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The Impact Of Globalization On The Multinational Corporations - Essay Example

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Reich (1998) defined globalization as a process through which the activities done in one part of the world affects people on other parts of the world (Reich, 1998, p. 5). It is difficult to define globalization in few words because of the complex parameters involved in it…
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The Impact Of Globalization On The Multinational Corporations
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Download file to see previous pages Plenty of definitions were given to globalization by different scholars. In any case, it is a fact that globalization has influenced most of the life segments of human being at present. The things happening in one part of the world has the capacity to affect the life of people in other parts of the world because of globalization. According to Lieber and Weisberg (2002), globalization helps people all over the world in the creation of a stronger and stable world (Lieber and Weisberg, 2002, p274).Global wealth is currently shifting from less heavily populated American and European regions to the more heavily populated Asian region at present because of globalization. The world's tallest building is now in Dubai. The largest publicly traded company is in China. The largest passenger airplane is built in Europe. The biggest movie industry is India's Bollywood, not Hollywood. And in the most recent Forbes rankings, only two of the world's 10 richest people are American (Zakaria, 2008, p.198). Business is one segment in which globalization brought revolutionary changes. Current market is heavily globalized because of globalization. Most of the prominent organizations in the world are currently operating internationally or cross culturally. Politics, economics, and religious or cultural beliefs are not causing any barrier in preventing the growth of international business. Offshoring and outsourcing like business concepts evolved out because of globalization. Multinational companies are utilizing these business concepts judiciously to make profits. The concepts such as Free trade, regional trade blocs etc are helping MNC’s immensely in spreading their business to overseas countries. Foreign Direct investment or FDI is encouraged by all countries as part of their economic reformation activities. All these favourable business climates are helping MNCs in operating cross culturally at present. This paper reviews the literatures to know the impact of globalization upon MNCs. Literature Review: The impact of globalization on multinational corporations Globalization has impacted MNCs both positively and negatively. Most of the prominent companies in this world were struggling for expansion before the introduction of globalization. For example, Starbucks is a company which is struggling to expand in America because of their excessive number of coffee shops everywhere in America. American market was saturated for Starbucks and they were looking for opportunities in global market. “While Starbucks was very successful in its domestic market, the leaders of the company knew they would have to exploit globalization and expand the company to foreign markets to fully utilize the potential that the company had.  In 2003, Starbucks quickly expanded into foreign markets and began to evolve into the world-wide company we know today”(Hart, 2011). At present, Starbucks is accumulating more revenue from international market than from American market. Robinson (2003) has pointed out that globalization helps the world to develop transnational capital (Robinson, p.12). The presence of transnational is operating globally with the help of transnational capital. Prominent automobile manufacturers are currently offshoring their manufacturing operations to cheap labour oriented countries such as India and China to reduce manufacturing cost. It is difficult for an American made vehicle to compete effectively with a Korean or Indian made vehicle in terms of price. Price wars are getting intensified in the automobile sector in recent times and hence the profit percentages of the automakers are coming down drastically. Governments in different countries have already formulated implemented ...Download file to see next pagesRead More
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