2. • Globalization is a process of interaction and
integration among the people, companies,
and governments of different nations, a
process driven by international trade and
investment and aided by information
technology. This process has effects on the
environment, on culture, on political systems,
on economic development and prosperity, and
on human physical well-being in societies
around the world.
3. • Globalization is not new, though. For thousands
of years, people—and, later, corporations—have
been buying from and selling to each other in
lands at great distances, such as through the
famed Silk Road across Central Asia that
connected China and Europe during the Middle
Ages. Likewise, for centuries, people and
corporations have invested in enterprises in other
countries. In fact, many of the features of the
current wave of globalization are similar to those
prevailing before the outbreak of the First World
War in 1914. Distinguishing this current wave of
globalization from earlier ones, author Thomas
Friedman has said that today globalization is
“farther, faster, cheaper, and deeper.”
4. • According to WHO, globalization can be
defined as ” the increased interconnectedness
and interdependence of peoples and
countries. It is generally understood to include
two inter-related elements: the opening of
international borders to increasingly fast flows
of goods, services, finance, people and ideas;
and the changes in institutions and policies at
national and international levels that facilitate
or promote such flows.”
5. • Economic globalization: the development of
trade with transnational actors such as
corporations;
• Financial globalization: the rise of global
finance, with international financial exchanges
and monetary exchanges;
• Cultural globalization: the interpenetration of
cultures, together with the rise of a globalized
supra-culture;
6. • Political globalization: the development and
growing influence of international
organizations such as the UN or WHO, as well
as NGOs like Doctors without borders or
Oxfam;
• Sociological globalization: information moving
in real-time, together with the
interconnection and interdependence of
events and their consequences;
• Geographic globalization: the new
organization and hierarchy of different regions
of the world that changes constantly.
7. Multinational Corporations
• A multinational corporation is a company that
operates in its home country, as well as in
other countries around the world. It maintains
a central office located in one country, which
coordinates the management of all other
offices such as administrative branches or
factories.
8. Characteristics of a Multinational Corporation
1. Very high assets and turnover: To become a multinational
corporation, the business must be large and must own a huge
amount of assets, both physical and financial. The company’s
targets are so high that they are also able to make substantial
profits.
2. Network of branches: Multinational companies keep production and
marketing operations in different countries. In each country, the
business oversees more than one office that functions through
several branches and subsidiaries.
3. Control: In relation to the previous point, the management of the
offices in other countries is controlled by one head office located in
the home country. Therefore, the source of command is found in the
home country.
4. Continued growth: Multinational corporations keep growing. Even
as they operate in other countries, they strive to grow their economic
size by constantly upgrading and even doing mergers and
acquisitions.
9. Characteristics of a Multinational Corporation
5. Sophisticated technology : When a company goes global,
they need to make sure that their investment will grow
substantially. In order to achieve substantial growth, they
need to make use of capital-intensive technology, especially
in their production and marketing.
6. Right skills: Multinational companies employ only the best
managers who are capable of handling huge funds, using
advanced technology, managing workers, and running a huge
business entity.
7. Forceful marketing and advertising: One of the most
effective survival strategies of multinational corporations is
spending a huge amount of money on marketing and
advertising. It is how they are able to sell every product or
brand they make.
8. Good quality products: Because they use capital-intensive
technology, they are able to produce top-of-the-line products.
12. Globalization: The MNC and TNC Organizations
The term "transnational corporation" means a for-
profit enterprise marked by two basic
characteristics:
1) it engages in enough business activities --
including sales, distribution, extraction,
manufacturing, and research and development --
outside the country of origin so that it is
dependent financially on operations in two or
more countries;
2) and its management decisions are made based
on regional or global alternatives
13. A Trans-National Corporation (TNC) or Multi-National
Corporation MNC is a business that is based or
registered in one country but has outlets/ affiliates or
does business in other countries.
Globalisation is one of the major reasons for the growth
in TNCs. A number of businesses in order to grow and
develop have had to take on a global or international
perspective. In addition, TNCs have also caused
further globalisation – a two way process.
Many TNCs are based in more economically developed
countries such as the UK and USA, with Foreign
Direct Investment coming from similar countries.
However, an increasing number of TNCs are based in
LDCs, for example India’s Tata or China’s Alibaba.
14. There are a number of reasons why a TNC
might want to set up in a country.
These include:
cheap labour,
cheap raw materials,
good transportation links,
a business friendly government (ones which
adopt policies which encourage business
develop and growth such as low rates of
corporation tax),
exploitable property rights and so on.
15. Collaboration with Media: In recent times,
the emergence of media giants with
increasing power and influence over
human minds, and their collaboration with
other MNCs, driven by mutual interest of
the two, has profoundly intensified MNCs’
influence. The process has evolved and
developed with modern ways and means
that have added to its significance as well
as its speed, scope and quantum.
16. Lobbying: Given their huge capital resources and
production capacities, MNCs are able to dictate their
own terms in economic dealings. For the sale of their
enormous production, MNCs require access to large
markets; tariff issues, access restrictions and similar
“barriers to trade” are hurdles in this access. What MNCs
need is a global system for the free flow of their goods.
They therefore use their sheer economic weight to
influence international trade rules. With their huge
resources, they employ lobbyists with the highest
expertise and influence at international trade
organizations.
17. • Entry in Host Countries: Having poor
economic infrastructure and little capital,
developing countries very easily agree to
host MNCs. At times, their weak regulatory
positions are subsequently exploited by
MNCs.
18. • Pushing Local Producers Out: MNCs
either buy out the local companies of the
host countries or push them out of the
markets by offering cheaper and better
quality goods for some time. Where
aggressive marketing is needed, MNCs
can, in the initial phase, even provide their
products free of cost to coax the public
into developing appropriate consumption
habits.
19. Inducing Buyers and Capturing the
Market: MNCs capture the market
using a variety of strategies and tools,
including social and market research,
opinion building, developing interest
groups, lobbying, sponsorship, etc.
The media plays an important role in
this campaign.
