Globalisation and management


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Globalization and Management

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Globalisation and management

  1. 1. 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
  2. 2. 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
  3. 3. Those who do not read and understand history are doomed to repeat it." - Harry TrumanHistory never repeats itself. Man always does." — Voltaire
  4. 4. GlobalisationWhat 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?
  5. 5. For those who want to know more…seek out….Guns, Germs and Steel by Jarred DiamondClimate Wars by Gwynne DyerLook up: Blue Gold: World Water Wars PBS videos
  6. 6. History first: Imperialism, empires andglobalisationImperialism : 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 capitalismIndustrial capitalism and bankingExport of investment from the centre (USA) to the peripheryControl of foreign marketsAn example: the British empire
  7. 7. 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?
  8. 8. 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 onAmerican 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…
  9. 9. 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.". [3] . As of February 2010, around $704 billion had been spent To whom did this vast sum of money go? Halliburtan ntractor_skirts_us_taxes_offshore/
  10. 10. 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)
  11. 11. (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
  12. 12. Why do organisations want to globalise?Economies of scaleEconomies of scopeCutting cost of resources
  13. 13. Economies of scale and scopeEconomies of scale have meant that volumes produced at home far exceed the sales that companies can achieve at home, forcing them to go internationalOpportunities 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
  14. 14. Reducing costsGetting 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 classChina and India have a potential market of 2.4bAccess to technology
  15. 15. Major issuesRelationships – and conflict - between states – Iraq and USA, India and ChinaSustainability as nations develop on the back of fossil fuels e.g. ChinaChina’s appetite for resources driving up world prices and itrs global search for resourcesDeveloped nations ‘outsourced’ their pollution e.g. waste plastic back to ChinaChanging peoples’ perceptions of who they are; ‘guest workers’ in the Middle East to illegal Latino immigrants in USAManaging displaced workers and their families e.g. Afghans in PakistanLeading to multiculturalism of organisations and communitiesNew challenges and opportunities for the ‘global manager’
  16. 16. Conflicts between transnationals and nationsTransnationals want:Unrestricted access to resources and marketsControl of all aspects of the firm on a worldwide basisMaximise shareholder value and minimise taxesEstablishing headquarters in low-tax havensLight regulatory frameworks and minimal government expenditures i.e. low taxes needed
  17. 17. (Cont)Think in terms of global competitivenessExpect governments to offer grants and subsidies for their investmentGovernments to cover the costs of basic infrastructure they need; R & D, universities, communication , transportation networks etcLook for tax incentivesPrivileged access to domestic markets via public contracts eg. Health, telecommunicationsIndustrial policies that suit them e.g. labour laws
  18. 18. Democratic governments want:To be re-elected!Electors look for lower taxes while still wanting more social services e.g. Health spendingStrong economies and sound stream of tax revenueWant 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
  19. 19. 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
  20. 20. Where are we going? As the rich get rich, the poor….Growing inequality gap between rich and poorFailure of ‘trickle down’ theoriesInternational 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 alleviateWhere does this leave managers with regards to sustainability, ethics and corporate social responsibility?
  21. 21. (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
  22. 22. What does this suggest for New Zealand management?Centralisation of strategies and policies ‘off-shore’ e.g. BNZImportant management decisions taken off-shoreNew Zealand small, regional outpost e.g bankingGlobalisation of ideas and practicesA new breed of manager? Have skills will travel.Affect on local communities whether in New Zealand or China?