such as Pulau and investment from Taiwan, Japan’s bribery of Pacific nations regarding whaling and China’s aid to Africa
Where are we going? As the rich get rich, the poor….Growing inequality gap between rich and poorFailure of ‘trickle down’ theoriesInternational capital chasing bigger profits at the expense of?The illogic of it; exporting pollution to poorer countries which degrade the environment which proves increasingly expensive to try to alleviateWhere does this leave managers with regards to sustainability, ethics and corporate social responsibility?
(cont)A self-defeating ‘merry-go-round’China today, Bangladesh tomorrow and then?Speculation, greed and over-heated economies such as China drive up the price for resources, which means western consumers cut back, leading to lower production in China, rising unemployment and civil chaos and disorder?Undermining of national governments
What does this suggest for New Zealand management?Centralisation of strategies and policies ‘off-shore’ e.g. BNZImportant management decisions taken off-shoreNew Zealand small, regional outpost e.g bankingGlobalisation of ideas and practicesA new breed of manager? Have skills will travel.Affect on local communities whether in New Zealand or China?