This document discusses multinational corporations and their impact. It begins with a quote criticizing multinationals as "big, irresponsible, monopolistic monsters." It then provides context on globalization and discusses both the arguments for and against multinationals. While multinationals provide benefits like jobs and technology, they can also exploit workers, harm local businesses, and make developing nations dependent on them. The document leaves the question open of whether multinationals are a friend or foe.

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