International Businesses and Globalization - Literature review Example

Running Head: INTERNATIONAL BUSINESS International Business s International Business International businesses areusually known as multinational corporations. An additional, important feature of globalization is the nature as well as supremacy of multinational corporations. Companies like these are at the present responsible for almost 33 per cent of whole world’s output, as well as almost 66 per cent of world trade Significantly, somewhat close to a quarter of world trade takes place inside multinational corporations (op. cit). This final point is well explained by means of operations of manufacturers who make cars they normally get their components from plants located in diverse countries. Nevertheless, it is significant not to run away by means of the plan that the kind of globalization we have been discussing also involves multinationals turnover, on a number of outsized scale, to translational: International Businesses and Globalization International businesses are at present largely restricted to their where they originated from, only if we consider their overall business operations and activity; they stay heavily nationally rooted and carry on to be multinational, to a certain extent than translational ,organizations . (Palmisano 2006) While full globalization in this organizational sense may not have occurred on a large scale, these large multinational corporations still have considerable economic and cultural power. Multinationals can impact upon communities in very diverse places. First, they look to establish or contract operations (production, service and sales) in countries and regions where they can exploit cheaper labour and resources. While this can mean additional wealth flowing into those communities, this form of globalization entails significant inequalities. It can moreover, it may lead to outsized scale job loss in especially for those whose industries were in the past located. The wages paid in the recent settings can be nominal, and workers privileges and conditions pitiable. For instance, a 1998 study of exceptional economic zones in China showed that manufacturers for organizations such as Ralph Lauren, Adidas and Nike were the ones paying low wages, to the extent of 13 cents per hour Second, multinationals continuously look new or else under-exploited markets. They look to increase sales - often by trying to create new needs among different target groups. One example here has been the activities of tobacco companies in southern countries. Another has been the development of the markets predominantly populated by children and young people. There is increasing evidence that this is having a deep effect; that our view of childhood (especially in northern and developed countries) is increasingly the product of consumer-media culture. Furthermore, that culture is underpinned in the sweated work of the mothered children of the so-called Third World. With the aid of various media, the commodity form has increasingly become central to the life of the young of the West, constructing their identities and relationships, their emotional and social worlds. Adults and schools have been negatively positioned in this matrix to the extent that youthful power and pleasure are constructed as that which happens elsewhere - away from adults and schools and mainly with the aid of commodities. Of course such commodification of everyday life is hardly new. Writers like Erich Fromm were commenting on the phenomenon in the early 1950s. However, there has been a significant acceleration and intensification (and globalization) with the rise of the brand (see below) and a heavier focus on seeking to condition children and young people to construct their identities around brands. Third, and linked to the above, we have seen the erosion of pubic space by corporate activities. Significant areas of leisure, for example, have moved from more associational forms like clubs to privatized, commercialized activity. For example, charts this with respect to young people Fourth, multinational companies can also have significant influence with regard to policy formation in many national governments and in transnational bodies such as the European Union and the World Bank (key actors within the globalization process). They have also profited from privatization and the opening up of services. As George Monbiot has argued with high opinion to Britain, for example: the stipulation of hospitals, roads as well as prisons... has been intentionally modified to meet corporate strain rather than community need (2001: 4). He goes on to say that biotechnology organizations have sought after to turn the food chain into a convenient product and there is an unusual web of power connecting them to government ministers as well as government agencies. Corporations have come to preside over important decision-making processes inside the European Union as well as, by means of the British governments approval, begun to expand a transatlantic single market, forced in addition to run by corporate principal executives. While with globalization the power of national governments over macro-economic forces may have been limited in recent years, the services and support they provide for their citizens have been seen as a considerable opportunity for corporations. In addition, national governments still have considerable influence in international organizations - and have therefore become the target of multinationals for action in this arena. The growth of multinationals and the globalization of their impact are wrapped up with the rise of the brand. The astronomical growth in the wealth and cultural power of multi-national corporations over the last fifteen years can debatably be traced back to a single, apparently inoffensive idea urbanized by management theorists in the mid-1980s: that winning corporations must first and foremost produce brands, as divergent to products. Corporations must not use up their limited resources on factories that might definitely require physical upkeep, on machines that will oxidize or on workers who will surely age as well as die. In its place, they ought to focus on those resources in the effective brick as well as mortar consumed to construct their brands. Nike, Levi, Coca Cola and erstwhile most important companies use up huge a huge amount of money in promoting and nourishing their brands. One approach is to attempt and set up particular brands as an essential part of the way people recognize, or might be fond of seeing themselves. As we have already seen with respect the operation of multinationals this has had a certain effect on children and young people there is an attempt to get those young. Considerably, the focal point of brand is somewhat more then the intrinsic qualities of the invention is also provides many advantages; multinationals in terms of market growth in addition has an Achilles heel. Harm to the brand can do uneven harm to sales as well as profitability. If a brand becomes linked with disappointment or shame (for instance a sports star they use to promote their product is uncovered as a drug-taker; or where the brand becomes connected in the publics brains with the misuse of children - as for instance has happened with a number of the main trainer makers) then it can face key exertion in the marketplace. Despite the fact that there is no hesitant the expansion in scale as well as extent of multinational corporations - the amount of control they have over the essential dynamics of globalization still remains restricted. Globalization In China With hundred percent certainties, it can be said that they are frequently feeble and unstructured organizations. They show the loss of power and wearing away of regular values that afflicts almost each and every one of the late modern social institutions. The global market is not under any cost spawning corporations which take for granted the precedent functions of self-governing states. To a certain extent, it has weakened as well as made hallow to a great extent both institutions. The localization of Ericsson (China), bearing in mind the huge market in China, is an extremely significant step in the direction of the globalization of Ericsson. According to the 2007 plan of Ericsson, this corporation will most defiantly order RMB of about 14.9 billion of components; these components will be purchased from local suppliers, which is by all means an extensive order. This will still give more to Chinese enterprises and add to their happiness, Ericssons purpose to take origin in China will allow them to land still additional kind of orders and contain a outsized share in the Sweden-based companys manufacture and R & D activities. Jointly, Ericsson and China will clinch success Ericssons localization program has already born fruits - its domestic purchase value rocketed from RMB 3.9 billion in 1999 to this years RMB 14.9 billion. Apart from the staggering 4-time increase, Ericsson has another generous gift to offer. By the end of 2000, the accumulative investment from the company will reach $ 600 million. As part of its localization program, Ericsson also took many of its first-level and second-level suppliers to China, who up till now have invested a total of RMB 15 billion. The telling figures suggest strongly that Ericsson is going full steam ahead with its localization project and is seeking a win-win ending with local enterprises. While multinationals have played a very significant role in the growth of globalization, it is important not to overplay the degree of control they have had over the central dynamics. As China is tied closer and closer to the global economy, Ericsson increasingly takes the advantages China enjoys in production and personnel into account in designing its global products and development strategies. If these advantages are made better use of, Ericsson believes that it can improve its international competitiveness substantially. Having full confidence in its localization efforts, Ericsson predicts that many Chinese telecom manufacturers and scientific institutions, serving as a necessary link of the companys international chains of purchase and R&D, will prosper and contribute more to Chinas general export volume. One of the ultimate goals of Ericssons localization program is to increase the export volume of China-made Ericsson products, which will turn out to be beneficial to both Ericsson and Chinas foreign trade. Transnational companies like Elicited and Chatham set up plants in China mainly to satisfy the demand of Ericsson, but their products also flow to Motorola and Nokias production lines in China as well as in other parts of the world. Amphenol, one of Ericssons first-level suppliers, for example, exported more than 82% of its Chinese plants overall output in 1999. A fact which is bound to have far-reaching effect on Chinese foreign trade is Ericssons decision to build Ericsson (China) into one of its four production centres in the world (the other three are in North America, Latin America and Europe). ENC and BMC are quickly adapting themselves to the new roles Ericsson has assigned. Being two of the parent companys pivotal production bases, the two joint ventures are charged to supply consumers all over the world and Asian customers in particular with Ericssons telecommunications products. In 1999, Ericsson (China) Co. Ltd. exported $ 300 million worth of products. It is estimated that the figure will be catapulted to $ 1,464 billion this year Conclusion The past fifty years, global capitalism has raised the living standards of more people higher and faster than the previous five hundred years.2 increasing the number of "haves" in the world has also dramatically increased the number of "have-nots". It has also driven the poor further into poverty making it more and more unlikely that they will ever recover. Globalization creates tensions, especially within nations and companies, between those who have the skills and resources to compete in the global market and those who do not. International businesses have greatly helped in developing the concept of multinationals so much so that they have become a profit making source. This along with globalization has worked wonders for chins. China has now turned into industrial giant. Where companies such as Ericsson find profit in doing business. References Palmisano 2006; the Globally Integrated Enterprise. Foreign Affairs, Vol. 85 Issue 3, p127-136 Jiatao Li; Yue, Deborah R 2007; Managing global research and development in China: Patterns of R&D configuration and Evolution. Technology Analysis & Strategic Management, Vol. 17 Issue 3, p317-337 Read More