Opportunities and Threats that Globalization Has on MNCs in Emerging Economies - Sinopec Corp - Case Study Example

Opportunities and threats that globalization has on MNCs in emerging economies University Student Id Course Date Introduction Globalization has actually acquired emotive force whereby some individuals usually view it as a process which is beneficial as well as the key to the development of the economy in the world. The increased globalization has affected the performance of Sinopec Corp which is a Chinese MNC operating in the energy sector in different parts globally. There are different challenges and opportunities that have been experienced in Sinopec Corp due to the effects of globalization. Considering the increasing technology advancements that have been taking place globally has been associated with the aspects of increased globalization (Guillén and García-Canal, 2009). Therefore, globalization has greatly affected the MNCs in the emerging economies because of its opportunities and challenges that affect their operations. The effect of globalization has been viewed differently by the stakeholders depending on the challenges and the opportunities that have been experienced in the MNCs in the emerging economies. Some view globalization positively while other have a negative view. For instance, some of the individuals usually view globalization with a hostility perspective whereby they hold a belief that globalization results into inequality among the nations in terms of the employment, social progress and also living standards (Luo and Rui, 2009). Besides, globalization usually provides great opportunities for the development in the entire world, even though the development does not progress evenly. This essay is exploring the challenges and opportunities that are associated with globalization in the MNCs in the emerging economies using Sinopec Corp. Opportunities of globalization There are many opportunities that have been realized by the MNCs in the emerging economies and in particular Sinopec Corp. The opportunities that are associated with globalization have played important role in enhancing the operations of Sinopec Corp. For instance, in some of the emerging economies, the aspect of globalization has been integrated into the economy more rapidly as compared to the others hence growing faster and also reducing their poverty level. Economic globalization has been among the major opportunities that are being realized by the MNCs in the emerging economies are able to utilize (Kumar and Liu, 2005). Economic globalization in this context to the historical process which is usually brought about by the technological advancements taking place globally that help in improving the operations of the MNCs. Besides, human innovations have been among the opportunities that have been availed by economic globalization to the MNCs in the emerging economies. For instance, Sinopec Corp has been in a position to achieve its set objectives because of the availability of human innovation that has been possible through globalization. Globalization has increased trade opportunities for the MNCs in the emerging economies where firms like Sinopec Corp have the opportunity of doing business with many developed and developing countries. Economies can be highly integrated through globalization where the economic integration plays important role in the process of making sure that more business opportunities are availed. For instance, Sinopec Corp has been enjoying the increased business opportunities that have been made available through economic integration achieved because of the increased globalization (Sauvant, 2009). Besides, technological advancements are among the opportunities that are linked to globalization as firms are able to share technological ideas leading to the increased chances of improving the technology status in the MNCs in the emerging economies. The aspect of globalization has resulted in technological improvements which have facilitated business transactions internationally in both trade and also in financial flows. The MNCs in the emerging economies are experiencing an expansion of the trade boundaries due to increased integration of the trade affairs globally. For instance, Sinopec Corp has enjoyed the expansion of the markets in the energy industry through the increased extension of the trade boundaries that has been possible through signing trade agreements among countries. Globalization is mostly used as an extension of the national borders of the market forces which operates at various levels of the economic activities of the people (Sapir, 2006). Besides, globalization usually promotes effective competition and also a division of labor because of the aspect of specialization which allows individuals as well as the economies to focus on their best line of production. Sinopec Corp has benefited from globalization through the increased chances of achieving specialization as they are able to access different customer in the foreign markets. Globalization has led to the increased opportunities for increasing cash flows due to the expansion of the markets in the foreign markets. In addition, the global markets also provide greater opportunities for the business people to participate in business activities in larger markets in various parts of the world. For example, Sinopec Corp has realized an increase in cash flows due to the increase in the market size that has led to the increase in opportunities in the foreign markets. Furthermore, through globalization business, people can easily have access to the capital flows, cheaper imports, technology and also to the export markets (London and Hart, 2004). However, the global markets are not always guaranteed in making sure that the benefits realized from increased efficiency are shared, hence the countries should embrace the necessary policies required. Globalization has led to increased market integration hence increasing the chances of enhancing the operations of Sinopec Corp. Through globalization, both the world trade and also the financial markets are usually integrated. However, the majority of the developing countries, their per capita income have been progressing slowly (Sapir, 2006). For the case of Africa, the per capita income decreased relatively in the industrial countries whereas in some countries the per capita income has declined absolutely. Sinopec Corp has experienced an increase in sales volume due to the increased market opportunities that have led to access to many foreign customers. From the year 1971, the share of the developing countries in the world market was actually 19% but the share increased up to 29% in the year 1999. Moreover, the composition of the exports of given country is quite important in determining the share of a country in the world market. For instance, those countries which usually export goods which are manufactured always have a greater share in the world market (Boyer and Drache, 2005). However, those countries which usually export primary commodities such as the raw materials in most cases have a little share in the world market. The capital movement has been among the opportunities that are linked to the globalization where the MNCs in the emerging economies like Sinopec Corp have been experiencing an increase in capital movement. As a result of globalization, private capital flows to the countries which are developing have increased rapidly (Sapir, 2006). Moreover, the private capital flows usually serve as the development assistance on the developing countries which help these countries to improve their economies. Therefore, direct investment of the foreigners in the developing countries usually plays an important role in improving the economies. Sinopec Corp has been in a better position to access qualified labor forces because of globalization as the movement of people across the globe has increased. People in most cases usually move from a country to another in search of better employment chances. However, the majority of the movements of the individuals in finding for better job opportunities in most cases take place in the developing countries (Boyer and Drache, 2005). Consequently, as a result of the migration of the people to the advanced economies usually creates a way through which the global wages can converge. In addition, through the movement of the people, various important skills can be transferred from the already developed countries to the developing ones. Globalization has created many other opportunities for the MNCs in the emerging economies such as increased sharing of knowledge. Sinopec Corp has been able to utilize the increased transfer of knowledge to improve its operations. The exchange of information is usually facilitated by the aspect of the globalization. For instance, through the globalization business, people are able to do investment in foreign countries thus resulting into technical innovation (Spence, 2011). Moreover, through the aspect of globalization, knowledge concerning the production methods, economic policies, export markets and also about the management techniques can be spread out and therefore many people in various countries can access such information less costly. Threats of globalization The MNCs in the emerging economies like Sinopec Corp face some threats due to the increased globalization. Despite the many opportunities availed by globalization, the crises which took place in the emerging markets in the year 1990, showed an evidence that the opportunities related to the aspect of globalization are always accompanied by the various risks. The risks which are usually associated with the aspect of globalization in most cases arise from the social, environmental degradation and also economic factors which are brought about by poverty (Boyer and Drache, 2005). Therefore, countries and also the investors are expected to implement policy changes in order to establish strong economies as well as a good financial system that can result in rapid growth and eradication of poverty. Globalization has led to increasing in inequalities in the income distribution in the emerging economies hence affecting the operations of Sinopec Corp. Globalization is actually not a phenomenon which has started to take place recently, but according to the analysts, the economy of the world was globalized in several years ago. However, in nowadays the commercial services as well as the financial services are actually more developed and also integrated deeply as compared to the past time. Moreover, the major striking aspect concerning the aspect of globalization is about the integration of the financial markets which have been facilitated by the modern electronic communication. In addition, during the 20th century, there was unequal economic growth which was taking place at a greater pace (Spence, 2011). During the second half of the 20th century, a strong expansion of the economic growth was realized as a result of the expansion of trade as well as the financial liberalization. Globalization has resulted in some other challenges that can include the uneven dispersion of the growth of income. Moreover, the 20th century was actually divided into four periods whereby during the inter-war era, the world mostly relied on the aspect of internationalism whereby countries retreated into economies which were closed and also protectionism (Anderson, 2004). In addition, this was actually the main factor during the devastation of the period of the 20th century. For instance, although there was growth in population throughout the century, the growth of the per capita income was actually slow. However, after the world war, the growth of the per capita income started taking place at a faster rate because of the economic boom which resulted from the industrial countries. However, although there was an average growth in income which was remarkable during the 20th century, the progress of the income growth was not actually dispersed evenly. Therefore, as a result of uneven dispersion of the income growth, a gap between the rich countries and the poor countries was created (Van, 2007). For instance, during the 20th century, the richest countries could realize an increase of the per capita GDP of almost six-fold, whereas the poorest countries could experience an increase of the per capita GDP of less than three-fold. Hence, there is a rapid increase in income inequalities among countries in the emerging economies hence negatively affecting the operations of the MNCs like Sinopec Corp. Globalization has led to the increase in the gap between the poor and the rich due to the inequalities in the distribution of resources. In the 20th century, the per capita income increased rapidly, but with variation among the different countries. However, the aspect of globalization has actually widened the gap between the rich countries and the poor countries for the several years. Moreover, in accordance to the world economic outlook, there has been an unequal distribution of the income in various countries as compared to the past (London and Hart, 2004). In addition, even though the globalization has resulted into increase in life expectancy, the quality of life for the many individuals has yet not changed because they are still living in poverty. The increase in poverty has led to the lack of the necessary purchasing power of the customers hence affecting the sales volume of Sinopec Corp. Lessons The international business managers can be in a position learn the interplay between host and home country differences in the process of achieving success. The managers can learn factors related to economic stability, structural reform and realize the benefits of institution building in achieving long-term development of an economy. As a result, managers can greatly benefit from the many opportunities that are availed by the increasing globalization of the emerging economies. The international business managers can be in a position to enjoy an increase in market share due to the increased market integration that has been possible through globalization. Therefore, the knowledge of the international business managers ensure business success through utilizing the opportunities that can be realized from increased globalization. Conclusion Globalization has been defined as the integration of the economies in various parts of the world specifically via trade and the financial flows. Also, globalization is usually used to refer to the movement of labor and also technology across the international borders. The broad dimensions of the globalization include political, environmental and also cultural dimensions that have created both opportunities and threats to the operations of Sinopec Corp among the other MNCs in the emerging markets (Anderson, 2004). Globalization has also been associated with improvement in technology and flow of capital hence helping the growth of Sinopec Corp. Besides, the growth of the living standards of people can result in great accumulation of the investment as well as the labor through the improvement in technology. Moreover, in accordance with the experience from the countries which have increased their output more drastically have actually shown the significance of establishing conditions that are conducive for the long run of the per capita income growth. References Anderson, K. ed., 2004. The world's wine markets: Globalization at work. Edward Elgar Publishing. Boyer, R. and Drache, D. eds., 2005. States against markets: the limits of globalization. Routledge. Guillén, M.F. and García-Canal, E., 2009. The American model of the multinational firm and the “new” multinationals from emerging economies. The Academy of Management Perspectives, 23(2), pp.23-35. Kumar, S. and Liu, D., 2005. Impact of globalisation on entrepreneurial enterprises in the world markets. International Journal of Management and Enterprise Development, 2(1), pp.46-64. London, T. and Hart, S.L., 2004. Reinventing strategies for emerging markets: beyond the transnational model. Journal of international business studies, 35(5), pp.350-370. Luo, Y. and Rui, H., 2009. An ambidexterity perspective toward multinational enterprises from emerging economies. The Academy of Management Perspectives, 23(4), pp.49-70. Sauvant, K.P. ed., 2009. The rise of transnational corporations from emerging markets: threat or opportunity?. Edward Elgar Publishing. Sapir, A., 2006. Globalization and the reform of European Social Models. JCMS: Journal of Common Market Studies, 44(2), pp.369-390. Spence, M., 2011. The impact of globalization on income and employment: The downside of integrating markets. Foreign Affairs, pp.28-41. Van Agtmael, A., 2007. The emerging markets century: How a new breed of world-class companies is overtaking the world. Simon and Schuster. Read More