Impacts of Globalization on the Oil and Gas Company Total SA - Case Study Example

Impacts of Globalization on the Oil and Gas Company Total SA World economy has greatly improved over the last few years due to increased rate of trade among countries. Contrary to what existed before World War II, countries now depend more on both domestic and international trade. Several factors have made it easy for the creation of a more integrated world, making it easy for countries to reach out for world markets. Some of the factors that act as major drivers of globalization include technological development and liberalization. Technology has improved transportation and communication sectors such that trade among countries has become such an easy thing. Countries also try as much as possible to remove the trade barriers that once existed among them through reduction of tariffs. As these factors continue to create more room for globalization, it is arguable that some medium sized businesses will continue to face challenges in the market due to increased introduction of new competitive products into the markets. Most major corporations consider opening up for world markets where they will be able to supply their products at very competitive costs (Mazighi 73). In today’s business arena, large Multinational Corporations (MNCs) are the major determinants of the global market trends. These corporations enjoy the world’s attention in market issues and even affect small and medium-sized enterprises in their home markets. It forces these small industries to look for ways of competing with these gorillas (Prashantham and Birkinshaw 6). Total S.A. is one of the large corporations ranked among the top leaders in the global economy. It has a number of businesses that include the oil and natural gas products, as well as chemical manufacturing. Its wide area of operation has enabled it to become one of the major MNCs that control the global market. Globalization of the local oil and gas markets is something that is very likely in the future. There are several driving forces behind the likelihood of this kind of integration. Some of the factors include reduction in transportation costs of Liquefied Natural Gas (LNG) over the last few decades and reduced amount of gas in most of the gas reserves worldwide, heightening the need of imported gas in most countries around the world. Moreover, the geographic location of the oil and gas producing countries is concentrated in a few regions, hence poses a compelling need of gas and oil imports in the countries that do not have oil and gas reserves (Aune, Rosendahl and Sagen 40). All these factors will continue to increase the need for globalization of oil and gas companies around the world. Moreover, globalization leads to increased demand for energy because of increased industrial activity, growing population, and urbanization (Bradshaw 282). The question that most large corporations will ask themselves is how globalization will affect their economy. As argued by Aune et al. (51-52), globalization leads to increased trade among nations, and the result is the integration of prices. It is true that if there will be no restrictions on exports that come from the major oil and gas regions such as the Middle East, the prices will remain normal around the world. It is because fuel prices cannot rise when the demand is fully met. Similarly, globalization will result in the introduction of similar goods from different companies in one market, hence major companies such as Total SA that have spread their operations around the world will face competition. The economy of Total SA may just remain stable if it keeps on diversifying its businesses and if it will focus on introduction of unique products in the market, otherwise globalization may have negative impacts on its economy. However, as globalization increases the demand for energy around the world, major companies that operate in most countries will greatly benefit since there will be a readily available market for their products. As such, globalization is one of the major factors that can boost the economy of Total SA Company, but only if it employs measures that make it remain relevant in the global market. As demand for energy increase worldwide, environmental concerns continue to emerge. The demand for fossil fuels, which are also the major threat of the environment, has risen over the recent past at an alarming rate. This makes the world face a dilemma on the issues concerning globalization and the environment. It is true that one of the major contributors of energy demand is globalization and as countries continue to rely on fossil fuels, the damages caused to the environment continue to increase and to disrupt the ecological system. It has been a matter of concern of many countries, but there has been little concern on issues such as the possibility of coming up with low carbon fuels. With increased globalization, it is a fact that production of low carbon fuels cannot meet the ever-growing demands (Bradshaw 287). Therefore, major oil and gas producers such as Total SA just work towards meeting the demands without considering the devastating effects they cause to the environment. However, some countries are taking strict measures to some preventable mistakes such as oil spills on the oceans. Total SA is one of the corporations that have ever been fined huge sums of money for oil spills. As the companies continue to meet the growing demands for energy, they must also put in practice some measures that will reduce incidences of environmental pollution, as well as implementing the CSR policies as regards the environmental concerns. Large Multinational Corporations face various challenges as they try to operate across the borders, and as they operate under different structures and networks. Therefore, as these corporations widen up their operations, they must come up with strategies that will enable them to operate efficiently and exploit fully the opportunities in the new markets. Two different strategies prove beneficial to the corporations, i.e. there must be efficiency responsiveness, which can be achieved through proper organization and standardization that aims at exploiting the opportunities in the markets. It means that the corporation must identify with the needs of the market and work towards satisfying those needs. The second strategy is interpenetration, which aims at merging the local and the global market needs together for efficient operations. Within CSR, the globalization strategies aim at integrating the social, commercial and ecological issues into the corporations’ value systems and culture in order to realize improved production, maintain good practices and bring changes into the society (Bondy and Starkey 5-6). Although, research shows that most companies ignore local culture and only favor global concerns, the Total SA faces a challenge to meet all these organizational responsibility for it to succeed in the global markets. It may be a challenge for most corporations to implement the CSR policy but it is necessary. Most countries in the world were confined within their geographical locations before the idea of market globalism came into being. In today’s world, large corporations have defied all geographical boundaries and have ventured into the world markets where they continue to bargain for favorable taxes, earnings, and subsidies. At the same time, there is increased pressure on countries that have not fully embraced the idea of globalization to open up their markets and reduce their market restrictions. One of the major bodies that have continually called for this move is the World Trade Organization. Therefore, we can view globalization, in its broadest sense, as the process through which nations foster interdependence for the purposes of cultural, economic and political exchanges. One of the key claims of globalism is that globalization aims at liberalization and integration of world economies (Steger 16). In light of all these ideologies, major Corporations like Total SA can harvest these ideas and make them the founding principles through which it operates in the global market. The impacts of globalization range from both negative to positive, and several factors play a role in determining the nature of these impacts. For example, the size of the company and the products it produces can determine how globalization will influence the particular company. The Total SA Corporation is one of the MNCs that have greatly influenced the global markets, but even such big companies continue to experience various challenges in the world market. For example, every corporation must face some challenges with its economy, must purpose to implement all the CSR policies, stay competitive all the time and meet the social and environmental obligations. Moreover, the world’s largest corporations have widely dominated the world markets, posing danger to small businesses that have to think of ways of remaining relevant in the world economy. On the positive side, successful players in the global markets greatly benefit and continue to exploit the opportunities that come with globalization. Woks Cited Aune, Finn Roar, Knut Einar Rosendahl and Eirik, Lund Sagen. "Globalisation of Natural Gas Markets -- Effects on Prices and Trade Patterns." Energy Journal. 2009 Special Issue (2009): 39-53. Bondy, Krista and Ken Starkey. " The Dilemmas of Internationalization: Corporate Social Responsibility in the Multinational Corporation. ." British Journal of Management (2015): 4-22. Bradshaw, Michael J. " Global energy dilemmas: a geographical perspective. ." Geographical Journal. (2010): 275-290. Mazighi, Ahmed El Hachemi. " The drivers behind the globalization of natural gas markets. ." OPEC Review: Energy Economics & Related Issues. (2006): 71-84. Prashantham, Shameen and Julian Birkinshaw. " Dancing with Gorillas: How Small Companies can Partner Effectively with MNCS. ." California Management Review (2008): 6-23. Steger, Manfred B. " Ideologies of globalization. ." Journal of Political Ideologies (2005): 11-330. Read More