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Sociology Essay: Impact of Globalization Trends


Globalization is a widely discussed and contested topic. The process of globalization has profound impacts on the capacity of a nation to formulate its policies. It is accompanied by a seemingly endless process of change within education (Peters, 1992). Globalization is one main issue that is increasingly attracting the attention of most academicians, researchers and policy makers. It has gained relevance in the context of higher education. Education is an important driver of growth and poverty reduction. Education policies have been in existence for quite some time and have played an important role in the development policy. The most recent wave of globalization is likely to have profound effects on education structures and policies across the world.

What is globalization?

‘Globalisation’ is a term that describes the process of integrating societies by removing legal, political and geographical constraints (Trowler, 1998). Vulliamy (2004) describes it as a process which is rapidly integrating the world into one economic space via an increasingly networked global telecommunication system. A study by Tikly (2003), suggest globalization as an inevitable and largely irresistible phenomenon that contains opportunities and threats for national development. Globalization is therefore seen to be concerned principally with integration into global and regional markets underpinned by technologies

Although internationalization is not new to education policies, the forces and tensions under the umbrella concept of globalization constitute dramatically different environment in which education institutions and policy makers operate in (Marginson, 1999). The changes to which education structures inUKand around the globe is exposed are complex and varied (Marginson, 1999). Nonetheless, the globalization concept indicates that these changes are somehow interrelated. For the purpose of this analysis, we will stress the following tendencies within the overall force of globalization:

Restructuring of the economic world system due to rapid integration of the world economy resulting from a transformation to a post industrial knowledge economy and increasingly liberalized trade and commerce.
Rise of network society due to technological advancements and the expansion of the internet
Increasing virtual mobility of people, knowledge and capital resulting from the development of new transport facilities, expansion of the internet and increasingly world integrated community
Complex cultural developments whereby we have an increasing cultural exchange and multicultural reality on the one hand of homogeneity and cultural differentiation and segregation on the other hand.
Erosion of the nation state and a widening of the gap between socio-political regulation and economic activity.

Such is the nature and complexities of forces associated with globalization. These forces define the social environment in which education structures and policies operate in (Green, 1999). Further, these forces condition the context in which education policies and structures have to operate and profoundly alter people’s experience of both formal and informal education (Green, 1995). For example, most institutions are transformed to become targets of corporate expansion and sites for branding. A more detailed explanation will be discussed below.

Impact of globalization on education structures and policies

Globalisation has profound impacts on education structures and policies. The impact is profound but also diverse, depending on the locality within the global arena. While there is often a danger of oversimplification and generalisation when dealing with globalisation, diversity has to be recognised and promoted to a certain extent. Various views have been expressed in literature with regard to the impact of contemporary globalization on the processes and structure of education worldwide.

1. Direct impacts on both the curriculum and pedagogy

Carnoy (1999) suggests direct impacts on both the curriculum and pedagogy. There is little evidence however to support such an assessment. Whilst attempts have been made to inject global awareness on school curricula in western industrialized countries, these have generally remained very low status add-ons. Carnoy (1999) continues to argue that whilst the direct impacts on pedagogy and curriculum are limited, the more general influences of economic restructuring and political ideologies are immense. For instance, globalization is putting considerable premium on highly skilled and flexible workers in an organisation hence increasing the demand for university education.

2. Emerging ‘bordeless’ higher education market

The most visible manifestation of globalisation in the education sector is the emerging ‘bordeless’higher education market. Globalization leads to huge increases in worldwide demand for higher education through opportunities created by the internet and new communication technologies which in turn shape an environment in which providers can expand their supply of educational facilities (Breier, 2001). Universities fromAustralia, North America, Europe andEnglandare reaching out their educational provisions to the international market by actively recruiting international students through establishing branch campuses or via distance education, e-learning and other transnational activities (Breier, 2001).

These increasing demands bring new providers into the market. The business of borderless education comprises various forms and developments including the emergence of corporate universities, professional association that are directly active in higher education, and media companies delivering educational programmes among others (Alao & Kayode, 2005). These new providers extensively use the Internet and ICT as a delivery channel.

3. Erosion of national regulatory and policy framework

Globalization is also associated with the erosion of national regulatory and policy frameworks in which institutions are embedded (Slattery, 1995). The policy framework is subject to erosion in an increasingly international environment marked by globalizing professions, liberalized market place, mobility of skilled labour, and international competition between institutions (Slattery, 1995). Most institutions acknowledge this and thus develop consortia, partnerships and networks to strengthen their position in the global arena. Schemes such as the European Credit transfer system and mobility programmes such as UMAP and SOCRATES can be developed to stimulate internationalization in higher education with respect to the various national policy frameworks (Dearden et al, 2002). There is need for an international regulatory framework that transcends the eroded national policy framework and steer to some extent the global integration of higher education system.

4. Create new and tremendously important demands and exigencies towards universities as knowledge centre’s

Consequently, globalization creates new and tremendously important demands and exigencies towards universities as knowledge centers (Dearden et al, 2005). Research and development is crucial in any knowledge and information driven society. Globalization of research and development leads to a more mobile and highly competitive international market of researchers. Moreover, universities are called upon to take up responsibilities in the society, deepen democracy, act as mediators and to function as centre’s of critical debate. These higher demands placed upon them create tensions in institutions and stimulate other organizations to engage in such kind of activities.

5.Increasing demand for higher education worldwide

Finally, the continuing trend of globalization is expected to increase the demand for higher education worldwide. In the developed world, the society will always ask for highly qualified and flexible workers. Modernization, economic development and demographic pressure increase the demand for higher education in most parts of the world (Blanden & Machin, 2004). Governments and local institutions generally lack enough resources to deal with the increasing demand hence leaving an unmet demand to the international and virtual providers. This demand not only grows quantitatively but also becomes more diverse. The internet together with new technologies are increasingly providing new opportunities for more flexible delivery of higher education, thus increasing demand in some countries and meeting demands in others where traditional institutions have failed. These developments brought by globalization underpin the assertion that higher education will emerge as one of the booming markets in future (Blanden & Machin, 2004).

The need for an international regulatory framework

There is a big difference in the way countries deal with private universities and transnational higher education.GreeceandIsrael, for instance, rarely recognize their diplomas and degrees (Blanden, Gregg & Machin, 2005). While other countries residing in the developing world such asMalaysiarecognize their incapacity to meet the increasing demand and thus welcome foreign providers (Blanden, Gregg & Machin, 2005). Principally, there is no reason to oppose a positive and open attitude towards transnational higher education and private universities.

In modern policy approach, it must be recognized that private and transnational institutions are also capable of fulfilling public functions. Despite the fact that traditional higher education institutions have a specific tradition and academic culture to defend, it should be amenable to competitors from diverse backgrounds. It therefore becomes imperative to have in place international and sustainable policy framework that deals with private and transnational providers.


The globalization trends are leading to a wide spread changes that are impacting on education worldwide. Nation states acknowledge this and have developed reforms to their educational systems in response to modernizing ideas and international trends. It should be noted that globalization represents a new and distinct shift in the relationship between states and supranational forces and that its impact on education is profound in a range of ways. Whilst this analysis does not present an exhaustive listing of the impact of globalization on education, it does bring out key dynamics and highlight important areas of action for academicians and policy makers with respect to globalization.

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Blanden.J & Machin.S (2004), Educational inequality and the expansion ofUKhigher education, Scottish Journal of political economy, Vol 54, PP.230-49

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Carnoy (1999), Education, globalization and nation state,Oxford,Oxforduniversity press

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Dearden.L, Mcintosh.C, Myck.M & Vignoles.A (2002), The returns to academic and vocational qualifications inBritain, Bulletin of economic research, Vol 54, PP. 249-75

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Marginson.S (1999), After globalization: emerging politics of education, Journal of Education Policy, Vol 14, pp.19-31.

Peters M (1992), Performance and Accountability in ‘Post-industrial Society’: the crisis of the British universities, Studies in Higher Education, Vol 17, PP.123-139.

Slattery, P. (1995) Curriculum development in the post modern era,New York, Garland Publishing

Tikly (2003), Globalisation, knowledge economy and comparative education, vol 41, pp. 117-149

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Economic marketplace is increasingly characterized by globalization due to the dynamics of technology.

1. Introduction

1.1 Background to the Study

Today’s economic marketplace is increasingly characterized by globalization due to the dynamics of technology. For decades, politicians and bureaucrats have strived to break down borders hampering international trade. Their work led to the Bretton Woods conference in 1944 in the heat of World War II, an agreement by the world’s leading politicians to lay down the framework for international commerce and finance, and the founding of several international institutions intended to oversee the processes of globalization. Bilateral trade agreements between nations, agreements through institutions like the World Trade Organization and The World bank, and the increasing number of international alliances is a testament of increasing corporate globalization. The favourable conditions to expand internationally allowed firms to expand their business beyond their home country and has consequently resulted in a significant growth of Foreign Direct Investment (Kolstad and Tondel, 2002). The increased awareness of the merits of foreign direct investment (FDI) has resulted in an increasing body of scientific work in this area. Despite this knowledge however, many foreign investments still fail to meet the local firm’s expectations. In order to establish what lies at the root of this impediment, additional research is required. To uncover in what respects national cultural values influence the feasibility of Foreign Direct Investment.

Recently, the special merits of FDI and particularly the kinds of incentives offered to foreign firms in practice have begun to be questioned. Fuelling this debate is that empirical evidence for FDI generating positive spillovers for host countries is ambiguous at both the micro and macro levels.In a recent survey of the literature, Hanson (2001) argues that evidence that FDI generates positive spillovers for host countries is weak. In a review of micro data on spillovers from foreign-owned to domestically owned firms, Gorg and Greenwood (2002) conclude that the effects are mostly negative. Lipsey (2002) takes a more favourable view from reviewing the micro literature and argues that there is evidence of positive effects. Surveying the macro empirical research led Lipsey to conclude, however, that there is no consistent relation between the size of inward FDI stocks or flows relative to GDP and growth. He further argues that there is need for more consideration of the different circumstances that obstruct or promote spillovers as national culture happens to be an inevitable factor in determining the size and growth pattern of outward and inward FDI.

1.2 Rationale

In order to provide an all encompassing insight in the role of culture with respect to FDI, an extensive research approach is called for. Culture is an elusive and complex concept, imbued in many facets of life and business. As previously stated, FDI has assumed a crucial role in the globalisation of economic activities. The basic concept of FDI reflects the objective to obtain a lasting interest in an economy other than that of the investor’s origin (Menon et al, 2006). A FDI relationship consists of two entities; a parent business enterprise and its foreign subsidiary. Together they comprise a Multinational Enterprise (MNE).

Foreign direct investment has various possible entry strategies. Most common are so-called Greenfield investments, Joint Ventures, Mergers or Acquisitions (Chang and Rosenzweig, 2001). Contrary to FDI, culture is a rather more elusive concept. Hofstede (2001) described culture in the following way: “Culture is the collective programming of the mind that distinguishes the members of one group or category of people from another”. It is evident that culture is imbued in many facets of life, making it challenging to gain intimate knowledge of a country’s culture. A complete understanding of the foreign country’s culture infused into the UK economy however, is a necessary prerequisite for corporate success through foreign investment.

1.3 Statement of the Problem

One major element that is considered to be a critical success factor concerning foreign investment is the elusive concept ‘culture’. Current studies show that the UK economy is in a global mix with emerging economies such as China, Brazil and India which have been attracting significant quantities of foreign investment. These so-called emerging countries offer significant growth potential and low cost labour and thus attract countless multinationals seeking to reap these benefits (Menon et al, 2006). These emerging markets however are often characterized by national and corporate cultures significantly different from their western counterparts. The resulting cultural differences can impede a firm to successfully achieve the goals that have been set out (Chen and Hu, 2001) and in the long-run lead to a shift in market concentration from the UK to these emerging economies. In times past, only very few studies to date attempt to provide insights regarding the relationship between FDI and National culture. In order to fully uncover the untapped potential FDI offers, an all encompassing understanding featuring both the concept of foreign direct investment and culture is imperative.

1.4 Objective of the Study

It should also be emphasized that business to a large extent is about realities at an empirical level and less about deep value structures (Gullestrup, 2006). Trading activities between disparate cultures are, for example, easy to organise as the meetings are concerned with relatively “trivial” facts of trading operations rather than deep values. FDI is different. Here you engage and commit your organisation much more in a foreign culture. Even so, you may not need to touch the deep. Structures to any large extent, but you may run into strong managerial preferences and belief, as is often the case with MNEs that believe strongly in their own management formula. The primary goal of this research is to conceptualise the cultural issues related to the management of FDIs by analysing the factors that influence the choice between joint ventures, wholly owned Greenfield (i.e, start-up) investments, and acquisitions.

The specific objectives are:

To empirically assess in what respects national cultural values influence the feasibility of Foreign Direct Investment.
To determine the trending Profile of natural cultural values and Foreign Direct Investment.
To proffer policies that the government can adopt to fine-tune foreign investments by appreciating the importance of cultural differences in the economy.

1.5 Research Goal and Question

Given the stated aims and objectives in the section above, the following are the research questions which would aid understanding of the contributions of national culture to FDI.

What are the impacts of fusing commerce and national cultures when organizations migrate business functions internationally
2.What are the main dimensions of culture
3.How does the Indian culture influence the MNE’s performance given its entry mode and the cultural distance between India and the MNE

1.6 Scope and Limitation of Study

An examination of public and private partnership (PPP) intervention in the economy is wide and deep. It covers cultural, social, political, psychological, even spatial and economic domains. This project centres on the cultural aspects and implications of combined intervention. The study will cover the cultural distance between the country of the investing firm and the country of entry, the more likely a firm will choose a joint venture or wholly owned Greenfield over an acquisition and also the culture of investing in a firm is said to be characterised by uncertainty avoidance regarding organisational practices between 1981 and 2010 as informed by data availability.

1.7 Research Outline

This paper is structured in five parts. In this first section, the research topic and objective have been presented, and the research question has been formulated. In the second section, the theoretical background of the central concepts in the research will be clarified. Based on the central research question and important findings in the literature, a conceptual model will be drawn, which will guide the continuation of the research. In the third section, the proposed implementation of the research, and the data-collection and processing will be described; furthermore, the concepts in the conceptual model will be operationalised. In the fourth section, the results of the data-collection will be presented, and the analysis of the results takes place. In the fifth and last section of this paper, the conclusion of this research will be presented and discussed, along with reflections on the research’ limitations, and the provision of managerial and academic research.

1.8 Chapter Summary

The research was directed at conceptualising the cultural issues related to the management of FDIs Looking at the FDI as a package of resources, most focus has been on the financial component and especially on the technology component and on technology transfer. The management cum cultural component is mentioned but rarely getting the same empirical attention as the technology component. The omission of a direct discussion of the aspects of organisational and national cultures will of course provide an incomplete pictogram of the impacts of FDI which tends to have a multiplier effect on Growth. The background to the study provided a solid foundation to the understanding of the concepts clearly stating the fundamental problem that could emerge out of any ineffectiveness in policy prescription, the objective and research question was also outlined bearing in mind the empirical framework that will be explored in the later stages of the study.

2 Literature Review

2.1 The Concept of Foreign Direct Investment

FDI, also known as (international) direct investment, forms part of the capital account of the balance of payments. ‘Direct Investment’ is defined as an investment that adds to, deducts from, or acquires a lasting interest in an enterprise operating in an economy other than that of the investor where the purpose is to have an ‘effective voice’ in the management of the enterprise.2 In FDI statistics, an effective voice is measured as 10% of the share capital of a company; any investment below this is counted as ‘portfolio’ investment under balance of payments statistics and not included FDI.

It should be noted that FDI is a financial concept and is not the same as capital expenditure on fixed assets (although an investment may include this).FDI statistics are normally recorded on a ‘net’ basis, meaning disinvestments by companies are included. FDI covers a range of forms of investment (UNCTAD, 2011). The examples given below relate to outward investment, but reverse of these for the foreign firm would be inward investment and vice versa for INDIA:

A foreign company establishes a branch or subsidiary in a foreign country-India, injecting start-up capital. This is often known as a ‘Greenfield’ investment.

A foreign company buys or sells (in full or in part) the equity of an existing foreign company-India. This is often known as M&A activity.

A foreign company puts additional capital into an existing foreign subsidiary-India or allows it to retain profits rather than return them to the parent company.

FDI statistics measure two different concepts – stocks and flows. Investment stocks measure the total book value of investments by a country and not a simple sum of investment over time. They are therefore subject to changes in valuation in company accounts, as well as exchange rate fluctuations. Flows measure annual levels of net investment, and can vary significantly year on year.

Office of National Statistics (2005) reports that FDI data should be used with caution; a significant proportion of FDI flows can be accounted for by large multinational M&As. An example of this is the Vodafone acquisition of Mannesmann in 2000 that had a significant effect on flows between the UK and Germany. More recently, in 2005 a transaction involving Shell between the Netherlands and the UK made up 45% of UK inflows in that year. Therefore, large flows do not necessarily indicate significant ‘greenfield’ investments, they can be large M&A transactions, and high flows may be dominated by just a few transactions.

2.1.1 Brief Overview of FDI in India

In 2009, following the UNCTAD (2010) global investment trends monitor, foreign companies invested ?46 billion in India, a decrease of ?3.2billion (7%) from 2008 and the lowest value since 2004. The largest decreases in inward investment flows in 2009 were from Asia and Africa. The largest investor was France, with ?20 billion or 44% of inward FDI, largely accounted for by the acquisition of British Energy Group Plc by Electricite de France (for a reported ?9.2 billion). The US was the second largest investor with ?19 billion (41%).

UK M&A activity in 2009 was stronger than in 2008 in India .significant transactions that took place in 2009 included the purchase of Barclays Global Investors Plc by Blackrock Inc (for a reported ?9.5 billion) and Resolution Ltd acquiring Gatwick Airport (for a reported ?1.9 billion).

Table 2.1: Inflow and Outflow of FDI into India: Past and Future

Source: Economist Intelligence Unit (EIU)

Source: GOI (2007)

In spite of the obvious increases in Indian FDI flow year on year as obvious in the table above, the Economist (2008) suggests that:

“India, though improving, has one of the worst fiscal positions in the world. The government tries hard to conceal this fact, boasting that it has reduced its deficit to an estimated 3.3% of GDP in the year ending March, from 6.5% in 2001-02. However, in a recent report the IMF argued that the true total deficit is closer to 7% of GDP once you add in the state governments’ deficits and various off-budget items. If the losses of state electricity companies are also added in, the total deficit could top an alarming 8% of GDP”.

For a successful entry into a foreign market such as the India market, the choice of an entry mode is important because of its influence on the relationship between the role of the subsidiary and corporate performance of the firm. Every entry mode has different implications, advantages and disadvantages regarding risk, ownership, and control. What is the best entry mode in a given situationThe most appropriate entry mode has to be selected.

The second moderating effect on the relationship between the role of the subsidiary and corporate firm performance is cultural distance, defined as difference in shared values and beliefs between the subsidiary and the MNE. The influence of culture on the effect of the role of the subsidiary on the corporate performance of firm depends on the cultural distance between home and host countries (Chen and Hu, 2001). To understand the way cultural distance affects a business structure, we rely on the four dimensions identified by Hofstede2001).

2.1.3 Scientific Relevance

Little is known about a subsidiary’s contribution to an MNE’s corporate performance (Chen and Hu, 2002). Even less is known about the influence of cultural distance and entry mode of an MNE on the contribution of the subsidiary to corporate performance. Much literature exists on the different entry modes, the determinants of entry modes, or the influence of the characteristics of a host country (the culture) on foreign direct investment (Furrer, 2010; Root, 1982; Chang and Rozenzweig, 2001; Dikova and Witteloostuijn; 2007, Bouoiyour, 2003). The majority of the existing academic literature only takes into account the link between entry mode and corporate performance. (Woodcock, Beamish and Makino, 1994) or the link between cultural distance and corporate performance (Gomez-Meija and Palich, 1997). To the best of our knowledge, no literature yet exists on the contribution of a firm’s subsidiary to the corporate firm performance of the MNE.

This study aims at contributing to close this gap in the literature by examining the influence of cultural distance and entry mode on the relationship between the contribution of the subsidiary and the corporate performance of the MNE. The study focuses on Moroccan subsidiaries.

2.2 Theoretical Background

In the previous section the research question and reasoning for conducting this research was provided. This section will supply the theoretical foundations that are necessary to execute this research. The first part will deal with the concepts of the conceptual model. The second part of this section deals with the links between the concepts. The relevant theoretical concepts are explained and analyzed, and have lead to a theory-based conceptual model.

2.2.1 Entry Modes

When firms decide to enter a foreign market, they have to choose a mode of entry. Different entry modes exist. Dikova and Witteloostuijn (2007) divide investment in foreign countries in two strategically important decisions. The first decision concerns the establishment mode choice, which refers to the level of ownership and the second decision concerns the entry mode decisions, which refers to the level of control. The level of ownership and the level of control are matched to different entry modes in Figure 2. Chang and Rosenzweig (2001) made also a distinction between four types of foreign investment decisions. They distinguished between full ownership, which can be achieved through Greenfield investment or Mergers and Acquisitions (M&A), and partial ownership, which is Joint Ventures (JV) or Strategic Alliances (SA) (Chang and Rosenzweig, 2001). The different modes of foreign direct investment (FDI) can be classified along the dimensions of ‘degree of control’ and ‘degree of ownership’. Exporting and outsourcing are not included as strategies of FDI because these strategies are non-equity investments (Beamish, Morrison, Rosenzweig and Inkpen, 2000, p. 114). Alliances exist in various forms, such as contractual Strategic Alliances (SA), Joint Ventures (JV), franchises and equity participation (Collis and Montgomery, 2005). According to the literature, SA and JV are the most common modes of entry into foreign markets and for this reason we only include SA and JV in our study. Besides this, in most studies SA and JV are treated as one concept (Collis and Montgomery, 2005; Faulkner, Child and Tallman, 2005). For reasons of simplification, in this study JV and SA will also be treated as one concept and we will refer to this concept as JV&SA. JV&SA are partnerships between two parties (Faulkner, Child and Tallman, 2005). They are formed when an MNE does have some valuable resources to enter a foreign market, but needs the resources of another firm to successfully enter the market. JV&SA are used to capture the positive sides of both Greenfields and M&A, while avoiding the negative sides of both modes (Collis and Montgomery, 2005, p. 110). Forming an alliance is the fastest way to seize an opportunity in a foreign market (Faulkner, Child and Tallman, 2005). Therefore, access to complementary assets and speed are the benefits of an alliance. However, forming an alliance does also face some challenges. The most important drawbacks of forming an alliance are the lack of control and leadership. Also, the relatively high risk of an alliance is another important drawback since an alliance has to maintain a shared vision, integrate learning, and possibly assists a potential competitor (Collis and Montgomery, 2005). M&A can be defined as purchasing or combining a controlling interest in another firm (Chang and Rosenzweig, 2001). An advantage of M&A is that it offers an easy establishment of local presence in a foreign country and it removes a possible competitor from the market. M&A is valuable when an MNE cannot imitate or accumulate the required resources (Collis and Montgomery, 2005, p. 105). A disadvantage may be the risks of overpayment or the inability to assess the value of the bought assets (Chang and Rosenzweig, 2001). Another disadvantage may be the possible post-acquisition integration failure due to cross-cultural differences and technological mismatches (Dikova and Witteloostuijn, 2007). Also, through an M&A the MNE possesses the whole acquired firm, including unnecessary adjunct businesses that are not valuable for the objectives of the MNE (Collis and Montgomery, 2005, p. 107). A Greenfield investment can be defined as the setting up of a new plant or other establishment from scratch (Chang and Rosenzweig, 2001). The Greenfield entry mode is the easiest way to transfer intangible assets into a new country (Collis and Montgomery, 2005, p. 109). Another advantage of Greenfields is that they offer full control over the local establishment (Chang and Rosenzweig, 2001), which leads to the possibility of presence of the corporate culture in a foreign country. An important disadvantage is the longer duration of the establishment period and the time spent on building a network locally or acquiring the know-how (Dikova and Witteloostuijn, 2007). Another drawback is the risk of not having success on the new project. A Greenfield comes with a high investment and when the project appears not to be a success, the investment costs are difficult to recoup (Collis and Montgomery, 2005, p. 109).

2.2.2 Cultural Role of Subsidiaries

Rugman and Verbeke (1992) assess the extent to which the results of Bartlett and Ghoshal’s (1989) work can be incorporated in what has now become one of the core explanations of multinational strategic management, i.e., the transaction cost-based theory of international production. They demonstrate that the transaction cost approach fully incorporates the empirical findings of Bartlett and Ghoshal’s (1989) work. To do so they make a distinction between location-bound and non-location-bound firm-specific advantages. In addition, three possible uses of country-specific advantages by multinational enterprises need to be identified. While the transnational solution, as proposed by Bartlett and Ghoshal (1989), is not in itself a new theory of multinational strategic management, it is compatible with the transaction cost-based model of multinational strategic management. Bartlett and Ghoshal (1989) state that

‘In the future, a company’s ability to develop a transnational organizational capability will be the key factor that separates the winners from the mere survivors in the international competitive environment’ (1989, p. 212).

Transaction cost theory, as a predictive model, argues that both the form and competitiveness of the international operations of an MNE depend crucially upon the configuration of three elements (Rugman and Verbeke, 1992): (1) firm-specific (or ownership-specific) advantages (FSAs), including both proprietary knowhow (unique assets) and transactional advantages; (2) country-specific (or locational) advantages (CSAs), which state that some benefits are associated with locating certain activities in particular countries; (3) there are internalization advantages, which refer to the relative benefits associated with different entry modes (e.g.,

exports, licensing, Joint Ventures, FDI and other forms of investment) when serving foreign markets. Rugman and Verbeke (1992) propose a 2 x 2 matrix to classify the MNE’s activities for both home and host country operations. This matrix is depicted in Figure 3. On the vertical axes, the perceived potential of a particular country’s CSAs for the competitiveness of the MNE can be translated into the strategic importance of the local environment. On the horizontal axes, the perceived potential of the operation to contribute to FSA development necessary to improve the MNE’s competitiveness can be translated into the level of internal resources and capabilities.

The Understanding of the Concept Culture within the Three Management Approaches

As we deal with rather disparate national cultures that may endanger the success of an FDI, it is important to know, how the three approaches conceptualise and resolve potential cultural conflicts. Conventionally, a distinction is made between national cultures and organisational cultures. In most literature on cultural issues related to cross-border management, the differences in the national cultures are outlined and the managerial implications of these differences are discussed. Often specific schemes for conceptualising and measuring the differences are used, such as Hofsteede’s five dimensional scheme (Hofsteede 2001). This approach for taking cultural differences into account is, however, not capturing the real business situation of, for example, an FDI as it ignores the organisational cultures. In case of an FDI, national and organisational cultures meet in two different ways depending on the FDI-mode:

• In case the FDI takes the form of a JV, two organisational cultures meet. They are each embedded in a different national culture, but the meeting place is within the national culture of one of the partners

• .In case the FDI takes the form of a subsidiary; one organisational culture creates an organisational culture within a national culture disparate from its own.

Thus, compared to most literature on inter-cultural management, we include into the modelling of inter-cultural management the meeting place and who will meet as important parameters. The situation is clearly different depending on the location for the meeting. In case of a JV, the foreign partner is less bound by his own national culture while the local partner is directly embedded in his own national culture at the same time as his company has developed its own organisational culture. In case of a subsidiary, the FDI-firm comes out of a foreign organisational culture, but does not meet a specific organisational culture. When it composes its new organisation abroad, it meets the values and preferences of the people to be employed and of course the organisational culture of the partners around the subsidiary. The different possibilities of meeting place and meeting who are shown in Figure 2.

Meeting in Home Country

Meeting in Host Country

Meeting in a JV

Two organisational cultures meet in same national culture

Two organisational cultures meet in a national culture of one of the JV-partners

Meeting in a Subsidiary

One organisational culture meets its own national culture

One organisational culture meets a new national culture

Development of cultures through interaction

Figure 3: Culture in Action.

National culture-values derived from socialisation
a)Organisational Culture – structures and routines derived from experiential learning in the work place

b)Individual Culture – concrete and discrete actions embedded in national and organisational cultures

Figure 3 pinpoints the interaction between the three levels of culture, national, organisational and individual and the interaction between them and with the individuals in interaction as the cultural

This approach to the understanding of inter-cultural management does not in any way ignore inter-cultural problems and that such problem can harm and destroy cross-border activities. It is first and foremost an approach to understand what happens when cultures at national, organisational and individual level meet. Based on these interactive meetings, the approach claims that culture becomes an action and a “negotiation” parameter that has its own contingencies for each of the partners at the meeting.

It should also be emphasized that business to a large extent is about realities at an empirical level and less about deep value structures (Gullestrup 2006). Trading activities between disparate cultures are, for example, easy to organise as the meetings are concerned with relatively “trivial” facts of trading operations rather than deep values. FDI is different. Here you engage and commit your organisation much more in a foreign culture. Even so, you may not need to touch the deep structures to any large extent, but you may run into strong managerial preferences and belief, as is often the case with MNCs that believe strongly in their own management formula.

Thus to summarise, to conceptualise the cultural issues related to the management of FDIs, it is proposed to include the following factors:

1. The meeting place, i.e. in which national culture is the activity to be embedded.

2. The meeting level, i.e. do two organisational cultures meet as in a JV or does one foreign organisational culture meet a national culture as in case of establishing a FDI-subsidiary

3. The meeting mode, i.e. focus on interaction at the individual level (culture in action)

4. The meeting depth, i.e. to what extent is deep structures of a culture or empirical practices at stake.

2.2.3 Cultural Distance

Culture can be defined as shared values and beliefs. The influence of culture in entry decisions depends on the cultural distance between home and host country (Chen and Hu, 2001). Business culture on the other hand is the reflection of the business by others as well as by the employees themselves. Many researchers tried to analyze different cultures by dividing it into different ways. To understand the way cultural distance affects a business, we use of the four dimensions identified by Hofstede (2001).

Power distance is the extent to which less powerful members in a culture expect and accept that power is distributed unequally. Low power distance cultures try to equalize the relationship between superior and inferiors. It means that there are not many steps between the leader of a company, e.g. a CEO and the lowest subordinate. High power distance however means that there is a centralization of power, while the subordinates have less power within the business and a long way to become a leader within the corporation. High scores mean that it is hard for people who have to start in the lower regions of a company, to become a high profile employee someday. In these countries there is a possibility of frustration among those people. This could also lead to unmotivated workforce since they cannot achieve these positions in the first place (Hofstede, 2001).

Individualism is the case when the employee just focuses on himself and his family, while collectivism highlights the focus on group actions. Societies, which are seen as individualistic, see as a personal opportunity for everybody to achieve the highest ranks. In collectivistic societies on the other hand, the goal shifts to a group achievement. Within individualism, business culture is seen as a hire and fire matter. A single employee needs to deliver her/his work or else (s) he will be fired. In collectivism theory, people are more concerned for others as this offers protection in exchange for loyalty. Collectivistic societies normally have a big social system and employee protection laws. Individualistic countries support the motivation of employees, as they have to fight for their jobs. However, this could lead to a higher competition for workforce between firms (Hofstede, 2001).

Masculinity refers to the role of genders within society. In high femininity societies, men and women both value ‘feminine’ qualities of life above the more traditionally ‘masculine’ qualities. Masculine attributes include, control and power forced upon the employees. This variable can be seen as an indicator of how a society differentiates between genders. Also, it displays the chances for female employees within the ranks of a company. A high score on this variable would mean that there is a large difference between genders, which means less opportunities for females and that men are dominating the business world. On the other hand,

high score on this variable would show that there are equal opportunities for the genders and females and males are not seen as different when it comes to doing their tasks within the company. The important aspect of masculinity for business is the fact that companies that acknowledge females as equals can make use of a larger workforce when they are searching for a new employee. A balanced company gender-wise can benefit within its business climate as well (Hofstede, 2001).

Uncertainty avoidance means to what degree the members of a society feel threatened by uncertain and unknown situations. Precision and punctuality is not as important in these societies. Societies with low uncertainty avoidance also display more interest in experimentation and variety. These societies are less dominated by rules or restrictions which can be found in countries with high uncertainty avoidance. Within these societies precision and punctuality are very important combined with a preparation for unusual occurrences. It does not tolerate uncertainty, so this society has to make use of rules (Hofstede, 2001).

With this framework in mind, we are able to determine if a firm has adapted its organizational culture and strategic behavior to the cultural differences with its subsidiary or not. In addition to that, it allows us to see in which field the business adapted to the culture and in which field they did not in order to achieve their ultimate goal of gaining corporate value. The differences in the four dimensions of Hofstede (2001) from the headquarters to the subsidiary allow us to determine the cultural distance within this relationship.

2.2.4 Corporate Performance

Corporate performance is a topic that has ignited much debate, whether this can only be defined in economic terms or also by intangible assets, such as knowledge. Much research has been conducted on what elements define the economic performance of the firm and its relation with corporate value, less is known about the corporate performance in general. Alongside, value creation as the ultimate goal for firms to exist, has always divided researchers. There are the ones who state that profit maximization and therefore shareholder value is a business’s ultimate goal and is the criterion for corporate performance and all other goals are subordinate. Others claim maximizing social welfare should be what firms strive for (Jensen, 2002). For this research, corporate performance is defined as the well-being and well-doing of the firm in the long run, as this is easier to measure than social welfare in total. We distinguish corporate performance in economic firm value, knowledge, cost reduction and synergies. According to Zimmerman (2003), economic firm value is determined by the business strategy and organizational architecture of the firm (decision-right assignment, performance evaluation and reward systems), which leads to certain incentives and actions. Consequently, this has an effect on the corporate performance of the firm. Similarly, customer satisfaction is usually related to firm performance (Zimmerman, 2003). Collis and Montgomery (2005) argue that a firm’s profitability is intertwined with its resources and capabilities and its corporate strategy. Firm performance maximization states that managers ‘should make all decisions so as to increase the total long-run market value of the firm’ (Jensen, 2002). Total value is the sum of the values of all financial claims on the firm. This includes equity, debt, preferred stock, and warrants (Jensen, 2002), but it can also be defined by its return on investment or its market share.

Rumelt (1974) provides arguments for a strong correlation between high profits and a strategy providing good opportunities for activity sharing or knowledge transfer. Possessing the right amount of knowledge and being able to transfer this knowledge leads to a competitive advantage, which in turn contributes to the corporate performance of the firm. According to the Williamson (1986) Information Cost theory, internal capital market access increases corporate performance in two ways. First, it reduces under-investment costs through a reduced reliance upon the external capital markets. These costs are a product of information asymmetries (Lundstrum, 2003). Second, internal capital market access increases corporate performance by increasing the efficiency of capital allocation across projects. However, Jensen’s (1986) theory suggests that diversified firms suffer from agency costs brought on by the manager’s easy access to cash. These costs include over-investment and excessive perquisites. An internal capital market increases the availability of cash, therefore exacerbating agency costs (Lundstrum, 2003). Creating economies of scale and scope is another way to reduce costs (Collis and Montgomery, 2005). Economies of scale are created when the average cost of producing each unit decreases as more units of a good or service are produced. Economies of scale are created when it is less costly to combine two or more product lines together in one firm instead of producing them separately.

According to Rumelt (1995), overall corporate performance can only be enhanced when business unit responsibilities have been clarified and individual unit performance is made transparent. In this way all resources are leveraged throughout the firm and synergy is created. Overall it can be stated that the corporate performance of a firm is not solely created through those four aspects separately. It is the intertwinement and mutual dependence that influence a firm’s corporate performance.

2.2.5 Links between the Concepts

When firms engage in overseas production through foreign direct investment, they must have some form of proprietary advantage to compensate for the natural disadvantage of competing with established firms in a foreign country (Birkenshaw et al., 1998). These advantages can be subdivided into two distinct types: asset advantages that lie in the exclusive possession of income generating assets; and transaction advantages, which entail the firm’s ability to economize on transaction costs as a result of multinational coordination and control of assets (Dunning, 1980, 1988). Previous research tends to assume that the MNE’s firm-specific advantages originate in the parent company, whereas the reality is that subsidiaries can play an important part in the creation and maintenance of such advantages (Birkenshaw et al., 1998). In this research, we are concerned with understanding those factors and roles that differentiate between high-contributing and low-contributing subsidiaries.

The roles of subsidiaries may differ in several ways, such as the degree to which they are actively involved in the formulation and implementation of corporate strategy and the degree to which they are creators and users of knowledge within the firm (Gupta and Govindarajan, 1991). According to the research of Ghoshal and Bartlett (1990), some subsidiaries may have the authority to make strategic and operating decisions autonomously, whereas others may be implementors of headquarters-developed strategic decisions. To name a few examples, subsidiaries can act as contributors to or leaders of innovation projects (Bartlett and Ghoshal,

1986); they can provide high numbers of outflows of valued resources to the whole corporation (Gupta and Govindarajan, 1994) and they can gain mandates for developing and producing certain product lines on a global basis (Roth and Morrison, 1992). Terms such as specialized contributor, strategic leader, and active subsidiary have been used to refer to those subsidiaries that contribute substantially to firm-specific advantage, while terms such as implementor and branch plant are used to refer to those that do not contribute significantly to firm-specific advantage (Birkenshaw et al., 1998).

One role that can be given to a foreign subsidiary is that of a world or global product mandate (O’Donnell and Blumentritt, 1999), or a strategic leader (Ghoshal and Bartlett, 1986; 1989). When a foreign subsidiary has the role of a global mandate, it has worldwide responsibility for a complete set of value activities associated with a particular product or product line. The strategic and operational activities are centralized and coordinated worldwide, but the critical point or focus of decision making is at the subsidiary level, not at headquarters (O’Donnell and Blumentritt, 1999). For subsidiaries with this global mandate role, the global market, not the home market of the subsidiary, is the primary focus throughout the development and production of the subsidiary’s product (Poynter and Rugman, 1982). According to Reich (1990), the higher level of strategic decision making that accompanies these types of strategic roles helps develop the expertise and managerial capabilities of the middle- and upper-level managers at the subsidiary. Another characteristic of a foreign subsidiary is international interdependence; the degree to which the activities and outcomes of the foreign subsidiary affect or are affected by the activities and outcomes of headquarters or other foreign subsidiaries of the MNE. Competitive actions in one country location affect those taken in another location (Porter, 1986). An increased amount of interaction facilitates the transfer of capabilities and knowledge between the subsidiary and other organizational units. Sources of competitive advantage can then include international scale and scope economies. It requires an efficient flow of resources between the different units of the firm. When determining the contribution of the role of the subsidiary to the corporate performance, this research will use the transaction cost theory of multinational strategic management (Rugman and Verbeke, 1992).

Transaction cost theory as a predictive model argues that both the form and competitiveness of the international operations of an MNE depend crucially upon the configuration of three elements; Dunning (1988a) provides a comprehensive overview. The three elements of the transaction cost theory of the multinational enterprises are: First, firm-specific (or ownership-specific) advantages (FSAs), including both proprietary know-how (unique assets) and transactional advantages. Second, country-specific (or locational) advantages (CSAs), which state that some benefits are associated with locating certain activities in particular countries. Third, there are internalization advantages. These refer to the relative benefits associated with

different entry modes (e.g., exports, licensing, Joint Ventures, FDI and other forms of investment) when serving foreign markets.

Bartlett and Ghoshal (1989) proposed the ‘transnational solution’, a firm able to develop non-location bound (NLB) firm-specific advantages (FSAs) and location bound (LB) FSAs. They identified four generic organizational types: a strategic leader, a contributor, a black hole and an implementor. To determine the different types of roles of subsidiaries and their contribution to the corporate performance, these organizational types will be used in the research.

The resource based view of the firm originated from recent competence-based theory (Teece, Rumelt, Dosi and Winter, 1994). According to this resource-based view, core competences allow the firm to successfully achieve competitive advantage in the market. They are acquired through internal learning processes.

According to Wernerfelt (1984) core competences relate to tangible and intangible assets such as distinctive skills, organization and tacit knowledge, context-specific know-how, skills and capabilities developed by the firm in the sphere of technology and management. When firms lack the ability to develop knowledge and competences they need, they have to search and acquire them externally. When the needed resources and complementary assets are available abroad, it influences the entry mode in foreign markets. It is the need for these resources and complementary assets that determines the specific type entry mode.

2.2.6 Propositions

Based on the theoretical background of this study, the following propositions will be examined:

Proposition 1: Cultural distance

We expect that the cultural distance based on the cultural distinctions (power distance, masculinity, individualism, and uncertainty avoidance) does have an indirect influence on the corporate performance.

Proposition 2: Entry mode

We expect that the entry mode of the subsidiary (Greenfield, M&A, JV&SA) does have an indirect influence on the corporate performance.

Proposition 1: Contribution of subsidiary

We expect that the subsidiary (strategic leader, contributor, black hole, executor) will have a direct influence on the corporate performance

2.2.7 Chapter Summary

The study established an understanding of the non-economic determinant of FDI and that the entry mode is a direct function of the cultural differences and distance of countries and the role of subsidiaries as found in the results of Bartlett and Ghoshal’s (1989) which is incorporated in what has now become one of the core explanations of multinational strategic management, i.e., the transaction cost-based theory of international production. In further delineating the complexities of the impact of national culture issues on FDI, a proposition is made based on the theoretical background.

3. Research Methodology

3.1 Introduction

Response will be drawn from Vodafone India, while a dual perspective will be adopted as the research approach. One of the approaches is the qualitative (FGDs) and the second is the quantitative technique under which a multivariate regression analysis and a correlation analysis will be used to measure the degree of responsiveness of cultural variables. Dummies will be created in the construction of the questionnaire evaluated in response to a covariate (FDI). Data used that is not gotten from the responses of field survey are extracted from the Ministry of Statistics and Programme Implementation of India and the office of national statistics (ONS), MA4: Business monitor.

3.2 Research Approach

A research approach defines the means and methods by which a researcher collects and analyses data with which the aims and objectives as well as research questions will be addressed. In other words, the research approach provides order and focus to the process of obtaining, interpreting, presenting and analysing research information (Collis and Hussey 2003). In general terms, there are two broad approaches to undertaking a research: qualitative inductive and quantitative deductive methods. According to Saunders et al (2007) the inductive approach essentially entails the interpretative attempts to comprehend meanings attached to phenomena and particular research contexts; the deductive approach on the other hand has to do with pure empiricism and `scientific’ research in general. Furthermore, Denzin and Lincoln (1998) point out that the adoption of either of the qualitative or quantitative approaches may depend on the researcher’s experience, perception of philosophy, and personal values.

Accordingly, the approach that this researcher chose to adopt for the present study was in part influenced by subjective interpretations of the cultural issues involved in evaluating Foreign Direct Investment in India in order to determine the most suitable method that would facilitate thorough analysis. Indeed, Shih (1998) also sheds more light on how a researcher’s subjective interpretations can play a role in the selection of a research approach by itemising major factors for consideration when deciding on a research method. For him, these factors include the research philosophy, phenomenon and subject-matter, the level and nature of the research questions, practical considerations related to the research setting, and the efficient use of resources. Indeed, Habermas (1972) also claimed that research is influenced in varying degrees by a researcher’s interests and values; personal, social and other interests that constitute part of a researcher’s peculiar context are invariably enmeshed in the research. Underscoring this idea is the suggestion that a consistency between the aims and objectives of a research, the research questions, the methodology, and the individual philosophy and values of the researcher influences the research process (Proctor, 1998).

3.3 Sampling Methodology

q In order to achieve an adequate spread of interviews across the organization, the Modified Multi-Stage Sampling Technique approach will be used for sampling. That is, starting from the selection of starting points up to the selection of dwelling structure, selection will follow a purely random process. Final respondents to be interviewed will however be selected via a set of specified eligibility criteria included as screeners in the questionnaire.

q Employees and top-level management will be selected using the “Kish Grid” in order to remove bias; each day’s job starts with the use of day’s code (date of the day which must be a digit e.g if the date of the day is 7 we start the day’s job from house numbered 7 or dwelling number 7 taking a count from point of alight. If it is 29 we add up 2+9=11 it is further added up as 1+1=2 meaning that the day’s job starts from dwelling structure 2.)

q Peradventure there are not dwelling structures (office) we use the next dwelling structure as our starting point) in order to avoid starting each day’s job from a particular side of any given department/office.

q Selection of employees: Within each dwelling structure, the interviewer determines the first respondent to begin with by using the worker-selection grid to randomly select the qualifying workers. The selection grid is a table of random numbers with listed alphabets from A to K on the rows, and figures on the column. The interviewer on entering a dwelling structure, counts the number of workers including employers and employee(s) in the dwelling structure, starting from the topmost floor if it is a multiple storey building, and then traces the total number of employers counted against the alphabet pre-coded on his/her questionnaire. Where the two (number of employers & alphabet) intersect is the department where the qualified respondent would be sought.

For the purpose of this study an employee base is defined as a group of individuals living together, who share a common working arrangement and who recognize a person as the head of the department/organization. For an individual to qualify as an employee, he she must have stayed with the rest of the members for a minimum period of six months prior to the time of interview.

Labour Market:

v Purposive sampling will be applied in getting employees/ respondents to be interviewed thus ensuring arbitrary selection of respondents and giving every employee equal opportunity of being interviewed, thereby eliminating bias.

v The selection will be purposive. For a respondent to qualify he/she must be a decision maker of the targeted businesses or organisations.

Specifically, all interviews will be conducted face to face in respondents’ offices with the aid of the fully structured questionnaire.

Quota will however be evenly distributed amongst the following specified target businesses or organisations as shown in the sample structure ensuing slides

Target Respondent:

The target respondents would be decision makers in their various organisations in Vodafone and Macdonalds e.g. IT officers, chief financial officers, financial managers, accountants, human resources and customer care agents, Entry staffs e.t.c.

3.4 Data Processing using the Hyper-Research Code-Based Builders

q Data processing will include the following stages:

v Listing of verbatim questions/code frame preparation

v Post – coding of verbatim questions

v Test data structure

v Data capture

v Data verification/clearing

v Tabulations

Listing of verbatim/others (specify)

q The responses to verbatim questions/other specified will be listed taking 25% of the sample. This is to ensure that responses across study locations are featured in the code frame preparation. The responses are tallied and codes are assigned from responses with highest frequency to the one with least frequency. The frequency listing is used to prepare the code frame.

Post – coding

q The code-frame is used to post-code verbatim questions/others specified. The client may wish to approve the code-frame before post coding commences.

Data Structure Setup

q All questions/variables on the questionnaire will be defined using the data capture software. This will include definition of valid responses, lower and upper band codes as well as skip logics for all questions, which reduces data entry errors

Data Structure Test

The data structure is tested by trial data entry

q of not less than 120 questionnaires. This tests to ensure all logics and skips are well defined without errors and that data structure works perfectly.

Data Capture

q The data structure will be analysed using the multivariate regression analysis method to capture the effects of national culture on FDI.

Data Verification/Cleaning

q As part of our quality control, 20% of the total sample are re-captured (verified) to identify/bring out data entry errors if any. Holecounts table will also be generated to identify errors on outliers/inconsistent data which are then cleaned. We go through this process to ensure that clean data are analysed.


q All questions will be cross tabulated by appropriate variable showing descriptive statistics such as frequency, column percentages, mean scores etc.

Data formats

q Data will be supplied in SPSS format as well as Microsoft Excel Spreasdsheet

3.5 Quality Control Measures

q In order to ensure accurate and reliable results of fieldwork, emphasis will be placed on quality control. The following quality control procedures will be applied:

v Pre-briefing of respondents.

v Review of all completed questionnaires for legibility, accuracy and consistency.

v Monitoring the accuracy of the individual interviews.

v 10% – 20% spot field checks of field interviews to eliminate fraud and inaccurate form filling.

v Edit and check the quality of each questionnaire before punching. Any questionnaire suspected would not be punched.

v Reliable coding type will be used in the coding of the open-ended questions.

q In order to ensure accurate and reliable results of fieldwork, the following quality control checks are employed:

v Group interviewing approach-focus groups

v Field checking of all questionnaires for consistency, uniformity and omission

v 20% on-the-spot field checks of field interviewers

v 30% back-check of each interviewer’s work

v 100% editing of questionnaires in-office before data processing

3.6 Survey Instrument

q Questionnaire

The structured questionnaire to be used for this study was developed upon approval of the study.

The instrument (questionnaire) to be used will however cover the following key investigation areas:

v Lifestyle typologies for India

v Key life stage typologies for India

v Whether segmentation of profession should be based on cultural lifestyle

v The peculiarities of national culture and its effects on international management and FDI.

v Examine the cultural difference, working practices and language barriers

3.7 Limitations to the Methodology

One of the main limitations to the present methodology particularly relates to data collection. It would be noted that only 120 interviews were conducted as opposed to more which could have improved the validity and reliability of the present outcome. Interviewing more people would have inherently improved the objectivity and strength of data collected while creating more awareness to the researcher about other critical issues within the present research context which could have been mislaid by interviewee’s and yet essential to the present research goals. More so, because of the subjective nature of data and its Indian origin, interviewee’s could be bias in their own views therefore causing limitations to the outcome of the data. While this study also adopted secondary data alongside primary data in order to address some of these limitations, the deficiency in the primary data collection can still not be fully compensated by these secondary sources.

4. Analysis and Discussion of Results

4.1 Introduction

In this chapter, tables and diagrams are presented in order to make for an easier analysis and comparison of the cultural indicators that determines the growth of FDI in India.

This chapter also presents and details the results of other findings from the Ministry of statistics and programme implementations. For the purpose of simplicity, the chapter is structured into three sections. Following this section, section 4.2, details the summary of research goal and question, 4.3 dwells on the data analysis process and method of analysis, section 4.4 focuses on the estimation technique adopted to evaluate the study and finally 4.5 discusses the research findings of the study.

4.2 Summary of Research Goal and Question

What are the impacts of fusing commerce and national cultures when organizations migrate business functions internationally
2.What are the main dimensions of culture
3.How does the role and activities of the Indian culture influence the MNE’s performance given its entry mode and the cultural distance between india and the MNE

While the first and second research questions have been explored to a reasonable degree in the preceding chapters, the third question as presented above will be given the most attention in the analysis section given its centrality to the research aims and objectives. As presented earlier, the aim of this research is to provide novel insights into how the role national culture on FDI, taking the moderating effect of cultural distance and entry mode into consideration.

4.3 Data Analysis Process and Method of Analysis of Survey

After coding the main data extracts which are presented in the appendix and SPSS data editor, each code is further analysed and explained in relation to the FDI secondary data and statistics obtained from government departments and reports. It should be noted that for ethical reasons, the interviewee’s names are not directly mentioned in the analysis thus, in cases where an interviewee’s response is quoted in the analysis.

For the purpose of clarity, it is equally pertinent to mention that each sample drawn using the multi-stage sampling technique which possibly represents more than one issue but indeed in many instances a range of issues. Since not all data extracts can be represented in the SPPS data editor, the close-ended questions are analyzed in one single context using the multivariate regression model and correlation technique. As an illustration, some of the data extracts from the transcript shows that FDI improvement, better working practice, element of cultural differences and language barriers plus religion encourages domestic growth.

Notwithstanding this process, the data being presented and analyzed are to the best of this researcher’s knowledge, representative of the interviewee’s precise opinions and perspectives.

4.3.1 Descriptive Analysis

Figure 4.2a: Foreign Direct Investment (1980 – 2010)

Comment: FDI inIndiahas been on a volatile trend recording a downswing and upswing at different times between the start of the economic recession of the early 1980s till date. In the past there has been several pro-poor policies targeted at “Attaining sustainable economic growth through public-private partnership” for the sole purpose of reducing the surging rate of FDI

MeanStd. DeviationN
foreign direct investment as a percentage of GDP26.14525.0176431
position of employees1.2903.6925131
Current Salary$38,205.65$24,289.65531
cultural theory and practise1.2581.6815531
Religion(Belief & Practise)1.1935.4016131
cultural adaptibility1.58.99231
Language barrier1.10.39631
Cultural Sensitivity and awarenes1.26.68231

Comments: In the table above, we analyse the mean and standard deviation in relation to the observations. The distributions of the mean values of the cultural variables are equally distributed, the standard deviations from the mean line further explains the low variability of risk in determining the growth pattern and trend of FDI using a blend of organizational and individual cultures.

4.4 Multivariate Regression Analysis

Regression Estimates

The original intent of this study was to perform OLS regressions to determine trends in FDI. I planned to semi-replicate Sethi et al.’s 2003 study and run a multivariate regression model based on the information in the SPSS database drawn from Vodafone India.

The ultimate goal in regression analysis is the estimation of coefficients which implies the relationship between dependent and independent variables. The sign of coefficient of each independent variable indicate its relationship with dependent variable, while the magnitude of the coefficient implies the degree of responsiveness of dependent variables to independent variable.

The models for this study are stated below as:

(FDI) = F (C1, C2, C3, C4, C5, C6. ) …………………………….i

Position of employees= C1
Current Salary = C2
Religion(Belief & Practise)= C3
Cultural Adaptibility =C4
Language barrier =C5
Cultural Sensitivity and Awareness= C6

In all six cultural variables given the cultural characteristics of India was tested against the foreign direct investment as a percentage of GDP.

Table 4.2a: Regression Table with Cultural Information (Outcome) I

Model Unstandardized CoefficientsStandardized CoefficientsTSig.
BStd. ErrorBetaBStd. Error
1(Constant)21.6473.700 5.850.000
position of employees-4.4995.199-.621-.865.395
Current Salary1.35E-
Religion(Belief & Practise)-.8893.737-.071-.238.814
cultural adaptibility.034.987.007.035.973
Language barrier6.5203.059.5152.131.044
Cultural Sensitivity and awareness2.8966.404.393.452.655

Table 4.2b: Regression Table with Cultural Information (Outcome) II

RR SquareAdjustedR SquareStd. Error of the EstimateChange StatisticsDurbin-Watson
R Square ChangeF Changedf1df2Sig. F ChangeR Square ChangeF Changedf1df2Sig. F Change

a Predictors: (Constant), Cultural Sensitivity and awarenes, cultural adaptibility, Language barrier, Religion(Belief & Practise), Current Salary, position of employees

b Dependent Variable: foreign direct investment as a percentage of GDP

Analysis on the Potency of the impact of National Culture on FDI in India- Standardized Coefficients and Probability value

The impact of the position of the employee motivated by promotion is subject to organizational cultures in Vodafone like any other Multinational. From table 4.2a, the beta estimates of column 4 is negative or has an inverse effect on foreign direct investment in india, this conforms to a priori expectation and managerial theories and practice within the organizational framework as it can be clearly seen in the review of literature that the position of employees is a direct consequence of on-the-job performance (Hoftseede, 2001), a parameter determined by the organizational culture of Vodafone and in the national culture of India. The result also shows an insignificant effect on position of employee inNigeria. As the employee moves up the management hierarchy, foreign direct investment falls by 62%, this trend is consistent overtime due to the remittance and transfer of profits abroad to the parent company inUK.

In the result, there exists a positive but insignificant relationship the current salary of employees and FDI, salary and earnings is majorly subject to performance ratings within the organisation’s cultural framework. Salary and earnings increases direct foreign investment by 6.5%, it should be noted however that the positive effect is below 10% and relatively small further confirming that salary is not a core determinant of FDI and at such contributes a small proportion to the growth of an MNE within the national culture framework.

A cursory look at Religion, it could be drawn that religion contributory effect onindia’s FDI is negative to the tune of 71% accounting for an inverse relationship. Individual culture within an organization is fuelled by the subject and practice of religion and could be an instrument for efficiency or inefficient within the organization. The managerial relevance of religion cannot be overlooked as it is a practical day to day concept that affects decision making. The variable is also insignificant.

In addressing how well Vodafone adapts to the Indian cultural environment, the cultural adaptability measure was incorporated to see the degree, magnitude and direction of responses from Vodafone employees and management staff, in reference to the beta estimate of cultural adaptability in table 4.3a, the more Vodafone adapts to the cultural environment of India, the more the realization of its growth objectives and goals to the tune of 0.7%.

In bridging the gap in cultural differences, language barrier is taken into consideration. The removal of the presence of language barrier in the organization’s Cultural framework enhances the direct foreign investment. This contributes 51% to a change in foreign direct investment language barrier has the disadvantage of post-acquisition integration failure which may be due to cross-cultural differences and technological mismatches (Dikova and Witteloostuijn, 2007).

Finally, in understanding the concept of culture within the three management approaches, cultural sensitivity and awareness was analysed. Conventionally, a distinction is made between cultural sensitivity and cultural insensitivity. In most literature on cultural issues related to cross-border management, the differences in the national cultures are outlined and the managerial implications of these differences are discussed. The result depicts that a cultural sensitive individual or employee in Vodafone (high, moderate or low) reacts to a certain as measured by the responses to the tune of 39%. Cultural distance also emerges out the concept of cultural awareness and also the influence of culture on the effect of the role of the subsidiary on the corporate performance of firm depends on the cultural distance between home and host countries (Chen and Hu, 2001).

In term of goodness of fit of the model as shown in table 4.2b, the coefficient of determinations R2 in the modelis 0.98. This indicates that about 98 percent of the total variations in foreign direct investment (Dependent variable) are explained by the variations in included national cultural variables (Predictors). This shows that our model explains large proportion of variations in FDI inNigeria. The model also represents a good measure of fit. The F-statistic shows overall significance of the model. The F-statistic is significant at 5% level. We, therefore, conclude that the model is not significant in explaining the variations in the dependent variable.

5. Conclusions and Recommendation

5.1 Discussion of Research Findings

Traditionally, firms preferred to invest in countries with similar cultures because there was no learning curve associated with such locations. Similarities in language, religion, legal structure, distinct work ethics and geographic proximity can explain the dominance of western economies.

The Study have found that the cultural distance between countries affects FDI flows: the greater the cultural distance between two countries, the lower the amount of FDI from VodafoneUKto theIndia. Geert-Hofstede created four cultural dimensions to measure cultural distance: the Power Distance Index, Individualism, Masculinity, and Uncertainty Avoidance Index (Hofstede, 2001), a pure representation of the concepts were incorporated in the analysis which suggests that a society’s level of inequality is endorsed by the employees as much as by the management. In other words how does vodafone ensure that individuals are “integrated” into groups.

The ways in which the Indian cultural processes have been carried out has indeed limited its possible growth potentials which can be derived from the acceptance of foreign culture and work ethics. Indeed, when compared to other emerging economies which have reformed in the two decades, the acclaimed growth and foreign investment policies ofIndiacan be said to be relatively successful.

If what the study have found holds true, I would expect that greater differences between theUKandIndiain the different measures would indicate lower FDI flows intoindiabecause it would indicate a greater cultural distance between both countries. However, Sethi et al. utilized this measure in their study on trends in FDI, and they found that cultural proximity to not as important to MNEs as it was in the past (Sethi et al, 2003). And in that light, the Indian FDI trend was found to exhibit the same behaviour as shown in figure 1 in the previous chapter.

Firms’ standpoints regarding cultural disparities are changing, and firms are now investing in locations with vastly different cultures, so this variable may no longer be as important in the investment decision. Strategic asset-seeking firms value access to different cultures, institutions and systems, and different consumer demands and preferences which they can tailor their products to satisfy. There is a growing geographical dispersion of knowledge based assets and these firms want to harness such assets from foreign locations.

As can be further drawn from data analysis,Indiahas one of the fastest population growths in the world and so does its need for cultural integration and human capital needs increases. The competitive economies of the future will indeed not compete based on resources but on the working practices, cultural adaptability, cultural distance and a common understanding in the business language of the Global economy.

Finally, cultural and social development is imperative to the inflow of FDI inIndiaas this has been the bedrock of development in other competitive economies in the global market. Over the years, more attention has been accorded economic reforms but cultural reforms have suffered significant policy attention and where policies have been made, implementation has suffered. In fact where most policies have been implemented, the government has often failed to define appropriately the contributory role of subsidiaries, the entry mode of MNEs and the cultural distance all of which are propositions that will have a direct influence on FDI and corporate performance.

5.2 Conclusions

In this chapter the main conclusions of the research will be discussed in order to formulate an answer to the research question.

How the role and activities of the Indian culture does influence the MNE’s performance given its entry mode and the cultural distance between India and the MNE?

First, an answer will be given to the question on how the notion of culture contributes to the differences in FDI policies. The Indian way of life differs from the Western mentality in terms of directness, long term vision and norms and values. For instance, respect is a very important aspect in the Indian way of life. Different managers found it difficult to adapt to these non-Western norms and values. A frequently used example by some managers was ‘the Dutch directness’. Indian people tend to be more indirect in their way of approaching others than Western, and especially the Dutch, people are. .

Furthermore, gender segregation seems to play a more important role in the indian society than it does in Western society. Inindiathe more traditional roles of men and women are still present; men work and women take care of the household. It is hard for women to combine the working and private life because of these traditional roles. The women who do work are mostly in administrative jobs and customer service as depicted in the survey questionnaire, because they are seen as more friendly, they have a nice voice, are passionate about the customer and are seen to be more trustworthy than men. With this research it became clear that women are regarded more suitable for particular jobs like customer care and sales. Few women are to be found in management positions due to the household and IT obligations which lead to the fact that they cannot travel to customer sites, which is often needed for the higher ranked positions. Companies do say that they want to change and help women, but their priorities and policies show differently.

In general, it became clear that when dealing with Indians it is important to adapt and keep in mind the characteristics of the Indian culture and know that there is of course a difference in nationality, but certainly also a big difference in mentality. The Vodafone company mentioned that they offer women the same opportunities as men but this is not how their employees think about it and experience it. Regarding the research question, the following can be concluded. Western companies in Indiastimulate the emancipation of cultural values within the working environment and labor market by providing flexible HR policies, like a day-care or the opportunity to work part-time as depicted in customer care and sales employees. However, the question arises if these kinds of policies are already accepted within Indian society.

5.3 Implications for Further Research

More research should be conducted on the impacts of national culture on FDI and the influence of cultural differences on MNEs organisations. Most occupations are associated with masculine or feminine characteristics; during the research it became clear that women are mostly active in customer service jobs and less often in consultancy jobs due to job characteristics. It seems like there is a powerful gender symbolism when it comes to what kind of jobs women should fulfil. This means that when women cross these occupational borders they may find themselves in an isolated position, since they are expected to stick to the gender appropriate job.

Higher positions are often characterized as masculine, therefore fewer women fulfil them. Women in higher positions often come, according to our research, from rich families. These rich women have the power to change things, because their voice will be heard and they are not suppressed by their spouses. It is interesting to investigate how rich women could be encouraged to strive for the position of all women on the labor market. In addition, more and more women are studying inindia; it would be interesting to explore this development over the years.

Secondly, it would be challenging to research the acceptance of implemented managerial and cultural polices in relation to the existing traditional role models and take some external factors into account, like foreign investment policies and the role that the home and host company play.

5.4 Recommendations

The fundamental objective of the research is to empirically assess in what respects national cultural values influence the feasibility of Foreign Direct Investment using VodafoneIndiaas a case study in order to provide recommendations for future foreign investors.

The conclusion already clarified the differences in cultural practice and adaptability between subsidiaries inIndiaand their headquarters in theUK. In this paragraph, however, the findings will be discussed and implications for further research will be proposed, but first, recommendations for multinationals that consider investing inIndiawill be provided.

In short, multinationals that invest inIndiahave to take the Indian culture into account. Some specific Cultural and management policies for the subsidiary inIndianeed to be designed locally. For instance, religion is one of the main differences with the Western World. Indians are very attached to their religion and therefore religion intervenes also in the professional sphere. This results in certain requirements like a special room for praying and a special work schedule for the Hindu Faithful.

Second, the way employees are managed is challenging. According to some managers in Vodafone the Indian mentality is different when it comes to a sense of responsibility, interpersonal contact and the long term focus. Indians are very direct in cultural related issues and seem to be offended easily compared to Western norms and values. This means that the manager has to be more careful when it comes to work appraisals. Appraisals should be done taking the cultural variables and characteristics into consideration. In this matter managers need to invest more in the interpersonal contact with their employees.

Third, the women who do fulfil higher positions in the organizations could organize corporate goals like gender ratios in the organization they work for. However, rich women might not want do this, as they might be are afraid of losing their own position due to more competition. As a result the class difference stays intact.

Fourth, the managers of Vodafone mentioned some limitations in their current HR policies, for instance, the process of recruiting women. Most women inIndiaare active in administrative and customer service jobs. Managers experience that it is harder to find women for IT, software engineering or consultancy jobs due to the job characteristics, like the requirement for a technical background. However, it is not only the required education that leads to a lack of women, it seems also related to a traditional role model who assumes that women do allegedly not like to travel and they are not interested in these types of jobs. The limited HR policies make it impossible for women to combine their working and private life. This means that the traditional gender role model stays intact. Especially in lower classes, women are expected to do the household at home

Finally, there also some managerial policies implemented inIndiathat do not exist in Western countries. For example, one of the managers offers loans to his employees and he appointed one of his administrative workers to the function of employee support. A lot of employees at this company do not understand the workings and come up with questions about forms and letters they received. The employee support helps these people to fill in their form or to answer the letter.

5.5 Limitations

In the conclusion some factors are mentioned which may influence the adaptation of cultural policies to the Management practice of Vodafone. However, for the right interpretation of these conclusions some general limitations will be discussed.

Though the study has an international character, some cultural differences, language barriers and religious differences did not exist but the fluent understanding and communication between both parties, that is the interviewer and interviewee could have been influenced by sentimental feelings. Also the ideas and prejudices that the Indian interviewees had about people from western companies and Western countries could have influenced the answers of the interviewees. Like the one of the HR manager believed that the researchers already looked from a tunnel view to his country and his organization. He thought that everybody from a Western country has the idea that women inIndiaare oppressed by men and he therefore might have given desirable answers to deny this stereotypical view.

Finally, time constraints could have influenced the answers gathered during the data collection. In some cases there was less than fifteen minutes left to ask the manager questions about the integration of cultural policies to management practise and the consequent relevance of managerial skills in dealing strategically with cultural-related issues in the organisation.


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Hofstede, G. (2001). Culture’s Consequences; comparing values, behaviors, institutions and organizations across nations. Second Edition,London: Sage Publications.

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Free Essays

Globalization brought about rising number of students migrating to different countries for higher education


1.1 Background of study

Globalization brought about rising number of students migrating to different countries for higher education. As international educations’ landscape continue to change, students are seeking opportunities that are not only advantageous to their academic agenda, but also to their social and professional development within a global context (Marginso; Agawal, Said, Sehoole, Sorozi and De Wit; Daglish and Chan, cited in Fleischmann, Lawley and Raciti). There are great challenges in higher education brought about by globalization. “These challenges are seen as threats as well as opportunities for higher education around the world” (Arambewela &Hall, 2006 p142)

Research has shown that there is a continuous rise in the number of international student in to the Netherlands. Generally the transition of studying overseas either from a secondary school or from the work place in another country in always challenging and usually stressful. According to Pereda et al. international students are often less satisfied with their courses than other student.

Most international student i.e. full-fee paying students may have similar issues with their fellow domestic students but additionally they face some distinguishing issues like inadequate financial resource, social adjustment, loneliness and cultural shock etc, these may affect the students’ experience and hence their overall satisfaction. Therefore the need to understand international students’ perception of the service quality is vital.

For a business to achieve its financial objectives and survive, understanding what creates a great satisfying customer experience is crucial. Research has shown that high service quality contributes significantly to profitability. Understanding the students’ perception of service quality and satisfaction at the university is vital to management and policy makers in the design, implementation and evaluation of services, as the key to sustainable competitive advantage is creating memorable customer experience. Competing in a highly competitive market requires the delivery of superior service because it affects corporate image.

International students have a significant role to play on the country economy for the fact that the pay full tuition fees and they spend on the country’s home produced goods and services.

1.2 The significance of the research

This research will be a source of knowledge about issues concerning international students to the researcher who is an international student. Not only will the research be beneficial to the researcher it would benefit other individuals or groups of individuals because of the following:

This research focuses on the effect of adjustment issues on the overall services experience of the international student and student satisfaction which will add knowledge to the existing literature on higher education service quality.

The importance of students from other countries to colleges and universities cannot be undermined as they bring with them different cultures which adds to the cultural richness of the institution.

The outcome of the research will be valuable to different groups of individuals like university management team and lecturers, the students and their parents, and the country. To the university management it will provide insight about international students experience and their satisfaction which will help management in policy design and satisfying their customers the students and their parents. To the lecturers it would lead to a better understanding of the international students need and better delivery of the services hence increasing their satisfaction. Finally, the students will be better served by the university and their fellow students, their experience abroad will be enhanced.

1.3 Purpose Statement

This study aims at evaluating the service quality of the Netherlands University. The overall objective is assessing international student’s perception of the service quality provided and adjustment issues, and its relative impact on students’ satisfaction and potential loyalty.

Seek to:

–Examine the dimensions of service quality and the determining factors of international student satisfaction at the university

–Analysing the effect of interaction of service quality and adjustment issue on international student satisfaction and potential student loyalty

–gain an insight in international student perception of service quality in the Netherlands University

– To provide a set of conclusions and recommendations to enhance the level of quality of service provided by universities.

1.4 Problem Statement

As the international education continues to grow in size and international full-fee paying students expect to be treat as customers, they have several adjustment issues which affects their overall experience and hence satisfaction.

“How does the adjustment issues of international students affect the overall service experience and what are the effects of this experience on their satisfaction?”

This research is conducted mainly to find answers to the question above.

1.5 The conceptual framework

This research will be guide by the SERVQUAL survey developed by Parasurama et al. An adapted SERVQUAL model with some modification made to provide contextual relevance, will be used in this study as it will help the researcher measure the perceived service quality across the five SERVQUAL dimensions. The SERVQUAL is an instrument for assessing customer perception of service quality in service and retailing organization (Parasuraman et al, 1988)

Based on extant literature adjustment issues affect affects international students experience at universities. These adjustment issues are Academic, socio-cultural and psychological factors. The main key to success in studying abroad is the degree to which the student adjusts to the above mentioned factors.

Figure 1.1 Conceptual framework

The conceptual model above illustrates the study of international students overall service experience and their relative satisfaction with the Stenden university in the Netherlands. The study with the aim of evaluating the service quality and adjustment issues of the international student on their overall service experience, will also evaluate the effect of the experience on their satisfaction and hence word-of-mouth and if they will chose same university for further education.

The main dependent variable in this study is the student satisfaction with the university and the sub dependent variables are Positive word-of-mouth and same university for further study. The independent variables are service quality provided by the university and the student adjustment issues. These independent variables influence both influence the dependent variables.

When there is an overall good experience this will lead to student satisfaction which in turn will lead to a positive word of mouth and may want to further study at same university. If quality of service offered by the school is good and students adjustment to academic, socio-culture and psychological is good this will also lead to student satisfaction. On the contrary if the service provided by the school is good but students have problems with adjusting this may have a negative effect on their overall experience and student satisfaction.

1.6 Research Questions

The central research focuses on the analysis of the international students’ perception of service quality and adjustment issues at Stenden university and the relative impact on student satisfaction and potential student loyalty. The research aims at answering the following research questions:

Which service quality factors are most important to international students
What are the adjustment issues international students faces
What factors affect international students perception of service quality at the university
What are the determinants of overall international students perceived service quality
In what ways does the quality of service affect the satisfaction of international student
How does an adjustment issue affect student satisfaction
How can the overall experience of international students be enhanced.

1.7Ethical Consideration

All the information collected will be used strictly for the purpose/objectives of this research and the researcher will abide to the ethical principles of research. The researcher will strive to be objective in her judgment in scenarios that might come up by not taking side but by being critical.

1.8Research limitations

The period required to complete the research is short therefore time is a constraint. The results may not be generalizable as the research involves only a single organisation.

1.9 Overview of the chapters

The study will consist of five chapters followed by reference and appendices

Chapter 1 Introduction consists of:

Background of study
The significance of the research
Purpose of the study
Problem statement
The conceptual framework
Research questions
Ethical considerations
Research limitations

Chapter 2 Literature review

Higher Education

– International full-fee paying student

Service quality
SERVQUAL Dimensions
Adjustment issues of international student
Student Experience
Student Satisfaction

– Positive word-of-mouth

– Chose same university for further study

Chapter 3 Methodology

Research methodology

– Quantitative research

The research Process
The population under study
Research design
Data collection

Chapter 4 finding and analysis of Data

Demographic profile of sampling
Data analysis

Chapter 5 Summary and Discussion

1.10 Reference
Arambewela, R. and Hall, J. (2006). A Comparative Analysis of International Education Satisfaction Using SERVQUAL. Journal of Services Research 6 pg 141-146
Fleischman, D., Lawley, M., and Raciti, M. Community Engagement and the International Student Experience: Definition. From
Khawaja, N. and Dempsey, J. (2007). Psychological Distress in International University Students: An Australian Study. Australian Journal of Guidiance & Counselling 6(1) pg 13-27
Mehdizadeh, N. and Scott, G. (2005). Adjustment problems of Iranian international students in Scotland. International Education Journal, 6(4), 484-493.
Pereda, M., Airey, D., and Bennett, M. (2007). Service Quality in Higher Education : The Experience of Overseas Students. Journal of Hospitality, leisure, Sport & Tourism Education 6(2) pg 55-67
Qiang, Z. (2003) Internationalizatin of Higher Education: towards a conceptual framework. Policy Futures in Education 1(2) pg 248-270
Rogers, C. and Smith, P. (1999). Identifying the needs of overseas students: a monitoring exercise at the University of Southampton, August 1992. Journal of International Education 3(3), 7-24
Sadrossadat, S. J. (1995). Psyco-Social and Cultural Adjustment Among International Students at the University of Wollongong, PhD Dissertation, University of Wollongong.
Zeithaml, V.A. (1988). “Consumer Perceptions of Price, Quality, and Value: A Means –end Model and Synthesis of Evidence”, Journal of Marketing, 52 (2) Pg 2-22.
Zeithaml, V.A, Bitner, M.J.& Gremler, D.D.(2006). Services Marketing: integrated customer focus across the firm. International 4th Edition.
Zeithaml, V. A., Parasuraman, A., & Berry, L.L. (1990). Delivering Quality Service: Balancing Customer perceptions and Expectations. NewYork: The Free Press.

Free Essays

De-globalization and Globalization. Who is the winner?


If people look back the development of the world economy over the past decades. Manifestly, the world economy is in the time of prosperity and increasingly perfected, thanks to a notion ‘globalization’, which could be seem as one of the important contributors to promote economic prosperity. The birth of globalization was extremely changed the world economy structure, since it carried out an integrated world-wide market, both developing and developed countries could gain benefits from global integration, such as accelerating economic growth and sharing the overseas markets and plentiful resources, respectively. Some economists even pointed out that globalization has became an inexorable and irreversible trend of world market development. However, the belief of economic globalization was overturned again after the economic crisis in 2008. Specifically, in the process of globalization, there would be some inevitable problems and conflicts, which were criticized constantly over the past decades. With these criticisms, a new term, ‘de-globalization’, has stepped into the global market, apparently, some of the primary developed countries begin to reject trade liberalization, combining with the rising of protectionism. Undoubtedly, the reversed ideology took the global economic market into an embarrassing situation. In so doing, the conception of de-globalization was percolated into some countries quietly. But in fact, the global economic situation has already experienced a downturn during the First Great Depression in 1930s. And now, this is in another period again (Economic and Social Commission for Western Asia, 2002). By any possibility, the de-globalization seems always followed by each Depression. So it does, in the period of economic recovery nowadays, de-globalization has already permeated everywhere. A Philippine economist, Walden Bello(2004), an adherent of de-globalization, argued that globalization is losing its credits and being in the end, while ‘de-globalization is an opportunity’.

Unfortunately, despite the existence of de-globalization, the tendency of economic globalization would not be replaced, because any action would be took by de-globalization cannot continually exist, however, similarly the world economic structure could not get rid of the effect of this wave of de-globalization immediately but soonly. In respect that 80% success in Doha Round of global trade negotiation have more or less impact on Walden Bello’s announcements. Accordingly, it is worthwhile to investigate into the question. Is globalization truly come to the endThe main purpose of this paper is from financiers and economists’ perspective to illustrate de-globalization, which seems as one of outcomes of financial crisis, has side effect on economic recovery, and will not be a last winner in future world economic structure, while globalization definitely is.

In this paper, I will outline some possible reasons could give rise to anti-globalization generation, then followed by description and discuss some threats of de-globalization, like protectionism and trade barrier, combining with past examples to prove de-globalization is not the feasible solution of avoiding crisis, it would make crisis worse contrarily. Ultimately, globalization will be back on the economic platform. Finally conclusion will make some suggests that the financial globalization requires more nationals could make efforts on minimize dangers and maximize the benefits., as well as a few prediction for the future global economy structure.

Globalization provides both opportunity and challenge, but it follows with the generation of de-globalization

The definition of globalization can be briefly describe like a process of movement of goods, capital, labour across world-wild ( Bardhan, Bowles & Wallerstein, 2006). The benefits of globalization are overwhelming. For example, when countries open up, a variety of products would be exchanged frequently between rich and poor. This requires both participators should obey the fundamental principle of mutual complementarily and reciprocity, such as one country could offer comparative advantage to the other, in order to come the same target of common development. Additionally, some restrictions will be released, such as abrogating high tariff and limited foreign investment. These preferential policies help to expand economic markets and offer plenty of trade opportunities. In a sense, Foreign direct investment (FDI) is deemed to one important indication of economicglobalization performance and it refers to finance assistance for developing countries, so as the article ‘Economic and Social Commission for Western Asia’ in 2002 pointed out the global FDI inflow was increased from US$59 billion in 1982 to US$1491.9 billion in 2000. These figures illustrated the integration of the world economy experience rapid increase in 1990s. A higher FDI index means a nice condition of integrating into global economy.

Whereas, the course of globalization is unstable. The global FDI inflow suddenly slumped more than 50 percent in 2001, accounts for 735.1 billion. This may implies that in the process of global economic growth, there would carry certain risks and threats for the reasons of economic turndown. In some extent, globalization has possibility of increase inequality and poverty (IMF Staff, 2000). More apparently, there is common acknowledgment that the developed countries hold comparative advantages of economy, such as technology and management skills, while they are advanced so far than developing countries. Undoubtedly the maximum profit will belongs to the former, and the later may not gain benefits in the short run, even suffer enormous damage and clash. Besides, competition may be the primary principle, more and more wealth would flow into the winner instead of the loser.

Inequality and poverty, nevertheless, do not tell the whole story. The current world-wide economy is remaining in global economy structure. The growth of economic globalization is processed in challenges and opportunities. Even as Chow mentioned in 2001, in the year of China joined WTO, some investigators were worried about that, is it a positive impact on China’s economic development or a disaster for domestic enterprisesAs the matter of fact, China has obtained excellent achievement in economic improvement over these years. Globalization provides China large amounts of opportunity to export manufacture goods, and it also brings fearful harm, i.e. China is one of the biggest victims in the financial crisis (Hillebrand, 2009). Perhaps just because of these challenges and opportunities existence, the idea of de-globalization would come out. As Bello said that the world is in the end of globalization in 2009, while in the next year the chief Pascal Lamy said ‘Finishing Doha round by 2011 is technically doable’ ( Tralac, 2010), which illustrated the goal of decreasing trade barrier and trade protectionism has finished about 80 percent, the remaining 20 percent needs a lot efforts on political wishes. In a certain extent, the progress of Doha round negotiation takes a great strike to the spread of de-globalization.

The arising of de-globalization is not by chance, it might be a consequence by financial crisis. There is no doubt that the current world economy is growing fast, and the economic globalization has been obviously reached in a high level, while the potential risks are still existed. Even though crisis is not just result of globalization, there is a certain relationship between globalization and crisis (Lobaton et al 2001), i.e. Financial volatility and crisis will be infected by countries liberalized their financial systems. For instance, the financial crisis in 2008 was caused by American sub-prime loans. once sub-prime loans were collapsed, the crisis spread immediately to all over the world. That was lead to most countries were suffering inflation, unemployment even bankruptcy in the period of economic downturn. To confront with the serious recession, from small companies to international economic organizations carried out flexible measures, whereas some developed countries put protectionism and trade barrier forward on economic platform. So far, this has mostly promoted de-globalization raising.

The global economy structure ups and downs, but it does not mean the end of globalization

The global economy structure has experienced a downturn 70 years ago, and nowadays other downturn reoccurred after financial crisis. And this stage, protectionism as the main outcome of de-globalization.

Protectionism will not beneficial to economic recovery, on the contrary, it could make the matter worse, while free trade would be a better choice. As a result of financial crisis, some developed countries are motivated for the sake of keeping survival of domestic industries, they persisted in carrying out protectionism. One of the typical examples is United States, in Jan 2009, American claimed ‘American Recovery and Reinvestment Act’, abbreviated ARRA provision or ‘Buy American’ provision (Keffer, 2009), which intended to simulate the American economy by ‘Stimulus Bill’ to support American jobs and domestic industries. In despite of this provision was criticize by many critics, American still keep the foreign products away from them. But is it a really an advisable actThe ‘Stimulus Bill’ is only for supporting iron and steel industries, however if being observe deeply of ‘Buy American’, which means all products relate to iron and steel industries, from raw material to finished product, should be made, produced, packaged in the United Stated only. But in particular, the difficulties in this procedure make suspicions about the feasibility of this provision. Even Keffer, the president of EBAA Iron Sales, was come out the words that, the act of ‘Buy American’ provision is far reaching (2009). Additionally, the implementation of the rescue plan is still in animadversion.

Though the clause’s target is to stimulate American economy by creating jobs for Americans, in fact it seems to reverse. Because it can be argue that the disadvantages of ‘Buy American’ provision are likely overwhelmed by its advantages. Imaging that, there is a good chance for world economy could accelerate recovery, if governments are willing to persist in liberalizing the domestic financial sector cross countries capital movement, with making a concerted effort, the world economy will not be worse in the period of financial crisis. Since these contradictory debates were quickly increased, Some scholars have to reconsider the feasible of this provision, When United States sent a protectionism massage to the world and held in opposition to the leitmotiv of G-20, as well as WTO and Doha Round Negotiation. A bad impression might be set up by other nations. A literature was done by Hufdauer and Schott in 2009, pointed out ‘buy American is bad for America (and everyone else)’. In more specific terms, as the act was run counter to the world trade common goal, it could break U.S trade obligation and national reputation. More surprisingly, economic stimulus bills have little assistance on U.S. jobs, because both iron and steel industry are capital intensive, which may have less demand on labour force supply, It could be suppose that the reinvestment on iron and steel would make 1,000 new jobs, which is a small proportion, alternatively, if expand the plan to stimulate all manufactured goods, the most gain is 9,000 jobs. Apparently, U.S. iron and steel industry would end up with more costs than gains.

With the growing up spearhead of protectionism, a terrible consequence was embroiled in worldwide. from the aspect of economics, more and more economists are worried about that, United States, as a powerful developed country, was act protectionism rampantly, these would cause other countries are imitative of American’s tail. Imaging that if the other countries are imitating of practicing protectionism universally, the world economy situation, especially for global trade system, will in confusion and ultimately intensify the negative impact of financial crisis as well as deteriorate world economy environment. Since the clause arose a mass of discontentment by worldwide opponents, the supporters have brought forward some altisonant phrases, like ‘the purpose is to make sure we are creating jobs in the United States and not in China’ (Horsley, 2009), and ‘US taxpayer money should go to US workers’ (Hufbauer,et al 2009), at the same time, Europeans began to increase its pressure on US and went against of ‘Buy American’ clause. They stressed that the act not only aggravated protectionism but also induce retaliatory moves (BBC News, 2009). The more serious is that, American went ahead and did this could provoke spiteful retaliate on trade, which could be followed by the possibility of the relationship between trade partner break up, consequently, the danger may be the eruption of trade war.

As a matter of fact, terrible calamities can be traced back in history. Normally, they are catastrophic and temporary. For instance, regarding the great depression in 1930, the U.S. government legislated the Smoot-Hawley Act, which was aim to protect U.S. companies from foreign contention. Nevertheless this decision was completely deviated from the original purpose, according to the congressman Wally Herger (2010), the Smoot-Hawley Act was the ‘signature failure of 20th century protectionism’. Specifically, the tariffs, was increased a highest level in history recording, on more than 2,000 import products, and it became the highest tariff barrier over the world, then war of trade was broke out. In consequence, other counties took retaliatory tariffs on trade to United States, this could resulting in its import and export underwent a big loss, accounted for more than 50 percent, as well as world trade was slumped dramatically. Thus with the increase of protectionism would not the feasible solution of stimulating the economy recovery, instead it brings a lot of harm and pushes United States slumped deeper into great depression. So it can be seen that, the disadvantages of protectionism outweigh its gains.

Furthermore, the failure of globalization is a temporary phenomenon not permanent. These can be validated by the past lessons. For example, the tensional relations on trade between India and China have lasted for a long time, unfortunately the economic downturn heightens the tensions dramatically. (Wonacott, 2009). On Jan. 23 2009 India government carried out a ban on import of toys from China for 6 months (Srivaslave, 2009). During the period of implementing this restriction, the inventories from China import toys were sold out less than in one month, this give rise to toy’s price in India market went up by around 30 percent to 100 percent. In this case, India has no choice to compromise with protectionism soon. Actually, the 6 months ban was only lasting for 39 days.

While it is still need to admit that, whether ‘Smoot-Hawley’ or ‘India-China toys ban’, after all they are measures to meet an emergency, perhaps protectionism proceeds from nationalism by governments who are in suffer of great depression, so it seems that these kinds of rescue policies can be understood. Rescue policies might not have much impact on economic recovery but could help to comfort morale of their own communities in some extent. Once countries are hurting by huge unemployment, they must do something even if the ending will much severer than before. Whereas, through testify the failure of protectionism, to learn lessons of that, de-globalization would not the ending, a better global structure will be estimated later.


The financial globalization would retrogress into meltdown is seem as a necessity consequence of history process, the same as globalization, de-globalization is not the exception. Global economic integration has underwent vicissitudes over last decades, it reached in such high level at the beginning of 21 century, because it has the feature of quickly infection, financial markets become deeper and more advanced. One of the benefits of financial globalization is the preeminent contribution on developing countries commerce. Specially for China gained big advantage over export manufactured goods, however the prosperous phenomenon enable risks were invaded in market. Although financial globalization encourages economic prosperity, the potential risks and challenges also give rise to chance of appearance of financial crisis. Consequently, a shock of new round de-globalization was accompanied by the harm of economic depression. Thereby, globalization may have certain responsibility on the depression. So it does, any form of de-globalization activities are existed by the name of protectionisms will not be permanently lasted. The significant defect of de-globalization may be worse off the world economy than financial crisis does, usually these consequences are expressed as damage national reputation and rising of trade war. Hence, as the common wish of people, globalization would not really end, the current global structure is just in a temporary phenomenon, the reverse will be turn back again. Manifestly, all the comments can conclude in a word, ‘financial globalization is not necessarily to be reversed, particularly for partially integrated economies, even if the possibility of that happening still exists’ (Lobaton, et al, 2001).

As far as I concerned, the threats of anti-globalization should be read as a harrowing lesson that leans toward protectionism. For those prime ministers of countries, the most useful effort I can make is to suggest that blindly insist on de-globalization cannot really protect their profits from harmful impact of financial crisis. The possible solution is that to reconsider regulatory mechanism on international trade and find out an appropriate new order in the process of globalization, because it is irrational to reject one thing when have problems on it. Financial system globalization is inevitable to avoid. Globalization is the ultimately trend of the world, the same as the earth, is in round, and entirely a whole, so does economic system.

We should be smart optimists, in the sensitive downturn period, the global economic bodies are periodic reversal, but the most important is to remember that the global society begin to take into re-globalization soon. Just as Director-General of World Trade Organisation, Pascal Lamy, said that Doha round of trade negotiations is ‘technically doable’, it is still must complete remaining 20 percent by 2011, and it just requires much more efforts on political promise, the agreement will be achieved eventually. The future financial global structure of all countries may not only consider maximise self-interest. But more and more of them will choose to gain common development opportunity in becoming mutually beneficial pattern. Accordingly, keeping both rich and poor countries’ markets open, the growth in one part of the world can help stimulate the recovery over the world.

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Free Essays

Impact of Globalization Trends on Education Structures and Policies


Globalization is a widely discussed and contested topic. The process of globalization has profound impacts on the capacity of a nation to formulate its policies. It is accompanied by a seemingly endless process of change within education (Peters, 1992). Globalization is one main issue that is increasingly attracting the attention of most academicians, researchers and policy makers. It has gained relevance in the context of higher education. Education is an important driver of growth and poverty reduction. Education policies have been in existence for quite some time and have played an important role in the development policy. The most recent wave of globalization is likely to have profound effects on education structures and policies across the world.

What is globalization?

‘Globalisation’ is a term that describes the process of integrating societies by removing legal, political and geographical constraints (Trowler, 1998). Vulliamy (2004) describes it as a process which is rapidly integrating the world into one economic space via an increasingly networked global telecommunication system. A study by Tikly (2003), suggest globalization as an inevitable and largely irresistible phenomenon that contains opportunities and threats for national development. Globalization is therefore seen to be concerned principally with integration into global and regional markets underpinned by technologies
Although internationalization is not new to education policies, the forces and tensions under the umbrella concept of globalization constitute dramatically different environment in which education institutions and policy makers operate in (Marginson, 1999). The changes to which education structures in UK and around the globe is exposed are complex and varied (Marginson, 1999). Nonetheless, the globalization concept indicates that these changes are somehow interrelated. For the purpose of this analysis, we will stress the following tendencies within the overall force of globalization:
• Restructuring of the economic world system due to rapid integration of the world economy resulting from a transformation to a post industrial knowledge economy and increasingly liberalized trade and commerce.
• Rise of network society due to technological advancements and the expansion of the internet
• Increasing virtual mobility of people, knowledge and capital resulting from the development of new transport facilities, expansion of the internet and increasingly world integrated community
• Complex cultural developments whereby we have an increasing cultural exchange and multicultural reality on the one hand of homogeneity and cultural differentiation and segregation on the other hand.
• Erosion of the nation state and a widening of the gap between socio-political regulation and economic activity.
Such is the nature and complexities of forces associated with globalization. These forces define the social environment in which education structures and policies operate in (Green, 1999). Further, these forces condition the context in which education policies and structures have to operate and profoundly alter people’s experience of both formal and informal education (Green, 1995). For example, most institutions are transformed to become targets of corporate expansion and sites for branding. A more detailed explanation will be discussed below.
Impact of globalization on education structures and policies
Globalisation has profound impacts on education structures and policies. The impact is profound but also diverse, depending on the locality within the global arena. While there is often a danger of oversimplification and generalisation when dealing with globalisation, diversity has to be recognised and promoted to a certain extent. Various views have been expressed in literature with regard to the impact of contemporary globalization on the processes and structure of education worldwide.
1. Direct impacts on both the curriculum and pedagogy
Carnoy (1999) suggests direct impacts on both the curriculum and pedagogy. There is little evidence however to support such an assessment. Whilst attempts have been made to inject global awareness on school curricula in western industrialized countries, these have generally remained very low status add-ons. Carnoy (1999) continues to argue that whilst the direct impacts on pedagogy and curriculum are limited, the more general influences of economic restructuring and political ideologies are immense. For instance, globalization is putting considerable premium on highly skilled and flexible workers in an organisation hence increasing the demand for university education.
2. Emerging ‘bordeless’ higher education market
The most visible manifestation of globalisation in the education sector is the emerging ‘bordeless’higher education market. Globalization leads to huge increases in worldwide demand for higher education through opportunities created by the internet and new communication technologies which in turn shape an environment in which providers can expand their supply of educational facilities (Breier, 2001). Universities from Australia, North America, Europe and England are reaching out their educational provisions to the international market by actively recruiting international students through establishing branch campuses or via distance education, e-learning and other transnational activities (Breier, 2001).
These increasing demands bring new providers into the market. The business of borderless education comprises various forms and developments including the emergence of corporate universities, professional association that are directly active in higher education, and media companies delivering educational programmes among others (Alao & Kayode, 2005). These new providers extensively use the Internet and ICT as a delivery channel.
3. Erosion of national regulatory and policy framework
Globalization is also associated with the erosion of national regulatory and policy frameworks in which institutions are embedded (Slattery, 1995). The policy framework is subject to erosion in an increasingly international environment marked by globalizing professions, liberalized market place, mobility of skilled labour, and international competition between institutions (Slattery, 1995). Most institutions acknowledge this and thus develop consortia, partnerships and networks to strengthen their position in the global arena. Schemes such as the European Credit transfer system and mobility programmes such as UMAP and SOCRATES can be developed to stimulate internationalization in higher education with respect to the various national policy frameworks (Dearden et al, 2002). There is need for an international regulatory framework that transcends the eroded national policy framework and steer to some extent the global integration of higher education system.

4. Create new and tremendously important demands and exigencies towards universities as knowledge centre’s
Consequently, globalization creates new and tremendously important demands and exigencies towards universities as knowledge centers (Dearden et al, 2005). Research and development is crucial in any knowledge and information driven society. Globalization of research and development leads to a more mobile and highly competitive international market of researchers. Moreover, universities are called upon to take up responsibilities in the society, deepen democracy, act as mediators and to function as centre’s of critical debate. These higher demands placed upon them create tensions in institutions and stimulate other organizations to engage in such kind of activities.
5. Increasing demand for higher education worldwide
Finally, the continuing trend of globalization is expected to increase the demand for higher education worldwide. In the developed world, the society will always ask for highly qualified and flexible workers. Modernization, economic development and demographic pressure increase the demand for higher education in most parts of the world (Blanden & Machin, 2004). Governments and local institutions generally lack enough resources to deal with the increasing demand hence leaving an unmet demand to the international and virtual providers. This demand not only grows quantitatively but also becomes more diverse. The internet together with new technologies are increasingly providing new opportunities for more flexible delivery of higher education, thus increasing demand in some countries and meeting demands in others where traditional institutions have failed. These developments brought by globalization underpin the assertion that higher education will emerge as one of the booming markets in future (Blanden & Machin, 2004).
The need for an international regulatory framework
There is a big difference in the way countries deal with private universities and transnational higher education. Greece and Israel, for instance, rarely recognize their diplomas and degrees (Blanden, Gregg & Machin, 2005). While other countries residing in the developing world such as Malaysia recognize their incapacity to meet the increasing demand and thus welcome foreign providers (Blanden, Gregg & Machin, 2005). Principally, there is no reason to oppose a positive and open attitude towards transnational higher education and private universities.
In modern policy approach, it must be recognized that private and transnational institutions are also capable of fulfilling public functions. Despite the fact that traditional higher education institutions have a specific tradition and academic culture to defend, it should be amenable to competitors from diverse backgrounds. It therefore becomes imperative to have in place international and sustainable policy framework that deals with private and transnational providers.


The globalization trends are leading to a wide spread changes that are impacting on education worldwide. Nation states acknowledge this and have developed reforms to their educational systems in response to modernizing ideas and international trends. It should be noted that globalization represents a new and distinct shift in the relationship between states and supranational forces and that its impact on education is profound in a range of ways. Whilst this analysis does not present an exhaustive listing of the impact of globalization on education, it does bring out key dynamics and highlight important areas of action for academicians and policy makers with respect to globalization.
(1557 words)


Alao & Kayode (2005), Emerging Perspectives on Educational Assessment in an Era of Postmodernism, Commissioned paper presented at 31st Annual conference on International Association for Educational Assessment.
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Blanden.J & Machin.S (2004), Educational inequality and the expansion of UK higher education, Scottish Journal of political economy, Vol 54, PP.230-49
Breier.M (2001), Curriculum Restructuring in Higher Education in Post-Apartheid South Africa, Pretoria
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Dearden.L, Mcintosh.C, Myck.M & Vignoles.A (2002), The returns to academic and vocational qualifications in Britain, Bulletin of economic research, Vol 54, PP. 249-75
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Vulliamy.G (2004), the impact of globalization on qualitative research in comparative and international education, journal of comparative and international education, Vol 34, pp.261-284

Free Essays

How Globalization Has Contributed To Transnational Crime Including Drug Trafficking And Human Trafficking


Globalization refers to integration internationally through the exchange of world views, products, ideas and other cultural aspects. This is facilitated by advances in transportation and telecommunications infrastructure enabling openness in trade, finance, travel and communication (Aart Scholte, 2000). These are the major factors that have generated economic and cultural interdependence, creating economic growth and well-being, and unfortunately, also giving rise to significant opportunity for criminal activities and business (Nelken, 2008).

With these developments and economic globalization, global governance has failed to keep pace and has enabled the diversification and internationalization of crime which is presently deemed to have reached macro-economic proportions. Globalized crime includes trafficking and marketing of illegal and counterfeit goods across continents, smuggling of migrants in modern day slavery, organized crime gangs in various urban centers and insurgency, cybercrime and fraud, piracy, and money-laundering, among other vices. Despite the gravity of these threats, there persists a lack of comprehensive information and a global perspective on crime trends and the transnational criminal markets (UNODC, 2010).

This paper explores the ways in which globalization has contributed to transnational crime including the trafficking of drugs and human beings. Transnational organized crime (TOC) refers to crime that is organized and coordinated across national borders of more than one country and which involves groups or networks of individuals planning and executing illegal business ventures utilizing systematic violence and/or corruption. This type of crime has inadvertently been a significant beneficiary of globalization (Sangiovanni, 2005).

The International Monetary Fund (IMF) in 2000 identified four elementary aspects of globalization: movement of capital and investment, trade and transactions, migration, and the dissemination of knowledge, aspects which lead to the emergence of an international network of social and economic systems (Jones, 2010). Globalization is therefore defined as the intensification of social relations across the globe linking distant localities in such a way that happenings at a local level are shaped by events far and wide and vice versa. The processes of globalization do affect and are affected by the organization of business and work, social and cultural resources, economics, and the natural environment (Kohler and Chaves, 2003).

Human trafficking

Globalization through these effects has contributed to disparities in nations of the globe (increased inequality). This consequently leads to a disruptive effect that drives people into operations in illicit markets and organized crime in attempts to cope with the situations or towards the quest of people for better life. Due to inequalities leading to impoverishment and marginalization and political conflicts in certain parts of the world, as well as socio-cultural change and restrictive policies of immigration in countries that are better endowed economically, many individuals from developing countries hoping to find work and better life are willing to borrow heavily from their communities and to risk their lives for the opportunities desired (UNODC, 2010).

Since this is an illegal venture, these people often seek assistance from organized criminals with knowledge of the system, a trend that increases as nations tighten immigration controls. Being an illegal and clandestine activity, those providing the service have tremendous power over their charges and abuses are known to happen frequently. This particular set of events has led to what is commonly referred to as the trafficking of human beings, sometimes into modern-day slavery (Haken, 2011).

Examples of these are two northward smuggling flows that compose migrant trafficking: from Africa to Europe and from Latin America to North America. In the USA, the large Spanish speaking and Mexican expatriate population exerts a powerful influence on poorer states to the south with immigrants hoping to substantially improve their standard of living. Mexicans compose the largest percentage of illegal immigrants with 90% of them assisted by smugglers given the strict immigration controls and deterrents. Similar to this, the Africa to Europe flow has even stronger push and pull factors. This is however a fraction of the America migration partly due to the difficulty in crossing (hazardous voyages in which migrants are subject to exploitation) and the small size of the African expatriate population. This flow is evidently due to economic factors since the global economic recession has led to significant reductions in migrant trafficking (UNODC, 2010).

The trafficking of women for the purpose of sexual exploitation is also notable though the strong increase at the end of the Cold War appears to have stabilized and a diversity of nationalities have displaced the victims from Eastern Europe that earlier dominated this market (UNODC, 2010).

Drug trafficking

There is present a huge and growing market for drugs in neighborhoods across the globe. Drugs traded and which have significance on the global scale include cocaine and heroin (Sangiovanni, 2005). 90% of global supply of heroin comes from opium poppy cultivated in Afghanistan while a bulk of cocaine flows proceeds from the Andean region. Such drugs flow either in bulk or in small quantities following trade and travel routes to destinations across continents and the globe, as well as countries en route to major markets. Some of the proceeds of this drug trade are used to finance other crimes such as terrorism (UNODC, 2010).

Other forms of crime

Following trade and travel routes and enhanced by the expanded global tourism facilitated by less restrictive visa regimes and cheaper airfares, goods that are trafficked abound including firearms, environmental resources, and counterfeit goods ferried parallel to licit goods. Alongside these, crimes such as cybercrime and maritime piracy are facilitated by enhanced communication and increased movement (UNODC, 2010).

Taking advantage of the forces of globalization, criminals and associated organizations have thrived and grown under the current world environment using the processes outlined below to promote their activities. Institutions of state that should watch and stem these activities have however been hindered by bureaucracy and ‘red-tape’ as well as issues of sovereignty (Nelken, 2008).

Global trade and widespread deregulation

The facilitation of international trade through globalization despite its economic advantages inadvertently leads to difficulty in regulating global trade. This challenge is exploited by smugglers and traffickers in their pursuit of profit enhancing attendant crimes (Nelken, 2008). Also a significant contributor is the widespread deregulation of the global financial system since the 1970s. This has created loopholes which have allowed easy laundry of proceeds of crime by illicit actors with attempts at creating regulations and safeguards for not being very effective. These unchecked illegal activities provide mechanisms to fund terrorists, insurgents, and warlords with criminals adopting myriad distinct structures depending on their circumstances (UNODC, 2010).

Technological advancement

The advancement of technology becomes a double-edged sword providing convenience to end-users in positive uses but it is also harnessed for criminal activities, the coordination, planning, and execution of their operations in widespread locations across the globe (Kohler and Chaves, 2003). Mobile phone and internet technologies have enabled enhanced communication and the conduct of business through digital avenues. Criminal gangs also use these technologies in the conduct of their illicit activities such as soliciting customers for drugs and child pornography and the coordination of these activities. In the case of child pornography, customers pay online to receive sexual images and content of underage children. Legislation used to control and curb some of these online activities may not be applicable when servers are based in other countries hindering effective pursuit and stamping out of such illicit activities (Sangiovanni, 2005).

Mobility of people and goods and social networks

The migration of people across countries is also utilized by trans-national criminal organizations. The obvious activities enabled by this is human trafficking and smuggling but a more serious criminal activity is based on the legal migration of people in order to set up a social network, a significant aspect in criminal organization. Human and commercial flows are too intense to easily distinguish the illicit from the licit (Nelken, 2008; Sangiovanni, 2005).

A trans-national network engaged in criminality can be understood as a series of cross-border nodes connected through communication links and/or resource exchange. The social networks act as intermediaries facilitating the movement of resources mirroring operations of multinational corporations with widespread branches. The social networks facilitate the sharing of information and localized knowledge between the established nodes in a linear and flatter distribution of social nodes that allow maximum efficiency and flexibility in decision-making and initiative. This capability enables their quick reaction and alteration of operations which is particularly useful in evading authorities in pursuit, facilitating their high resilience (Nelken, 2008; Haken, 2011).

Lack of international cooperation

Though there exist many platforms for cooperation with regard to the sharing of information and intelligence aimed at curbing trans-national crime, very little is done to facilitate this information sharing (UNODC, 2010). With international presence of diplomatic missions, very few law-enforcement agencies pursue and are involved in the same objective. Countries such as Lichtenstein and Switzerland have tight secrecy and financial regulation protecting against the divulgence of their clients’ personal wealth to law enforcement agencies and bodies. This secrecy and protection favors organized crime and is thus employed by criminals to evade capture and freezing of assets by authorities (Sangiovanni, 2005).

Legal framework

With differing legal frameworks across various jurisdictions globally, what may be legal or what may require burden of proof varies in different countries. The burden of proof has different weights in various legal jurisdictions, a reality which trans-national criminal groups take advantage of in the globalized world basing and conducting their operations in countries that have lax frameworks or high thresholds for proof of criminality. For instance, drug trafficking in Singapore attracts a charge under the criminal conspiracy act, requiring little evidence of proof. Laws in the United States, on the other hand, require much more evidence or proof of conspiracy (UNODC, 2010).

There have been a number of arrests highlighting the effectiveness of law enforcement agencies and bodies in detecting and pursuing criminal activities. In reality however, many cases still go unnoticed and some un-reported. Figures released, in light of the lack of transparency and too many unknown variables, may not be an accurate reflection of the actual situation on the ground (UNODC, 2010; Kohler and Chaves, 2003).


It is a global concern that forces of globalization that facilitate economic growth, positive social and cultural change and enhances interaction across a shrinking world are also inadvertently being utilized for negative effects and are benefiting perpetrators of crime across boundaries of nations and continents. Transnational crime is taking advantage of the globalization process to enhance the speed and frequency of its conduct of illicit activities, and as well to avoid detection and adverse consequences of law in various jurisdictions. Criminals are increasingly adapting to quick changes and developments in technology, people and goods mobility to cross borders through social networks while exploiting the lack of international cooperation between countries. They also exploit different legal frameworks between countries to successively undermine states efforts in curbing their illicit activities.

Burdened by bureaucracy and red-tape, bounds of sovereignty, and an uncoordinated international system, law enforcement bodies and agencies around the world are ineffective in their endeavor to catch up with the flow and the dynamism employed by criminal organizations. Transnational networks have been utilized by criminal organizations to increase the speed and frequency of their operations and to increase the degree of challenge to the authority of the state with enhanced capacity to plan, direct and organize their criminal operations in countries while based in another.

Aart Scholte, J. (2000). Globalization, Palgrave
Haken, J. (2011). Transnational Crime in the Developing World. Global Financial Integrity. Retrieved 8/11/ 2013 from:
Jones, A. (2010). Globalization. Key Thinkers. Cambridge: Polity Press, John Wiley & Sons. ISBN 0745643221
Kohler, G. and Chaves E. J. (eds.) (2003). Globalization: Critical Perspectives. Hauppauge, New York: Nova Science Publishers. ISBN 1-59033-346-2.
Nelken, D. (2008). “Globalization and the growth of transnational crime”, in McCusker, R. (ed.) Transnational Crime: A global perspective, The Marketing & Management Collection, London: Henry Stewart Talks Ltd.
Sangiovanni, E. (2005). Trans National Networks and New Security Threats, Cambridge review of International Affairs, No. 18:1
UNODC, (2010). The Globalization of Crime: A Transnational Organized Crime Threat Assessment, United Nations Office on Drugs and Crime. ISBN: 978-92-1-130295-0

Free Essays

Effects Of Globalization On An Organization

1.0 Introduction

Globalization is the process of international integration resulting from continuous interchange of ideas, cultural aspects, products and other world views. The process of globalization in the modern day has been caused by the advancement in transport, infrastructure and telecommunication sector. The invention of the internet has led to the massive international integration promoting trade and various political interests. The development of global monetary systems such as PayPal and Visa has accelerated economic integration among several countries in the world. The continued growth in mobile telephony has also provided convenience in the globalization process through allowing global routing of voice and data. In the modern day, people are able to network and conduct business across the globe from the comfort of their homes.

The process of globalization has greatly influenced the normal business and organization’s operations with several organizations being forced to adjust to several changes in order to remain relevant and profitable in the current global markets. The research question the report will be seeking to explore is: – what are the effects of globalization to an organization?

Considering the numerous international changes that have taken place because of globalization in political and economic front, it is very paramount to establish the response of various organizations to the same changes. Therefore, this report is very appropriate because it seeks to expand the study and focus on individual firms.

Globalization has brought about a sea of opportunities for organizations to exploit, but has also brought about several challenges too. There have been reported cases of loss of culture, insecurity and unemployment among many other challenges. This research will seek to identify several negative and positive effects of globalization in the context of an organization.

The entire issue of globalization is very broad and is therefore impossible to comprehensively exhaust it. However, the study will seek to streamline on a number of positive and negative effects of globalization on an organization and leave room for further study on the topic.

2.0 Literature review

According to Theodore Levitt (1983), the difference in preference in business and consumer patterns would eventually disappear ushering in an era of global production of goods and services. This prediction has been realized in the 21st century whereby most of the firms develop products with a global perspective. The global integration foreseen by Theodore in the 1980s has provided a myriad of opportunities to organizations in the modern era.

A report by the World Trade Organization (WTO) in 2003 indicated that globalization has resulted in increased productivity due to the increasing international trade. Several trade agreements enabling entry of non-tariff barriers for products from various sources within the globe have been accented opening a new page in the global trade. This move has increased industrial developments within member countries. Rodrik (1997) argues that the introduction of non-tariff barriers has led to accelerated economic growth in the developing countries because of availability of markets for their products. Most established multinational firms have found it cost-effective to relocate to developing countries to establish plants there in order to cut the cost of labour. This has resulted in the creation of employment opportunities to the people in the country these firms are established. Availability of the outsourced labour has increased on their profitability as documented by Rodrick (1997). According to Stiglitz (2003), relocation of multinational companies to developing countries has increased pressure on the labour market resulting to massive restructuring of the firms in the developed countries.

Globalization has enabled most of production to migrate from mass production under Fordism to customized and value added products in the current post Fordism era in order to satisfy the growing customer base. In the current dispensation, product branding and brand development has taken centre stage outshining the actual product development. According to (Klein, 2000), most of the corporations in the modern era have invested a lot of money in branding and brand establishment through advertisements and sponsorships. The aspect of value addition has resulted in an urgent need for adequate market researchers to satisfy the ever changing consumer’s needs fully (Klein, 2000).

Technology has been embraced by most corporations as a result of globalized markets. The stiff competition within the global market has led most corporations to seek alternative methods to reduce on cost of production. As outlined earlier most firms have opted to relocate to places where the cost of labour is considerably cheap according to (Stiglitz, 2003), but still technology has been embraced as a tool to reduce on the cost of production. Most firms have computerized their operations reducing the cost of labour and used the computer networks to seek markets for their products hence reducing on advertisement and promotions costs. To cut the cost of middle-men, firms have opted to embrace technology according to (Thomas, 2000)

According to (Carr & Chen, 2001), most organizations have been able to tap on availability of integrated systems of global standardization to advance to new markets. An integrated intellectual property rights and patent systems allow an organization to retain their intellectual property rights anywhere in the world provided they are registered. This has helped curb piracy and duplication of copyrighted materials. Therefore, the parent organizations are given an opportunity to venture new markets without undue harassments.

Globalization has come with numerous positive effects. However, according to a study by (Oxfam America, 2002), globalization has brought about several negative effects among them increased insecurity. However, the issue of insecurity and global terrorism has been a subject of concern leading to the establishment and empowerment of international police and UN peace forces according to a publication by the UN Security Council, 2006.

3.0 Research methodology

Several research methodologies were used to collect the data for this study. The major method of data collection was reading the already published articles and academic materials on the same topic. Several online journals, books and academic papers were read to provide data for this research. The information from the existing literature was discussed by the group members to reach a consensus on what to include on the final report. To help remain objective and focused on the study, several research questions were developed.

To ensure data collected is relevant, representative and consistent with study under review, a careful sampling technique was developed in the distribution of questionnaires. Video call and social media interviews were also carefully reviewed to ensure that relevant candidates were interviewed. For the video call and social media interviews, people currently working in multinational firms were interviewed. Data collected from online books, academic papers and other forms of written sources were also carefully reviewed to ensure information retrieved is consistent with the subject.

Interviews were another method used to collect data for this study. Social media interview via twitter to an employee of a multinational organization was organized whereby the respondent responded to several questions we posted to him. The aim of the interview was to establish some of the gains and challenges the firm experiences as a result of globalization. The responses were documented and used in the data analysis phase of the research. The questions asked were simple, clear and short to avoid confusing the respondents. Absolute care was taken to avoid open ended questions which could influence the respondent’s responses. Additional questions were posted to the same respondent via an internet call using Skype. Similarly, questions asked through this method were short, concise and structured to avoid influencing the responses. Questions and answers provided by the respondent were recorded and used for data analysis.

Questionnaires were also developed for the above study. The questionnaires were developed and distributed randomly to several respondents within the college. A total number of 75 questionnaires were distributed, and the respondent’s responses used to analyze the data. The questionnaires were structured in such a way that they were concise, clear and short so as to avoid any confusion to the respondents. The interviewer was available upon request to aid clarifying issues where necessary, but very careful not to influence the respondents responses.

A random sampling technique was used in the distribution of the questionnaires. A sampling factor aimed at achieving a 6% of total population representation in the college was developed and questionnaires developed and distributed. Based on the college population, 75 questionnaires were distributed representing a sampling factor of 6%. In order to ensure that all the students had an equal probability of being chosen as a sample, a random picking was employed within the population. This method therefore ensured that every student had an equal probability of being selected. Data collected from the questionnaires was used in data analysis.

3.1 The big questions

The entire research was meant to establish the effects of globalization on an organization and all the questions asked to the respondents whether in the questionnaires or interviews were meant to answer that research question. In order to exhaustively cover the question, several other questions were developed to aid in the data collection. The questions were:

What is globalization
What are the causes of globalization
Have you witnessed any global change in your lifetime
How has globalization positively affected your life
How has globalization negatively affected your life
Which specific areas have improved as a result of globalization
Which specific areas has globalization affected negatively
How has globalization affected organizations in your locality
What are some of the suggested solutions to the challenges associated with globalization
4.0 Analysis and findings

4.1 Data analysis

From the responses, 57% of the respondents were for the opinion that globalization has a net positive influence to local organizations with 28% holding the opinion that globalization has net negative effects to the local firms. Of the total respondents, 15% were not sure whether the net effect of globalization has either negatively or positively affected local firms. The graphical representation of the respondents responses is demonstrated below.

It was clear from the questionnaires that a majority of the respondents identified several areas as the biggest beneficiaries of globalization. The four major areas that have been positively affected by globalization are: –

Foreign trade at 29% according to the respondents
Labour mobility 24% from the data collected.
Products and service standardization at 12% of the total respondents
Infrastructure and transport at 35% of the total interviewed respodents

It is necessary to note that this list is not exhaustive of all the responses the respondents gave but a summary of the major areas identified by the respondents. Areas like healthcare, sports, tourism, wildlife conservation and global peace initiatives were noted as having improved with globalization but had negligible percentages to be tabulated as compared to those represented below.

The respondents had also the opportunity to identify several areas they thought globalization has negatively affected. The major areas identified were;

Environment at 31% of the total responses
Security at 12% of the total interviewed
Employment at 12% of the respondents
Marginalization of local firms at 24% of the responses
Culture and tradition at 21% of the total data collected.

Just like with the positive effects, the one’s represented by the bar graph above are not exhaustive of all the areas given by respondents but a summary of the major points raised. Terrorism, global recession, colonialism and illegal trade were identified as additional negative effects of globalization.

4.2 Findings

4.2.1Benefits of globalization

Expanded markets

From the above data, it was found out that most of the respondents perceived globalization as a positive move and supported it as long as it brings economic growth and expanded markets. It was clear that globalization has expanded the markets for organizations and therefore making them more productive and profitable. However, most organizations have been forced to restructure in order to produce globally acceptable products. The current growth in the infrastructure, internet and telecommunication sectors globally was identified as the primary reason for the expanded markets. Internet has been perceived as the greatest contributor to the reduced advertisement and marketing costs and therefore leading to reduced costs of the products. This has made such products competitive in the global markets.

Free flow of labour

Globalization has enabled free flow of labour and therefore able firms have been able to recruit the best talents in the world without boundaries. This has enabled the firms to be more productive. However, this opportunity has been misused resulting to brain drain in the developing countries. . Cases of workplace discrimination, child labour and slavery have also been reported in the current times and this has been attributed to globalization.

Improved infrastructure

In order to trade efficiently, countries have developed several world class infrastructures. International roads, railways, telephony, internet, ports, air ways have been developed and constantly improved to ensure convenience and safety in movement of goods, services and data across the globe.

4.2.2 Negative effects of globalization

Environmental degradation

From the respondents, globalization has resulted in over utilization of environmental resources resulting to environmental degradation.

Marginalization of local firms

As most of the multinationals relocate to the labour friendly countries especially in the developing countries, the existing local firms have either been acquired or economically crippled. This has negatively affected the economies of these countries.


As the multinational organization firms relocate to the developing countries, many jobs in the firm’s original home are lost as a result of such restructuring. Continuous relocation has been accused of destabilizing trade unions in developed countries therefore weakening their bargaining powers on behalf of their members.

5.0 Conclusion

In conclusion, globalization has greatly affected the normal and strategic administration of organizations in the world today. Most of the organisations have been forced to restructure their normal working processes in order to satisfy the growing customer needs. Globalization has further opened global markets for products leading to increased productivity.

Globalization has to a big extent led to industrialization in developing countries due to relocation of big organisations to such countries in search for cheap labour. This has consequently led to the creation of employment hence accelerating economic growth in these countries. Globalization has led to poverty reduction in the developing countries by helping in reducing the gap between the rich and the poor through creating job opportunities. (Adams, 2003)

Apart from the many positive effects globalization has brought to organizations, there are several negative effects associated with it too. Some of the major effects include: –

Environmental degradation

Due to the expanded markets most of the natural resources have been over exploited resulting to degradation. Globalization has further accelerated industrialization which has led to over-establishment of industries above the nation’s carrying capacity leading to a net carbon production. The excess carbon emitted to the environment forms the component of the green-house gases, which have been ingredients of global warming.

Loss of culture and traditions

Most of the organizations have lost their culture and traditions because of the exposure to the global markets. In order to fit in the global markets, several local firms have been forced to restructure and invest in market research and innovative product development to satisfy the diverse customer needs.

Loss of employment

According to a UNCTAD, 1996 report, several workers in the developed countries have lost their employment in the restructuring processes within the organizations particularly in relation to relocating firms in the developing countries in search of cheap labour.

Victimization of local small and medium enterprises

Most of the relocated multinational firms use their financial power to victimize their competitors in their new countries. Lack of proper monitoring and policy formulation gives multi-nationals a competitive edge over their competitors forcing them into acquisition or insolvency (Boyer&Drache, 1996).

This study has tried to address the issue of globalization in the context of an organization. However, due to the scope of the subject the study has not covered the issue of globalization exhaustively. Numerous effects in relation to political, financial, economic and social implication of globalization have not been covered in this study. This research therefore leaves room for future study on the subject.

6.0 Recommendations

Several recommendations are made in order to mitigate the negative effects of globalization and harness the positive influences. Some of the recommendations suggested from the study includes;

Ensure full compliance to local and international law during establishment of multinational firms in the developing countries. This will ensure that the local labour and other resources are not exploited at the expense of their profits. Environmental issues are also addressed at this stage to avoid the establishment of industries that exceed the nation’s carrying capacity (FAO, 2004)
Organizations should embrace the modern methods of advertisements and marketing through the internet and the social media to fully gain from the extensive global population.
The firms should embrace technology as a tool for reducing cost of production. Mechanization would lead to reduced cost of labour hence producing competitive goods in the global markets.
The global consuming market in the world is dynamic and therefore needs constant market research and surveys to ensure that the organizations products are relevant at all times. It is therefore recommended that the organizations embrace market research in order to remain relevant in the market (Klein, 2000).
The local governments should endeavour to protect local firms from unhealthy competition from the multinationals. This can be implemented through government subsidies or tax rebates to the local small and medium firms in order to withstand competition from the multinationals
Governments should open their markets through such innovative products like non-tariff barriers on products from integration members. This would encourage more trade between countries resulting to increased economic growth to the member countries.
Monitoring of labour laws must be closely followed to guard against child labour and work place discrimination. Most of the multinationals established in the developing countries have been accused of child labour, slavery and work place discrimination. Such laws needs to be clearly monitored, and any firm contravening such should have their operating licenses revoked.(Black &Brainerd, 2002)
As the issue of globalization continues to develop, strong intellectual property rights, copyrights and patents monitoring needs to be done to avoid piracy or duplication of copyrighted materials. Such would ensure that firms would establish new markets in a foreign land without fears of copyright or patent infringement.(Thomas, 2000)

7.0 References

Adams, Richard H. Jr. 2003. International migration, remittances, and the brain drain: A study of 24 labour-exporting countries. Policy Research Working Paper No. 3069 (May). Retrieved August, 16, 2013 from <>

Black, Sandra E.; Brainerd, Elizabeth. 2002. Importing equalityThe impact of globalization on gender discrimination. NBER Working Paper No. 9110 (Aug.). Cambridge, MA, National Bureau of Economic Research. Retrieved August, 15, 2013 from


Boyer, Robert; Drache, Daniel (eds.). 1996. States against markets: The limits of globalization. London: Routledge.

Carr, M. & Chen, M. A. 2001. Globalization and the informal economy: How global trade and investment impact on the working poor. International Labour Organization. Retrieved August, 15, 2013 from <—ed_emp/documents/publication/wcms_122053.pdf >

FAO .2004. Trends and Current Status of the Contribution of the Forest Sector to National

Economies, FAO Working Paper FSFM/ACC/07. Forest

Products and Economics Division, Rome: FAO..

Klein, N. 2000. No Logo. London: Harper Perennial.

Oxfam America. 2002. Global finance hurts the poor: Analysis of the impact of North-Southprivate capital flows on growth, inequality and poverty. Boston: MA.

Ritzer, G. 2000. The McDonaldization of Society. California: Pine Forge Press.

Rodrik, Dani. 2001. The global governance of trade as if development really mattered. Background paper for the Trade and Sustainable Human Development Project, UNDP.

New York: UNDP.

Stiglitz, Joseph E. 2003. The roaring nineties: A new history of the world’s most prosperous decade. New York: W.W. Norton & Company.

Thomas, F. 2000. One Market Under God. London: Seeker & Warburg.

Free Essays

Globalization and Social Inequality


Social inequality is an issue that is much debated today within the social sciences, as well as other disciplines. Although very few would deny that social inequality exists and has always existed in human societies, it is not always clear through what mechanisms it manifests itself, along what lines it progresses, and how we can make life better for those affected by global inequalities. The question remains whether or not the world that we live in today is more equal than what people have experienced in the past. Although some might argue that Western development brings with it more equal rights, it is doubtful that this is actually the case. In recent years, we have witnessed a phenomenon called globalization which is, in short, a “widening and deepening of the international flows of trade, capital, technology and information within a single integrated global market (Petras and Veltmeyer 2001, p11).” Globalization has brought with it significant changes in the way people and nations relate to one another. In many cases, it has created new patterns of inequality, as well as reinforced old ones. The purpose of this paper is to investigate some of the effects of globalization and critically analyse them. I will argue that currently we do not live in a more equal world and neither are we moving towards greater equality. Rather, I argue that, through globalization, inequalities are exacerbated due to capitalism and the unequal flow of markets. This paper will look at how inequalities have evolved over the last two hundred years, why they have occurred, and how the pattern of inequality looks like today.

Kaplinsky (2005, p 28) and Jolly (2005) note that as early as 1776, economists such as Adam Smith became preoccupied with the issue of poverty and its consequences on inequality. During the 18th and the 19th century in England it was well-known that for every handful of rich aristocrats there were hundreds or even thousands of poor people. With the advance of industrialization, poverty only deepened (Jolly 2005). Karl Marx illustrated the problem perfectly by outlining the issue of the bourgeoisie owning the means of production, while workers sell their labour for minimal wages. Petras and Veltmeyer (2001, p 128) also stress that historically, a minority ruling class have used coercion and social institutions to control exploited people. Until the present day, this situation has not changed very much. Moreover, during the past decades, the disparities between the global North and South have become more and more evident, partly due to globalization. The movement of capital and trading agreements have mostly benefitted the developed countries, while the developing ones are forced to create economies that cater to the needs of the West. As Birdsall (2005, p 2) notes, “global markets are inherently disequalizing, making rising inequality in developing countries more rather than less likely.” This shows that we are not moving towards a more equal world. Moreover, even wealthy countries, such as the U.S. experience growing poverty rates within their own borders (Dillon 2010). Dillon (2010, p 60) stresses that “economic inequality has in fact grown since the late 1980s, as has the gap between the highest and the lowest income groups,” while Butler and Watt (2007, p 112) even call poverty rates in the U.S. “extreme.” It is evident from these accounts that unfortunately, unless measures will be taken, inequality will increase and dreams of an equal world are moving farther away.

The reality is that we live in an unequal world. There is an abundance of social issues that are caused by widespread inequality. Discrimination today manifests itself through the lines of class, gender, race, age, nationality, and other factors. Due to length limitations, this paper mostly focuses on economic inequalities. These are especially poignant when we look at the way people live in underdeveloped countries. This is a direct consequence of colonialism and the quest of the Western world to expand and develop their economic system. However, the expansion of the markets rewards only those who have more assets, such as financial and human capital (Birdsall 2005, p 3). Also, poor nations cannot attract investment and diversification, without a stable middle class and economic institutions. Consequently, the price of their exports declines and they fail to grow (Birdsall 2005, p 3). This is just an example of how globalization reinforces inequality. If markets are let to operate freely, as they do today, the world will become more unequal. Underdeveloped countries have not become more equal since interaction with the West has intensified. Beer and Boswell (2002, p 31) also stress that “disproportionate control over host economies by transnational corporations increases inequality by altering the development patterns of these nations.” Although some might think that international corporations can improve a developing country’s economy, this is not necessarily true. It is evident then, that the path that is nowadays advocated by many here in the Western world, does not serve the purpose of a more equal world. On the contrary, it exacerbates global inequalities.

The causes of growing inequality in today’s world are diverse and often not very easy to identify. However, the main cause might be the capitalist system that has spread internationally, oftentimes to the benefit of few and the exploitation of many. Trade between rich and poor nations creates patterns of dependency and unequal exchanges, leading to high income inequalities between the two (Beer and Boswell 2002, p 33). Despite the current emphasis on trade agreements and flows of trade that increasingly deepen, time and time again it has been stressed that this process creates inequalities and is detrimental to developing countries. In addition, the markets often fail. Some notable examples are the financial crises in Mexico, Thailand, Korea, Russian, Brazil and Argentina that took place in the 1990s (Birdsall 2005). Also, when a recession hits, the lower classes are the most affected. In turn, this leads to even greater inequalities between the rich and the poor.

There are many mechanisms through which capital and the markets contribute to a less equal world in our present time. Investment often causes disparities between foreign and domestic sectors. Also, international corporations usually do not reinvest profits in the local economies. Governments in developing countries adopt policies that prevent the lower classes from moving upwards, while at the same time they encourage the formation of a “managerial elite (Beer and Boswell 2002, p 33).” For those concerned about equality, it is alarming that neither foreign investors nor local governments fully understand the consequences of their actions. If this kind of policies will keep being implemented, levels of inequality will certainly increase. As Petras and Veltmeyer (2001) note, the politics of the Western Right are also at fault for the direction towards which we are heading. They say that the Right engages in “class warfare” through privatization and the concentration of power in the hands of few (Petras and Veltmeyer 2001, p 148). Thus, social institutions, as well as economic policies serve the interests of wealthy corporations. The focus of present neoliberal politics is not to decrease income disparities, but to increase the wealth of the few. Staying on the same course guarantees that the world will become less and less equal.

I have argued that we do not live and a more equal world. On the contrary, the globalization of markets has had a negative impact on the livelihoods of many. The effects of capitalism had started being seen a long time ago. Income disparities always existed between those who own the means of production (the bourgeoisie) and the workers that work in their factories. The income gap between the lower class and the upper class increased steadily with time. In addition, global exploration and colonization has led to even greater disparities between the West and the colonies. Under the current system, developing countries find it almost impossible to reach the same level of wealth and stability as Western countries. However, even developed countries have growing poverty rates within their own borders. These rates have been increasing over the past years, while the gap between the rich and the poor is widening. The world is becoming a less equal place. The free flow of markets and an unregulated capitalist system are mainly to blame for income inequalities. Poor nations have become dependent on rich nations and economic crises affect lower classes the most. With both corporations and national governments driven by profit, no one looks at the long-term effects that trade has on inequality. Moreover, the rise of neoliberal politics in the West encourages the maintenance of the same pattern of increased inequality and dependency. Despite the optimism of some, the truth is that globalization, as it is occurring today, is only increasing disparities between classes, between nations, and between the global North and South. The evidence shows that the world is at least as unequal as it was two hundred years ago. Current economic policies will only serve to make it less and less equal. If drastic measures are not taken soon, there is little hope that our world will become a more equitable place.


Butler, T. and Watt, P. 2007. Understanding Social Inequality. London: Sage.

Beer, L. and Boswell, T. 2002. The resilience of dependency effects in explaining income inequality in the global economy: a cross national analysis, 1975-1995. Journal of World Systems Research, 8(1), pp.30-61.

Birdsall, N. 2006. Rising inequality in the new global economy. International Journal of Development Issues, 5(1), pp.1-9.

Dillon, M. 2010. Introduction to Sociological Theory: Theorists, concepts and their applicability to the twenty-first century. Chichester: Wiley-Blackwell.

Jolly, R. 2005. Global inequality in historical perspective. WIDER (World Institute for Development Economic Research) Angle, 2.

Kaplinski, R. 2005. Globalization, Poverty and Inequality: Between a Rock and a Hard Place. Cambridge: Polity.

Free Essays

Effects of Globalization on the Micro Level

Globalization was generally derived from the assumptions of neo-classical economics. In order for a country to achieve economic development, it must open its economy to trade liberalization. Trade liberalization serves as a redistribution mechanism of capital and goods. Poor and developing countries can export unlimited volume of goods and services to developed countries. Added to that, the capital inflows from developed countries would serve as a stimulant for capital build-up in the recipient country (developing countries).

Because developed countries usually experience labor shortages, labor immigrants from developing countries would serve as the compensating medium. Here economists assume that the “income” derived from labor migration would then serve as capital outlay. While for many economists globalization is a positive force of development, certain practical issues were laid exposing the bad effects of globalization on the micro-level (individual and communal).

There are generally two negative impacts of globalization on the micro-level. The first impact focuses on the condition of the labor force of developing countries (exposed to globalization). It is generally noted while globalization aims for wealth redistribution between developing and developed countries, inequality in terms of income and capital increased (Goldberg, R.K., and N. Pavcnik, 2006). Skilled workers from developing countries are paid less than unskilled workers from developed countries. In China, for example, after opening to globalization, several multi-national corporations (which are based in developed countries) transferred a significant portion of capital to the country.

The reason can be derived from the cost of labor in the country. It is estimated that the cost of labor in China is one-eight (on the average) compared to labor cost in developed countries (Goldberg, R.K., and N. Pavcnik, 2006). Multi-national corporations found it rational to shift a significant portion of their capital to labor-rich China. The economic assumptions are clear. Labor surplus would drive the market to realign wages. The more workers, the less average labor price. The inverse relationship between the number of needed workers and labor price pushed these corporations to increase their capital inflow to China. Needless to say, because labor costs are below the market price of labor, these multi-national corporations can increase their profit level, generating new capital (to be transferred to the “mother” country).

Added to that, it was found out that after 10 years of exposure to trade liberalization, China experienced vast disparities in terms of income of its own citizens. Urban workers, on the average, have generally higher incomes than rural workers. Needless to say, these urban workers are generally better off than their rural counterparts. Thus, the vast disparity of income between developed and developing countries is mirrored out in the labor price of urban and rural workers. It can be said that the macro-level effect of globalization resulted to internal income disparities. This owes much to the economic rationalizing of multi-national corporations regarding the “proper” handling of labor costs.

Exposure to longer working hours and poor working conditions are also major impacts of globalization in the workplace. These impacts severely decreased the labor productivity of developing countries. Stallings (2007, pp. 6-7) noted that in Latin America, the opening of several countries to trade liberalization and privatization led to capital build-up in the short-run. Foreign direct investment and other capital inflows contributed to economic growth as well as sustainability of the industrial sector.

The labor sector though suffered. The expected level of employment growth as well as improvement in labor productivity in many sectors of several Latin American countries was not met. In fact, some industries like the garment and textile industries suffered from stagnation and high-costs of operations. Several governments were forced to implement longer working hours and tax incentives to several multi-national companies. The general effect: labor productivity decreased by half. Strikes became a common sight in the streets of major Latin American cities. Companies owned by local residents were forced to close as a result of the policy. Multi-national corporations though can easily shift their capital base to countries undeterred by political and economic debacles.

We come now to the second general effect of globalization on the micro-level. Globalization requires that all national currencies be on a floating status. This would allow the efficient transfer of capital from developed countries to developing countries. As such, many economists assume that this policy would generally improve the overall economic standing of developing countries in terms of capital outlay and technology acquisition. This is though not the case.

Akar (2007) noted that floating currencies would essentially alter the predictability of the market. Inflation, or in many cases stagflation, are usually the main economic problems in developing countries. Because developing countries only own a small percentage of the world’s total monetary reserve, they can easily be affected by price changes in the world market (Kasapidis, R, 1999). Price changes can destroy the predictability of the markets of developing countries. Inflation can become highly unpredictable.

Thus, this puts financial institutions on a very high-level of risk. This high risk can be translated to low-level investment schedule of firms. Nonetheless, the overall interest rate increases as a result of monetary downfalls. Increases in interest rate causes inflation and concomitantly, low economic output.

On the individual level, as inflation progresses, the present volume of goods and service that can be bought by the value of money is less than the previous volume of goods and services bought. In a simple relationship, globalization requires that national currencies be on a floating status. For developing countries, putting its national currencies on a floating status increases the risks on financial institutions. These risks are translated to high inflation and low economic output. The end: the current purchasing power of a consumer’s income is devalued.


Akar, O. (2007). Globalization. Available from: <> [Accessed 24 October 2007].

Goldberg, P.K., & N. Pavcnik. (2006). Distributional Effects of Globalization in Developing Countries. Available from: <> [Accessed 24 October 2007].

Kasapidis, R. (1999). The Opportunities and Dangers of Globalization. Available from:  [Accessed 24 October 2007].

Stallings, B. (2007). Globalization and Liberalization: A View from the Developing Countries. U.N. Economic Commission for Latin America and the Caribbean. Available from: [Accessed 24 October 2007].






Free Essays

Globalization of Enterprise

2012 Nigel. S. Paltoo – A11904 10/9/2012 Globalization of Enterprise 715 GE Source:Flikr. com ASSIGNMENT COVER SHEET(to be completed by the student)| AIB student ID number:| A11904| | | Student name:| NIGEL. S. PALTOO| | | Course name:| MBA -GENERIC| | | Subject name:| Globalization of Enterprise 715-GE| | | Subject facilitator:| Dr. Brian O’Toole| | | Teaching Centre:| NATIONS UNIVERSITY-GUYANA| | | No. of pages:| 17| | | Word count:| 2708 from Intro to Conclusion (2500 +10% tolerance) | | |

DECLARATION| I, the above named student, confirm that by submitting, or causing the attached assignment to be submitted, to AIB, I have not plagiarised any other person’s work in this assignment and except where appropriately acknowledged, this assignment is my own work, has been expressed in my own words, and has not previously been submitted for assessment. | ASSESSMENT SHEET(to be completed by the examiner)| Student name:| NIGEL. S. PALTOO| | | Course name:| MBA -GENERIC| | |

Subject name:| Globalization of Enterprise 715-GE| | | Assessor/marker:| | | | COMMENTS| Principles learnt (for example, number and understanding of principles referred to, their influence on the structure of this paper, number and correct citations of references, use of appropriate jargon)   | | /4| | | Application of principles. That is, the analysis and evaluation of the example problem based on the principles, including the final recommendations and their justification| | | /8| | |

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NATIONS UNIVERSITY–GUYANA®AUSTRALIAN INSTITUTE OF BUSINESS-MBA ®GLOBALIZATION OF ENTERPRISE-715 GEASSIGNMENT Comparing and contrasting two countries for international expansion into by local apparel company Denmor Garment Manufacturers. | Assignment: You are the manager of a business (in your country or region) that is thinking of going global. Compare and contrast two different overseas markets for the international expansion of your business, covering a consideration of: 1 • Political economy issues • Cultural issues 3 • Entry strategy 4 • Strategic alliances Start your assignment with a very brief description of the entrepreneurial business that you are writing about. This business can be your own business or one that you are familiar with, or it can be a hypothetical one based on an amalgam of several businesses of which you are aware. Conclude the assignment with whether the business should go to one or the other of the two countries, or none, or both. The total number of words should be 2500 words.

For penalties regarding exceeding the word limit, please refer to AIB Style Guide. For guidance on how to write an assignment, please refer to AIB Assignment Guide. Please note, the word count does not include your cover page, an abstract, table of contents, list of references or appendices. Thus you can place any supporting material that exceeds this word limit into appendices. However, a reader should not have to look at an appendix to know about the main thrust of the points you are making in your assignment.

So make sure all your main points are in the body of your report and refer there to the appendices that will support the points you are making in the body of your report, because the reader may not look at the appendices otherwise. Abstract: In the last quarter of the 20th century to present day the world economy has become more integrated and interdependent than ever before, with businesses both large and small expanding beyond their traditional local markets as barriers to world trade came down and technology advanced resulting in significantly lower communication and transportation costs.

This phenomenal change in the international environment in which business is conducted has resulted in increased levels of foreign direct investment by companies from developed countries in lesser developed economies such as the Third World as economic benefits were sought through the globalization of production as well as markets. (Hill 2011, p. 5)

With the benefits being widely seen to outweigh the disadvantages smaller companies are looking for the arrangements internationally that would best serve their interests of growth and expansion with companies from lesser developed countries now also looking to capitalize as well by creating synergies at the basic level by expanding their market horizons overseas, penetrating first and expanding as demand and relationships develop. This shift in the world economy towards greater integration and interdependence is one way of describing Globalization (Hill 2011, p. ). Globalization can be seen as the increase of functional integration between internationally dispersed economic activities, which is quite recent, as opposed to the older phenomenon of “Internationalization” which refers to the geographic spread of economic activities across borders and oceans which started in the 17th century when the colonial powers started dividing up continents in the New World in search of raw materials and markets (Devaraja 2011).

In Guyana, the more established companies have been seeking avenues to expand their markets overseas through exports and by establishing lower level strategic alliances. Hardly any local company has sought to globalize its production to increase its profitability. For any company looking to embark on international venture the interdependent political, economic and legal systems of the target country along with its underlying cultural fabric must be examined and analyzed in detail before any investment is made (Hill 2011, p. 45).

In Guyana, a small English speaking, third world country in South America, the more established manufacturing companies have been seeking avenues to expand their markets first through exports and also by establishing lower level strategic alliances overseas. Denmor Garment Manufacturers (DGM) is one such SME within the apparel industry in Guyana that has benefited from the effects of Globalization by having contracts to manufacture specific designs from companies owning major brand names in the USA (which are looking to lower their production costs) as well as by exporting directly to major retailers overseas.

Table of Contents| Page. | 1. 0 Introduction| 9| 2. 0 Denmor Garment Manufacturers| 9| 3. 0 Current Situation with DGM| 10| 3. 0 The challenge of international expansion| 11| 4. 0 Political and Economy Issues| 12| 5. 0 Cultural Issues| 15| 6. 0 Entry Strategies| 16| 7. 0 Conclusion| 17| Bibliography| 18| 1. 0 Introduction: The aim of this research is to analyze the potential of two countries short listed as possible candidates for the further international expansion of DGM.

These two options are reviewed in the perspective of the main issues that have to be taken into account when considering business expansion into foreign markets viz Political economy issues, Cultural issues, Entry strategy and Strategic alliances with the state of affairs in both countries being compared and contrasted with a decision being arrived at as to whether to expand into one, both or none of the two countries. It would be impossible to look at all aspects of the Socio-Economic, Cultural and Political landscape of the countries being considered therefore only the reas most likely to have an impact on DGMs’ venture are considered in the context of the nature of its business and the products on offer. Denmor Garment Manufacturers (DGM): Location: 7, 8, 9 Coldigen Industrial Estate, East Coast Demerara, Guyana. DGM is a private company in Guyana which commenced operations in 1997 and currently employs 1000 persons of which 97 % are women. Denmor has the capacity to respond to orders of up to 50,000 dozens of garments per month, and can produce up to 15 different styles at the same time.

Approximately 75 percent of Denmor’s activities involve full production (where the manufacturer manages all aspects except design), demonstrating an ability to carry out value-added manufacturing activities and supply-chain management. 100 percent of its products are exported, with its customers including some of the world’s leading brands and department stores, including Russell Athletic, Victoria’s Secret, Paris Accessories, Van Heusen, JC Penny and Wal-Mart. (Goinvest n. d) 2. 0 Current Situation with DGM:

As it is DGM is presently a small part of a buyer driven value chain environment where the large retailers, marketers and brand name manufacturers have established a diverse decentralized network of production in third world and developing countries and are leveraging at the design and retail stages (Devaraja 2011). Having had a fair degree of success from its operations and acquired considerable know-how from its alliances DGM is looking to expand its market base and production capacity but is constrained locally by the limited supply of labour for any new factory and weak local demand for beach wear and sport uniforms.

The key processes of DGM’s operation are very labour intensive involving the cutting of fabric and making of components by sewing machine and assembling into final product, this requires a semi-skilled to skilled level of labour. The challenge facing DGM is to remain a competitive player and to be able to increase profitability either by getting a bigger bite of the value chain from the companies overseas (expanding more into full production),developing its own brands or by securing new large brand name manufacturer customers and orders.

It is therefore important that DGM look to increase its factory capacity while at the same time keeping costs down thereby increasing attractiveness to buyers. Faced with a limited labour supply and a high cost of energy and sometimes erratic power supply for sewing machines and air-conditioned factories it has become critical that DGM seriously consider the alternative of moving overseas. After much consideration DGM’s management has concluded that the area with greatest growth potential would be to expand using its own designs and brands.

DGM has acquired significant expertise in the production of high end female underwear and in athletic uniforms from producing Victoria’s Secret products and Russell Athletic brand uniforms for the US NBA and is confident that it can tap into the supply chain for fabrics and using its own design team produce a new line of female underwear, beachwear and generic soccer uniforms that would have a higher quality and a far cheaper price, however in Guyana it is constrained by weak local demand and labour supply. . 0 The challenge of international expansion: Like any other firm contemplating international trade is faced with three strategic decisions about which countries to enter, when to enter and at what scale the entry would be. Consideration would have to be given to potential opportunities as well as areas of risk which must be closely analysed (Hill 2011).

The countries selected for consideration would first be compared and contrasted with their distinct political, economic and cultural realities being looked at then options relating to possible entry strategy (ies) will considered along with strategic alliances that may be advantageous or required The two countries being considered for expansion into are Brazil and Trinidad. Before these two countries would have been brought up for further consideration they would have been on a longer list of potential candidates he rest of which would have been eliminated with Brazil and Trinidad meeting the basic criteria of having a significantly larger population than Guyana, they are both developing countries (better off economically than Guyana), with a free market system in place, manageable national debt and single digit inflation rates and both countries are geographically close by. A decision has been made that once the two options are found to be acceptable then entry into that market will be made within six months. Map of South America and Southern Caribbean Islands showing Brazil, Guyana and Trinidad & Tobago. Source: www. worldatlas. com

Political economy issues: Brazil and Trinidad are both democracies, having had free and fair elections for the past two decades. Both countries currently have female presidents. Brazil is a Federal republic consisting of twenty-six states the smallest of which is far larger than Trinidad which is a twin island republic with a sister island Tobago. Both countries can be considered politically stable with the most recent incidence of serious turmoil being twenty two years ago when Trinidad had a failed coup with members of the Jamaat al Muslimeem trying to seize power. Individualism is respected in both countries but more so in Trinidad.

Indicator| Brazil| Trinidad| Size | 3,287,357 square miles| 1,980 square miles | Population| 197 million (2011 est. )| 1. 3 million (2011 est. )| | | | Government| Federative Republic| Democratic Republic| Legal System| Brazil is a former colony of Portugal. The Brazilian legal system is based on Civil Law. | Former British colony. The legal and judicial system is based on English common law and practice. | ECONOMIC| Brazil| Trinidad| GDP| GDP USD $2. 45 trillion Brazil is the sixth largest economy in the world. | USD $ 24. 63 billion| GDP per Capita| USD $4,803| USD $16,699|

GNI per Capita| USD $11,500| USD $24,940| Exchange rate| BRL 1. 00= GYD $100. 00| TT $1. 00 = GYD $30. 00| Inflation | 5. 24 %| 5. 4%| Reserves| US$ 349. 708 billion| US$ 9. 692 billion| Debt as a % of GDP| 65. 1%| 37. 3%| Unemployment| 6%| 5. 5%| Source: Communicaid and Central Intelligence Agency World Fact book and www. tradingeconomics. com The data presented indicates that both Brazil and Trinidad are about as politically stable as Guyana with both countries being economically better off. However in Brazil there is a greater divide between rich and poor and a higher level of crime relative to Guyana and Trinidad.

Both Brazil and Trinidad are currently experiencing low levels of inflation and unemployment Brazil unlike Trinidad has a tax on financial transactions; Brazil is far more bureaucratic when it comes to starting a business taking up to six months to get all the paperwork done whereas in Trinidad it is considerably easier and should only take one to two months. In Brazil getting certain legal permissions for establishing a business expedited may require the payment of bribes. There are no limits to repatriation of registered capital and no taxes on profits repatriated from both countries.

DGM would have to consider the higher level of bureaucracy in Brazil when it comes to getting things started (which creates opportunities for bribes to be extorted) as compared to Trinidad. A business class visa is required for investing and doing business in Brazil with a minimum level of investment being USD $50,000 being required. A Guyanese can transact and conduct business in Trinidad without a visa; however a work permit would be required. In Brazil it may be necessary to hire a middleman (despachante) to navigate the maze of bureaucracy. (CIA World fact book 2012, Communicaid 2012).

On the key issue of protection of property rights both Brazil and Trinidad have legal provisions for the protection of real assets and intellectual property rights, both countries having signed international agreements, however, the judiciary in Brazil is inefficient and subject to political as well as economic influence with piracy of copyright material being fairly widespread. Brazil presents a higher degree of risk due to lower levels of property rights protection. Trinidad unlike Brazil is a member of CARICOM just like Guyana which allows free trade among members. There is a free trade zone in Manaus in Brazil.

Taxation in Brazil is extremely complex and not as uniform as in Trinidad. Cost of labour in both Trinidad and Brazil is higher than in Guyana but is more available. Cost of energy is cheaper in both countries relative to Guyana. (CIA World fact book 2012, Communicaid 2012). Politically and economically there are fewer challenges for DGM to expand to Trinidad as compared to Brazil, however with inflation levels and unemployment levels being almost equal and exchange rates being stable there is still a degree of attractiveness to expand to Brazil if ways around the red tape can be achieved.

CULTURAL ISSUES: Cultural differences can present a variety of problems when looking to conduct business in foreign markets; from language barriers, employee behaviour and work ethic to strategic planning, it is therefore essential that entrepreneurs familiarise themselves with more than just the laws governing a society and obtain an understanding of the underlying values,norms and mores so as to be able to discern what is different and what is the same, what is acceptable and what maybe considered taboo or disrespectful. (Hill 2011)

Trinidad is an English speaking Caribbean country with a diverse multi ethnic society that has fused relatively well into a distinct “Trini” culture with a mix of East Indian, African, European and American influences, religion is mainly Christian, Hinduism and Islam. Carnival is celebrated annually with Soca and Calypso music, elaborate costumes and floats, parades and beach parties over a one week period. Trinidad like Brazil is very nationalistic and proud of their country and its national symbols and flag colours. Trinidad is also a soccer crazy nation but not to the extreme as Brazil.

There is a strong American influence in the way business is conducted in Trinidad which is very much alike with the way meetings and other business dealings are conducted in Guyana; however it is somewhat different in Brazil. Brazil is Portuguese speaking with a far larger population who are predominantly Roman Catholic, however just like Trinidad there is an annual Carnival and a strong soccer and beach culture since Brazil has some of the most attractive beaches on South America’s Eastern Atlantic coastline and year round sunny weather.

There are more cultural issues to be considered by DGM in looking to expand to Brazil than Trinidad (CIA World fact book 2012, US Commercial Service-US Department of Commerce 2012). Brazilians do not like to discuss business during lunch whereas that would be ok in Trinidad, coffee drinking is a ritual in Brazil whereas having a semi formal meeting over beers or whiskey is normal in Trinidad. There are a few hand signals acceptable in Guyana and Trinidad like the “OK” that would be considered insulting in Brazil (Communicaid Group Ltd 2012).

It would therefore be a bit more challenging from a cultural perspective for DGM to do business in Brazil as compared to Trinidad. Both countries have a well developed tourism industry with visitors from the US and Europe looking for differentiated products with unique designs, fabrics and colour. Although both countries presently have female presidents, males dominate business as such initial business meetings should be male led, but with DGM trading in the female apparel industry including a female during negotiations would be wise.

Entry Strategy: Having made a decision to expand to another country the management would need to consider all the risks and decide on the timing, mode and scale of entry to be adopted (Hill, 2011). In entering a foreign market there are six modes of entry that a firm can consider each with advantages and disadvantages ranging from Exporting, Turnkey contracts,Licensing,Joint Ventures to Wholly Owned Subsidiary. (Hill 2011,p. 32) Brazil presents a more challenging environment both politically, economically and culturally but DGM should not rule out expansion into the Brazilian marketplace since the sheer size of its population and proximity to Guyana offers immense potential, however, at this time DGM should look at exporting finished products by finding a wholesale distributor with a wide network of resellers to export beachwear to and also seek to market team uniforms directly to soccer teams especially in the lower divisions and have a local representative do meetings and collect sizes and measurements etc. ith delivery being done through this intermediary but with payments being remitted by bank transfers directly to DGM. By going the export route to Brazil import tariffs would be an additional cost as opposed to having a factory in the Manaus free trade zone, as such DGM should gauge the acceptance of its offerings and then look to develop strategic alliances at the manufacturing level later on if market conditions indicate the potential for higher profitability. DGM should be prudent in its business arrangements and look to secure transactions using letters of credit until levels of trust are established.

In Trinidad DGM should look to develop a joint venture with a suitable partner who has excess warehousing space suitable for establishing a garment factory thereby reducing the level of capital investment required, register its brands in Trinidad, establish a small scale factory and produce both beachwear and soccer and other sport uniforms in Trinidad and market both to the local Trinidad market and export to the distributors in Brazil and further afield. Strategic alliances would also be needed to market products across Trinidad as such a partner with appropriate channels already in place would be useful at the entry phase.

A strategic alliance with a business in an unrelated industry that has excess building space would be preferred to one that is in the same industry with spare labour and machine capacity due to the risk of having that partner appropriating designs and customers. Timing of these two ventures is important, however with the slow pace at which negotiations and business dealings flow in Brazil it may be prudent to start interim talks with potential distributors at the same time as getting the joint venture arrangement and factory setup in Trinidad.

Products would be differentiated in both markets according to designs and colors, more revealing beachwear is acceptable in Brazil and labeling would have to be in Portuguese as such a multi-domestic approach would be necessary with products being made specifically for each of the two markets with a slight overlap. This strategy should not be too costly given that the slight differences between products do not require different skills and machines and the designs for the Brazilian market would require less material but have the same selling price.

Conclusion: The beach and athletic wear segment of the apparel market is already established in both countries, as such there is no first mover advantage to be gained, however DGM is confident that it can secure a niche by supplying an overall better quality product (stitchwork,design,fabric) at a far lower price. Brazil which has the largest potential market has relatively more political economy and cultural barriers which increase the levels of risk and possibility for failure so DGM should be cautious when expanding into this market.

Trinidad on the other hand has much more political economy and cultural similarities with Guyana and this would allow for easier entry, allowing DGM to be more aggressive, which could end up solving the production capacity problems for DGM to meet the anticipated new demand when the export channels into Brazil open up which would in turn satisfy the present need for a wider market base. If both of these expansions come to fruition DGM can expect growth in demand and profitability over the long term with economic benefits accruing to each of the three countries. Bibliography:

CIA World fact book, Trinidad 2012, viewed 1 October 2012, < https://www. cia. gov/library/publications/the-world-factbook/geos/td. html > CIA World fact book, Brazil 2012, viewed 1 October 2012, Communicaid Group Ltd. 2012, Doing Business in Brazil- Brazilian Social and Business Culture UK, London, viewed 30 September 2012 < http://www. communicaid. com/access/pdf/library/culture/doing-business-in/Doing%20Business%20in%20Brazil. pdf>. Devaraja, Dr. T. S 2011, Indian Textile and Garment Industry-An Overview, University of Mysore, viewed 30 September 2012 < http://sibresearch. rg/uploads/2/7/9/9/2799227/working_paper_-_dr_devaraja. pdf > Goinvest 2012, Denmor Garment Manufacturers: Competing in the Global Garment Industry, viewed 29 September 2012 < http://www. goinvest. gov. gy/manufacturing. html > Hill, CWL 2010, Global Business Today, 7th edn, McGraw Hill, Boston US Commercial Service-US Department of Commerce 2012, Doing Business In Trinidad and Tobago: A Country Commercial Guide for U. S. Companies, viewed 1 October 2012, < http://trinidad. usembassy. gov/uploads/images/bLR3mH7MwdrEvCke0jB6Tw/CCG2006. pdf > End of Assignment.

Free Essays

Motorola and Globalization

Motorola is an electronic communications pioneer and is one of the foremost designer and manufacturer of cellular phones, cordless phones, two-way radios, pagers, cable modems, broadband set-top boxes, and other communications products and systems. About 60% of its sales are from outside USA. Motorola has followed the global strategy for several decades and has used this strategy to increase business revenues.

The company started to enlarge its operations outside the United States by building a plant in Mexico and marketing Motorola products in eight countries, including Japan. In 1961, an office was opened in Japan and in 1968 Motorola Semiconductors Japan was formed to design, market, and sell integrated circuits.

There was an ongoing attention to   globalization by Motorola on Asian, Eastern European, and Latin American markets in the early 1990s. In 1993, the company announced ‘Corporate America’s biggest manufacturing project in China’: two plants for the manufacture of simple integrated circuits, pagers, and cellular phones. The changes at Motorola are part of a wider movement in American business  Most companies, including Motorola, are also increasing their importance on creativity and innovation, as globalization has led to increasing competition from low-cost rivals from abroad ..

According to its CEO Ed Zander, “In order to compete successfully in today’s global world, companies must invest in the countries they do business in, learn the ins and outs of doing business in those countries, and not view them as simply a source of cheap labor”. With such global strategy, Motorola has acquired a presence in the global market that goes further than a few marketing maneuvers.

Together with Global strategy, it has inherent sincerity about supporting its customers and training its employees which have pervaded its policies as well as its budget  Motorola has  focused on customers and relationships, a respect for the work force and a strict sense of responsibility.. All of these strategies have led to its success and today Motorola is the world’s number 2 in sales of cell phone.

Ed Zander on Motorola’s tech Turnaround,11/28/2005 , Working Knowledge for business leaders Archives

Retrieved on 6/12 /2007



Free Essays

How Management has changed with respect to Globalization

Various things have and will persist to amend the practice of management. Advancing expertise, changing demographics, immense diversity in the workforce, and globalization are just some of the changes facing managers at present. These factors will persist to change the methods in which management runs. The globe now is not the world that subsisted years back. Globalization has fetched gigantic changes to the world of commerce and it has changed loads of sides of the management world (Palpacuer, 2006). Today’s globalization is disparate from what has gone earlier for two rationales.

First is technological, the acceleration of interactions. Many communications expansions have been occurring more than the preceding half-century, but the current momentum of change, the magnification of capacity for information diffusion and the dissemination of communications media have not been experienced in the past. The other is a shift in the policy setting: liberalization uprising, an opening of markets and lessening in the part of government in terms of rights and command over manufacturing of goods and services (Feenstra, 1998). Corporations nowadays can arrive at customers in every country and can cut overheads via global production and allotment systems.

Managements experience regular change, extreme competition, and amplified customer expectation, which formulates it progressively challenging for an organization to uphold its competitive border. These days, flourishing managements must appraise the competitive background and kit out their organizations with the tactics, configurations, and workers to compete in a frequently changing milieu (Swain, 1999). Globalization has changed new criteria, and every management must be ready to meet this transform by exploiting the aptitudes of leadership and communication, plus the capability to lead his or her industry through any sort of change.


Feenstra, R.C. (1998), Integration of Trade and Disintegration of Production in the Global Economy, Journal of Economic Perspectives, 12, pp.33-34.

Palpacuer, F. (2006), Globalization and Corporate Governance: Issues for Management Researchers, Society and Business Review, Vol. 1 No. 1, p. 49.

Swain, P. (1999), Organizational Learning: Developing Leaders to Deal With Continuous Change – A Strategic Human Resource Perspective, The Learning Organization, Vol. 6 No. 1, pp. 32-33.

Free Essays

Does Globalization Unite or Separate Us?

Does Globalization unite or separate us? If we find out about the term “Globalization” in different dictionaries we can realize that there are too many meanings like “the increase of trade around the world, especially by large companies producing and trading goods in many different countries” or “when available good and services, or social and cultural influences, gradually become similar in all parts of the world”. So, does Globalization unite or separate us? There are two opposite positions, good and bad, of the effects of Globalization.

But, I think, there is a third one: Globalization is good because enriches culture in many aspects, but we have to be careful about using the new communication technologies because we can lose the habit of talking face to face. With the meanings mentioned above, we can discern that Globalization is a phenomenon that involves the development of transportation and communication. Thanks to these advances emerged the worldwide production markets and we can access to a range of foreign products that previously we cannot consume.

International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. As this example, there are too many aspects the Globalization affects to our life in a good way like information, job market, culture, competition, politic, finance, social, etc. However, answering the principal question, I think we have to focus on the social side. It was clearly exposed that the Globalization facilitates de relations between countries. But, what about personal relations?

In the last years, we have seen an explosive growth of social networks (MSN, Facebook, Twitter, My Space, Skype, LinkedIn, etc. ) that are very easy to use and allow us to communicate with people around the world. To prove this, there are shocking numbers. In 2010, Facebook reached 500 million users and the number of monthly users in Skype was 124 million. With this numbers, I want to explain that the effects of Globalization are very useful to unite people from different parts of the world.

On the other hand, we have people who live very close. The same social network phenomenon has a negative side. Many people are replacing face-to-face conversation with a relationship via chat. I think this situation is very harmful to the proper development of social skills that anyone should have, which could trigger a major social crisis in a medium-term future. Even today, a new study suggests that spend time surfing the Internet for many hours would be associated with depression.

Also, there is another dangerous collateral effect: the sedentarism. Physical inactivity is one of the 10 leading causes of death worldwide. The World Health Organization (WHO) estimates that by 2030 secondary disease mortality will be 65% of total deaths. So, does Globalization unite or separate us? I think that the positive effects of Globalization make our life much easier. But, we have to pay attention to the other side. We must return to the customs of the old-school: talking face-to-face to share and solve our problems.

If we do not correct the direction we could finish in a serious social problem that will be very difficult to fix. We are still on time for Globalization means only good news in this aspect. ——————————————– [ 1 ]. Cambridge Dictionaries Online [ 2 ]. “Globalisation shakes the world”. BBC News. [ 3 ]. http://www. facebook. com/press/info. php? statistics [ 4 ]. http://blogs. skype. com/es/2010/08/ [ 5 ]. Sociedad Chilena de Pediatria, website, published 02/25/2011 [ 6 ]. World Health Organization – Data and Statistics

Free Essays

Has Globalization Helped Haiti in Handling?

Has globalization helped Haiti in handling the devastation of the earthquake? Haiti’s worst earthquake in two centuries hit south of the capital Port-au-Prince in 12 January 2010. Hundreds of buildings were damaged or destroyed, millions were relocated, thousands died. The BBC documental video “Surviving Haiti” showed how lives changed after the earthquake, how government was handling the situation and what measures were taken to help. As Haiti is one of the poorest countries in the world, the inhabitants of Port-au-Prince would not be able to handle the devastation of the earthquake on their own.

So, the question is, has globalization helped Haiti to recover losses after the devastating earthquake? The global response to the earthquake in port-au-Prince has been generous and quite fast. United States mobilized its soldiers to help suffering Haitians, the EU allocated large amount of money, Canada, Brazil, Italy and Cuba sent over 1,000 military and disaster relief personnel each, Turkey sent searching troops, Germany and China sent officers of technical assistance, aircraft carriers arrived from Russia, Israeli medical staff came, Iran allocated tents for families that lost their homes.

Even such countries as Guyana, Estonia and Liberia have sent money. It would seem that the sum these countries sent was ridiculous, but for a small country, it is a kind gesture. The total sum of donations worldwide equals about 2, 5 billion US dollars. Apart from financial aid, human compassion made miracles. Families from France didn’t give up the adoption processes; they came to see their potential children, to meet their parents and to solve bureaucratic problems.

Sympathetic corporations, non-governmental organizations, private persons and celebrities responded to the Haiti pledges. In the most difficult moment of their lives survived children and their parents got a flash of hope for better future. People all over the world are not indifferent to the sufferings of their „planet” neighbors. So, the film shows that life of earthquake survivors is very hard, but hope still exists.

In this particular case of Haiti, when globalization impact was also a question of humanity, not just of economy, the process itself helped Haiti to recover more or less after the devastating earthquake and to save as many Haitians as possible. ——————————————– [ 1 ]. guardian. co. uk, Haiti earthquake aid pledged by country http://www. guardian. co. uk/news/datablog/2010/jan/14/haiti-quake-aid-pledges-country-donations

Free Essays

Globalization: Indigenous Peoples and World

Globalization is the process in which the world becomes connected through communication, trade, and migration. Globalization can transform cultures and the identity of people within those cultures. One of the primary factors that leads to globalization in the advancement of technology In 1980 Dr. Knauft began to study an indigenous group of people deep in the forests of Papua New Guinea. This group of people had no contact with the outside world until the 1960’s, they were cut off from everything. They had a language and a name that was unknown to Anthropologists at the time.

They were virtually invisible to the outside world. When Dr. Knauft arrived he met the Gebusi people, and began his study. He watched as they preformed ritual dances and wore traditional costumes. The Gebusi people lived their lives according to tradition and beliefs and were not affected by the outside world. The truth is no one can hide from globalization, not even the secluded Gebusi people. With in a matter of only 18 years they were transformed, most of them willingly converted to Christian beliefs, and they became focused on politics, economics, religion and nationalism.

They were caught up to speed with the rest of the world due to globalization. The culture of the Gebusi people and their identity was drastically changed due to globalization. They were now on the same page as the rest of the world, and were now connected with the outside world. Trade organized groups such as NAFTA and the WTO make globalization easier to obtain for the smaller “developing” countries. For the countries that are a part of these groups goods, and ideas are much easier to share. With groups such as these and other factors globalization is inevitable so there is no sense in fighting it.

If it were embraced rather then rejected everyone would be much better off. I understand that it can interfere with older cultures and traditions of developing countries, but it’s eat or be eaten in today’s world and you need to do what you need to do in order to compete with other countries and to survive within your own. Globalization exposes who ever it effects to a variety of new and different opportunities that must be taken in order for that group to survive. It can be compared to having to evolve, or becoming extinct.

A lot of people see globalization as a bad thing, but its essential for survival in today’s world, and with out it we would be totally secluded from the rest of the world and that would just make everything extremely hard. It also helps keep the world balanced with power. Without globalization one country, or one group of people could easily be way ahead of others, and that could lead to wars and many other conflicts. The positives of globalization strongly out weigh the negatives and I’m not sure why anybody would be against it.

Free Essays

Reclaiming the Commons

My paper is based on the article entitled “Reclaiming the Commons”, by Naomi Klein. In this article the author defines what anti-globalization movement means in her own words. The meaning and origins of the term anti-globalization movement is disputed amongst various socialists and economists, but Klein says that anti-globalization movement can mean different things to different people based on their interests in a particular issue. It is therefor the movement of many movements. Before going in depth about the article, it is important to know from where the idea of anti-globalization comes from and how the movement came into being.

Some argue that is all started from Seattle, but a lot of them are unaware of the fact that AGM has gone through three waves. The first wave was back in 1970, when oil prices skyrocketed due to economic downturn, which lead to strikes, protests and demonstrations. The second wave erupted with the end of the cold war, during the early 1990’s and the third wave democracy spread like wild fire. The third and most important wave was during the 50th anniversary of Bretton Woods when the WTO emerged from the GATT.

The third wave lead to many activist groups to rise and this lead to overlapping emphasis on various issues like; anti-capitalist groups, women’s rights groups, global inequality groups, and many others. Klein mentions that people join the AGM because of similar interests and ideologies, which might be different from the regular mass. I personally think that people who do not agree with the common norms of society join these groups in an attempt to show their rebellious attitude towards the big corporations and political powers.

It is a known fact that one individual cannot tackle an entire organization and therefore, they form these individuals come together and make an organization of their own. They work together against the elites who turn almost everything into commodities; from education, to health care, to natural resources, even we are commodities since we “sell” our labor, it is considered a commodity. The basic things we need to survive are being privatized by these multinational corporations, because of their greed for power and profit.

In our hegemonic society, most of the people are almost brainwashed by powerful individuals who build leadership and consensus in the face of great inequality. They frame and spin the truth in such a way, that it seems to be in the best interest of the citizens. People who realize this resist to the changes that are implicated on them and the society. These people with similar interests also form a group to protest against these big corporations and their immoralities.

So we can see how different groups emerge because of different issues that they face. As Klein mentions in the article, activists who want change are not waiting for a revolution to happen, they are acting right now because what can be done today should not be left for tomorrow. Another reason is that the global economy and infrastructure keeps changing so rapidly, that it is sometimes hard to catch up to it and if they do want to make a difference, then they need to act quickly.

As a result, these activists create their own anti-privatization campaigns and most of the times these campaigns get under way on their own. Sometimes, other activist groups join in together and even though it seems that these organized groups work together, each participate because of their own benefits as I have mentioned above. For example, there can be an alliance between the women’s right group and the movements of small farmers. Each have their own motifs but if they work together they can get more attention and make their voices heard in a larger scale.

These are more local campaigns that occur every now and then but there are also larger global scale campaigns that take place and these protests are usually directed towards international and supranational organizations like the G-8, the WTO, the World Bank, and the IMF. These movements initially used to aim at local and national issues, but now because of globalization, they are aimed at the new global order that has no democratic institutions. During these campaigns, protestors take to the streets because that is the main form of expression that is available to them.

In the article, there is an example of Maude Barlow, a Canadian activist, who said that when she was leading the campaign against NAFTA, she was doing that to fight for her nation, but now the cause has gone beyond nationality and state borders. Now things are more global and it is no longer a fight for nationalism but for democracy. When these small activist groups started to get more involved with the global society, they realized it was a much bigger problem then they anticipated. Thanks to the big corporations, they now see the root cause of these problems.

It was clear right from the beginning that these corporations played a big part in creating these issues but now, the activists realize that these money hungry corporations are not only involved, but they are the ones who have created these issues and inequalities in the first place. The rich gets richer, and the poor get poorer, hence the gap keeps on getting bigger and they use the working class citizens to feed them and their selfish needs. As consumers, we always look at the front end of production and ignore the back end because we have never thought of looking at it in any other way.

But for me, the back end is more of a terrifying horror story. Underpaid workers, child labor, and sweatshops are just parts of it, and there are only a few who have stood up against this harsh reality because most people are just afraid to stand up against these large corporations. For example, Nike, one of the biggest corporations in the world use child labor and sweatshop and they are the ones who helped pioneer the new brand of activist synergy which basically means the coalition of multiple activist groups to fight against these corporations to create a larger global effect then they would have individually.

The basic cause of these activist groups is to stop the WTF, IMF and FTAA from creating any legislation that will directly affect the economy and the working class individuals. Their fear is privatization and the loss of the people. But sometimes, these activists’ movements turn into violent protests when outsiders who have little knowledge about the reality of the situation try and barge in. This creates chaos and thus the real point remains undelivered.

This happens due to the non-hierarchical structure of the movement and the unorganized press conferences. Usually the protests are not thought out or planned before hand, which leads to dramatic circumstances. These are the reasons why companies like Nike are still in business and no matter how much or how big the protest, nothing is being done. The protests might have reduced the issue, as some would like to believe, but did not completely eliminate it. Some people ask, if they know the corporations are so powerful, why stand up against them?

The reason Klein mentions is that activists usually protest because they know that the change they anticipate for, will not come through electoral politics or any other form of industrial power and thus, they challenge the constitutions and structures themselves. There is an obvious injustice and inequality that goes on which are always being undermined, and the reason why these problems occur in the first place is because of the poor decision making of these powers. Instead of the people making the decisions themselves, they are forced to follow the legislation created by these political and industrial powers.

Klein also argues that most complaints against the WTO is about governments embracing an economic model that involves much more then opening borders to goods and services and therefore the term anti-globalization is not appropriate. But most people do not understand the term globalization and therefore this movement gets criticized over and over again. If we talk about just anti-globalization, it more or less means being against trade and globalization but in reality, the movement is not against trade but it is against the tag along that come with free trade that are imposed by the government and law makers.

In this hegemonic society, it is almost impossible for an individual to stand up and fight against the system alone and that is where the anti-globalization movement comes in. So through this analysis, we can see that there are two types of analysts. There are those activists who fight for global and broader issues, and there are those who fight for day-to-day survivals and are the most neglected. The only ways their voices can be heard is by merging the two together and form a concrete alliance that is strong enough to fight these elites.

This will create a political framework that can take corporate power and control, and also empower local organizing and self-determination. Therefore, Klein says that the real motif behind the movement is not weather it is for or against trade, but if individuals have the right to negotiate the terms and conditions that come with these foreign capitals and investments. In other words, even though the term is a little misleading, their real goal is not to demolish globalization but to make it more fare and equal.

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The Effect of Globalization on Young People

As the degree of globalization is being strengthened in the present-day world, the issue of globalization has been a highly controversial topic, stimulating extensive attention among the economists and commentators. It is widely agreed that globalization produces widespread and profound impact on every field of the whole world, especially on the aspects of society, economy, politics and culture. However, there is a growing difference of opinion on whether the effects of globalization are beneficial or not.

In spite of some negative effects that the anti-globalization groups point out, the positive impact produced by globalization is comprehensive and significant. Many economists consider the process of globalization as the main motivator for social progress, economic growth and cultural exchange. Thus, this essay will be mainly concerned with the beneficial effects of globalization on economy, education and world peace.

From the economic perspective, economic globalization contributes to a higher growth rate in the developing countries which are involved in globalization. The positive effects should be attributed to openness associated with globalization. On one hand, according to Rappaport (2000), openness to international trade empowers these developing countries to develop their competitive advantages in manufacturing a certain products, thus making more profits.

On the other hand, it is illustrated in Romer (1993) that opening to foreign direct investment can narrow the gaps between developing and developed nations by stimulating the flow of domestic capital and introducing advanced technology and equipment, thereby improving efficiency and productivity and speeding economic growth in developing countries. A good case in point is that economic growth rate in China significantly increased by 2. 3% from 1975 to 2000 due to implementing economic globalization (Dreher, 2006).

In addition, from the educational standpoint, technological globalization is advantageous to the educational development. This is mainly based on the widespread utilization of information and communication technology around the world. It increases the availability of education and allows more students to engage themselves in various academic exchanges cross the borders. Kellner (2002) points out that the participation in academic communication at a global level is a perfect interactive platform for students living in different parts of the world to have access to and share information and knowledge.

It is also argued in Kellner (2002) that more opportunities are offered to students to have access to those research libraries or institutions, which were inaccessible in the past. These positive effects brought by globalization can contribute to promoting the development of global education. Finally, globalization promotes world peace that is the prerequisite to accelerate the common development of all countries. For one hand, economic interchange at the global level encourages all the countries in the world to cooperate with each other.

It is illustrated by Martin and Mayer (2008), it is extremely essential for nations who want to profit from global trade to establish friendly relations with other countries. For another hand, mutual interaction in international commercial activities contributes to strengthening their contacts between different countries. Martin and Mayer (2008) also believe that in order to further promote their prosperity, those countries which are involved in the globalization not only enhance their contacts with other countries but also tighten those ties.

Consequently, global economic interchanges promote mutual comprehension, cooperation, and contacts between different states around the world, in turn, promoting the world peace. In conclusion, by analyzing the benefits brought by globalization to the three main aspects: economy, education and society, this paper presents the positive effects of globalization, supported by relevant evidence from academic materials. In particular, it is described in this paper that globalization is of significant benefits for economic growth in developing countries, educational development and world peace.

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Globalization and Firms

41. With the help of an example discuss the characteristics of globalization. Globalization refers to a fundamental shift in the world economy in which national economies are no longer relatively self-contained entities. Instead, nations are moving toward an interdependent global economic system. Within this new global economy, an American might drive to work in a car designed in Germany that was assembled in Mexico by DaimlerChrysler from components made in the U. S. and Japan that were fabricated from Korean steel and Malaysian rubber.

A company does not have to be the size of these multinational giants to facilitate, and benefit from, the globalization of markets. 42. Define globalization and discuss it has changed the business environment? Globalization has created many opportunities for businesses to expand their revenues by selling around the world while at the same time reducing their costs by producing in nations where labor and other inputs are cheap. However, globalization has also produced new threats for companies in the form of increased competition. 41.

Compare and contrast a pure democracy and a representative democracy. Which type of democracy is more common today? Why? The pure form of democracy is based on a belief that citizens should be directly involved in decision making. In contrast, in a representative democracy, citizens periodically elect individuals to represent them. The elected individuals form a government and make decisions on behalf of the electorate. Because a pure democracy is impractical in advanced societies with tens or hundreds of millions of people, representative democracies are far more common in today’s world. 2. Explain the differences between common law and civil law systems by the approach of each to contract law. Contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. In contrast, contracts in a civil law system tend to be much shorter and less specific because many of the issues typically covered in a common law contract are already covered in civil law. 43. What are state-owned companies? Why do they exist? Why do they usually perform poorly? A state-owned company is a company that is owned by a nation’s government.

After World War II, many social democratic governments nationalized private companies that were to be run for the public good rather than private profit. Great Britain, for example, nationalized so many companies that by the end of the 1970s, state-owned monopolies existed in telecommunications, electricity, gas, coal, and several other industries. However, because state-run companies such as the ones that existed in Great Britain are protected from competition by their monopoly position and guaranteed financial support, they become inefficient. 1. Compare and contrast folkways and mores. Folkways are the routine conventions of everyday life. Generally, folkways are actions of little moral significance. Folkways include rituals and symbolic behavior. In contrast, mores are norms that are seen as central to the functioning of a society and to its social life. Mores have much greater significance than folkways. Accordingly, violating mores can bring serious retribution. 42. What is the difference between a caste system and a class system?

A caste system is a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual’s lifetime. The caste system is the most rigid form of social stratification. A caste frequently involves a specific occupation. In contrast, a class system is a less rigid form of social stratification in which social mobility is possible through an individual’s personal achievements and/or luck. 43.

Discuss why the stratification of a society is important to business. The stratification of a society is significant if it affects the operation of business organizations. In a country like Great Britain for example, the relative lack of class mobility and the differences between classes has resulted in hostility between middle-class managers and their working-class employees. This hostility and the resulting lack of cooperation can make it more difficult for firms to establish a competitive advantage in the global economy. While the last two decades has seen a eduction in the number of industrial disputes in Britain, there are signs that class consciousness may be reemerging in China. 44. Describe the four dimensions of culture as identified by Geert Hofstede. Geert Hofstede identified four dimensions that he claimed summarized the differences between different cultures. According to Hofstede, the power distance dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities. The second dimension identified by Hofstede, individualism vs. collectivism, focused on the relationship between the individual and his/her fellows.

Hofstede’s third dimension, uncertainty avoidance, measured the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating uncertainty. Finally, Hofstede’s fourth dimension, masculinity vs. femininity, examined the relationship between gender and work roles. 41. Compare and contrast import quotas and voluntary export restraints. An import quota is a direct restriction on the quantity of some good that may be imported int o a country. The restriction is normally enforced by issuing import licenses to a group of individuals or firms.

In contrast, a voluntary export restraint (VER) is a quota imposed by the exporting country, typically at the request of the importing country’s government. Foreign producers agree to VERs because they fear more damaging punitive tariffs or import quotas might follow if they do not. Both import quotas and VERs benefit domestic producers, but hurt consumers through higher prices. 42. What are the political reasons for governments to intervene in markets? There are a number of political reasons why governments intervene in markets. The most common reason for intervention is to protect jobs and industries.

Governments may also intervene to protect national security, to threaten punitive retaliatory actions, to protect consumers or to protect human rights, and to further foreign policy objectives. 43. Discuss the economic reasons for government intervention in markets. The economic reasons for government interaction have undergone a renaissance in recent times as more economists support economic reasons for intervention. The oldest argument for intervention is the infant industry argument. Strategic trade policy is the other main reason given for economic government intervention in markets. 44.

What is strategic trade policy? Provide an example. Strategic trade policy suggests that in industries where the existence of substantial scale economies implies that the world will profitably support only a few firms, countries may predominate in the export of certain products simply because they had firms that were able to capture first-mover advantages. Boeing’s dominance in the aerospace industry has been attributed to these types of factors. According to strategic trade policy, a government can help raise national incomes if it can ensure that the firms that gain first-mover advantages in such industries are omestic rather foreign. Further, the theory argues that it might pay governments to intervene in an industry if it helps domestic firms overcome the barriers to entry created by foreign firms that have already reaped first-mover advantages. 45. Explain how trade barriers affect a firm’s strategy. There are four main ways trade barriers affect a firm’s strategy. First, tariffs raise the cost of exporting, putting the firm at a competitive disadvantage. Second, quotas may limit a firm’s ability to serve a country from outside of that country.

Third, to conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise. Finally, the threat of antidumping actions limits the firm’s ability to use aggressive pricing to gain market share in a country. 41. What is a greenfield investment? How does it compare to an acquisition? Which form of FDI is a firm more likely to choose? Explain your answer. FDI can take the form of a greenfield investment in a new facility or an acquisition of or a merger with an existing local firm.

Research shows that most FDI takes the form of mergers and acquisitions rather than greenfield investments. Mergers and acquisitions are more popular for three reasons. First, mergers and acquisitions are quicker to execute than greenfield investments. Second, foreign firms are acquired because those firms have valuable strategic assets. Third, firms make acquisitions because they believe they can increase the efficiency of the acquired firm by transferring capital, technology, or management skills. 42. Compare and contrast the advantages of foreign direct investment over exporting and licensing.

A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Furthermore, the firm will favor foreign direct investment over licensing (or franchising) when it wishes to maintain control over its technological know-how, or over its operations and business strategy, or when the firm’s capabilities are simply not amenable to licensing, as may often be the case. 43. Discuss the various political ideologies and their impact on foreign direct investment.

The radical view writers argue that the multinational enterprise (MNE) is an instrument of imperialist domination. The free market view argues that international production should be distributed among countries according to the theory of comparative advantage. The pragmatic nationalist view is that FDI has both benefits and costs. The radical view has a dogmatic radical stance that is hostile to all inward FDI. The free market view is at the other extreme and based on noninterventionist principle of free market economics. Between these two extremes is an approach called pragmatic nationalism. 4. Describe the situations when licensing is not a good option for a firm. Licensing is not a good option in three situations. First, licensing is hazardous in high-tech industries where protecting firm-specific expertise is very important. Second, licensing is not attractive in global oligopolies where tight control is necessary so that firms have the ability to launch coordinated attacks against global competitors. Finally, in industries where intense cost pressures require that MNEs maintain tight control over foreign operations, licensing is not the best option. 46.

Discuss Michael Porter’s interpretation of value creation and competitive advantage. According to Michael Porter, low cost and differentiation are two basic strategies for creating value and attaining a competitive advantage in an industry. Porter argues that those firms that create superior value will achieve superior profitability. Porter notes that it is not necessary for a firm to have the lowest cost structure or create the most valuable product; rather it is only important that the gap between value and the cost of production be greater than that of competitors. 7. Discuss strategic positioning. How does strategic positioning relate to the efficiency frontier? The efficiency frontier shows all of the different positions that a firm can adopt with regard to adding value to the product and low cost assuming that its internal operations are configured efficiently to support a particular position. It is important that managers decide where a firm should be positioned with regard to value and cost, configure operations accordingly, and manage them efficiently to ensure the firm is operating on the efficiency frontier. 8. Describe the benefits of global expansion for firms. Global expansion allows firm to capture many opportunities not open to firms that remain focused purely on the domestic market. Firms that operate globally have the opportunity to sell their product in a much larger marketplace. Location economies can be realized through global expansion by dispersing value creation activities to the optimal location in the world. International expansion allows a firm to realize greater cost economies from experience effects.

Finally, global expansion provides firms with the opportunity to earn a greater return by leveraging any skills developed in foreign operations and transferring them within the organization. 49. What are the two types of competitive pressures that firms competing in the global marketplace face? How do firms respond to these pressures? Firms that compete in the global marketplace typically face two types of competitive pressure that affect their ability to realize location economies and experience effects, to leverage products and transfer competencies and skills within the enterprise.

They face pressures for cost reductions and pressures to be locally responsive. These competitive pressures place conflicting demands on a firm. Responding to pressures for cost reductions requires that a firm try to minimize its unit costs. Responding to pressures to be locally responsive requires that a firm differentiate its product offering and marketing strategy from country to country in an effort to accommodate the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies. 50.

What are the four basic strategies that firms use to compete in international markets? Under what conditions is each strategy most appropriate? The four basic strategies that firms use to compete in international markets are the international strategy, the global standardization strategy, the localization strategy, and the transnational strategy. The international strategy is most appropriate when there is low pressure for local responsiveness and low pressure for cost reduction. When there is high pressure for cost reduction, but low pressure for local responsiveness the global standardization strategy makes sense.

A localization strategy is appropriate when pressure for local responsiveness is high, but pressure for cost reduction is low. Finally, when pressure for both cost reduction and local responsiveness is high, the transnational strategy is best. 52. What are the three challenges related to strategy and structure that firms must accomplish if they are to achieve superior profitability? Superior enterprise profitability requires that firms fulfill three conditions. First, the different elements of a firm’s organizational architecture must be internally consistent.

Second, the organizational architecture of the firm must be consistent with its strategy. Third, the strategy and the structure must not only be consistent with each other, they must also be consistent with the competitive conditions prevailing in the marketplace. 53. Discuss the relationship between a firm’s control systems and a firm’s incentive system. Why is this relationship important? The relationships between a firm’s control systems and incentive systems is a close one. Control systems are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits.

Incentives are the devices used to reward appropriate managerial behavior. The relationship between these two areas is important because incentives are very closely tied to performance metrics. For example, the incentives of a manager in charge of a national operating subsidiary might be linked to the performance of that company. Specifically, he/she might receive a bonus if her subsidiary exceeds its performance targets. 54. Discuss the location of decision-making in a firm that is following a transnational strategy. Decision-making in a firm pursuing a transnational strategy is complex.

The need to realize location and experience curve economies requires some centralized control over global production centers. Yet, the need for local responsiveness requires the decentralization of many operating decisions, particularly those for marketing, to foreign subsidiaries. Decentralization of decision-making is also needed to allow subsidiaries the freedom to develop their own skills and competencies—a requirement that is necessary for the global learning component of the transnational strategy. 55. Discuss the sources of inertia in organizations. Is it easy to make organizational changes?

Organizations are difficult to change. Within most organizations are strong inertia forces. These forces come from a number of sources. One source of inertia is the existing distribution of power and influence within an organization. Managers who are not happy with the changes are likely to resist and slow the process. A second source of inertia is the existing culture. Since value systems reflect deeply held beliefs, they can be very hard to change. A third source of inertia derives from senior managers’ preconceptions about the appropriate business model or paradigm.

Managers may not recognize the value in a given business model that has been successful in the past. Finally, institutional constraints may act as a source of inertia. In some cases, local content rules or regulations pertaining to layoffs can make it difficult for firms to adopt the most effective strategy and architecture. 45. What are first-mover advantages? Discuss the advantages associated with them. First-mover advantages are the advantages frequently associated with entering a market early. One first-mover advantage is the ability to preempt rivals and capture demand by establishing a strong brand name.

A second advantage is the ability to build sales volume in that country and ride down the experience curve ahead of rivals, giving the early entrant a cost advantage over later entrants. A third advantage is the ability of early entrants to create switching costs that tie customers into their products or services. Such switching costs make it difficult for later entrants to win business. 46. Explain the relationship between first-mover disadvantages and pioneering costs. When a firm enters a market prior to other international businesses, it can have first-mover disadvantages.

These disadvantages may give rise to pioneering costs, costs that an early entrant has to bear that a later entrant can avoid. Pioneering costs arise when the business syste m in a foreign country is so different from that in a firm’s home market that the enterprise has to devote considerable effort, time, and expense to learning the rules of the game. Pioneering costs also include the costs of promoting and establishing a product offering. Finally, an early entrant may be put at a disadvantage, relative to a later entrant, if regulations change in a way that diminishes the value of the early entrant’s investments. 7. Discuss Bartlett and Ghoshal’s perspective on how firms from developing countries should approach international expansion. Bartlett and Ghoshal suggest that companies based in developing countries should use the entry of foreign multinationals as an opportunity to learn from these competitors by benchmarking their operations and performance against them. They argue that the local company might be able to find ways to differentiate itself from foreign companies by focusing on market niches that the multinational ignores or is unable to serve effectively if it has a standardized global roduct offering. Then, the firm from the developing nation may then be in a position to pursue its own international expansion strategy. 48. Discuss strategic alliances. How successful are they? Why do firms form strategic alliances? The term strategic alliance refers to cooperative agreements between potential or actual competitors. Strategic alliances run the range from formal joint ventures, in which two or more firms have equity stakes, to short-term contractual arrangements, in which two companies agree to cooperate on a particular task.

Firms enter into strategic alliances for four main reasons. First, strategic alliances may facilitate entry into a foreign market. Second, strategic alliances allow firms to share the fixed costs of developing new products or processes. Third, strategic alliances allow firms to bring together complementary skills and assets that neither company could develop easily on its own. Fourth, strategic alliances can help firms establish technological standards for an industry.

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Evolution of globalization

In 1492 the process of globalization began when Christopher Columbus unintentionally “discovered” the “new world”. The  cultures  of  the Nahua, Inca, Maya, and Spanish  peoples during the contact and conquest periods (1400s-1600s) was one of the factor that led to globalization.  The different  cultural, economic, social, philosophical, and political systems of these peoples, both before and after conquest   cast an shadow of  these cultures, though conquered, shape the Spanish-American colonial system as it developed in these regions.

The blend of different civilizations:

The present linguistic situation in ‘Merida’ has engrossed its roots from the pre-colonial period of Mexico. The first  Crenellation  took  place  during the final voyage of,

Christopher Columbus in the year 1502.  When his ships entered  Spain  the people over there didn’t know they were listening to the Mayan language. The first Mayan word they heard was “turquin” which translates to gold and money as wealth was the main goal of Christopher’s expeditions. Two Spanish explorers who were stranded in Mayan land  were   later found by conquistador Cortes . One of the stranded explorers was Aguilar who served as a interpreter between the two civilizations. Later ‘castellano’ language was developed and till now it is in use. The two entirely different civilizations was plunged as thick roots into the nation.

Castellano Vs Maya-Yucateco :

The new linguistic politics began with the catholic missionaries in the sixteenth century

The Spanish priests had to learn the language of the pupils who were mostly Mayans.

Formal studies of Maya- Yucateco  was done and the first dictionary was brought out in 1546. The colonization of Yucatan  was mainly  because of  the Mendicant  Landa. The learning of Maya-Yucateco continued until the eighteenth century . For many reasons there was little teaching of ‘castellano’ language to the Mayans . Linguists have divided the variations spoken by Mayans into 30 different languages. They are all included in generic term ‘Maya’.


The language was one of the factor that   divided people from the globalization. There were the people who supported the Mayan literature and some saying that ‘castellano’   was something uncontrollable and inevitable, the product of modernization.

Discrimination arouse for the Mayans in Merida. They were denied access to certain places and discouraged from being in others. This is a situation that is still in the existence. Mayans developed a passive resistant syncretism to the spiritual conquest that was imposed upon them. Though cultures accepted military defeat, but in an effort to keep some semblance of former lives pays a service to the Spaniard religion, still practicing the hated idolatry in secret. While the conquerors were assimilating Mayans, the Mayans were assimilating the conquerors religion.this resulted in the extension of the interrogation by Spaniards to the new world in  paradox  of   Christianity  at the time.

Conclusion   :

The evolution invoked by Christopher Columbus led to globalizationIn turn

it resulted in a revolution that brought discrimination

Until now it continues to be the present situation.  The endless …


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Globalization Test Questions

Chapter 1 Expanding abroad: Motivations, means, and mentalities True/False

1. The largest MNEs are equivalent in their economic importance to less developed economies such as Tanzania, Estonia or Sri Lanka. Answer: False (Sales of the largest MNEs exceed the GDPs of less developed countries. ) Difficulty: Easy Page: 4 and Table 1-1 on page 3 Topic: MNE scope and influence

2. The process of internationalization followed by most firms is usually well-thought out in advance and typically builds on a combination of rational analysis, planning and implementation.

Answer: False (It is more likely a combination of rational analysis, opportunism, and luck. In regards to opportunism, several studies have found that most firms begin exporting due to an unsolicited export order. ) Difficulty: Moderate Page: 9 Topic: Internationalization process

3. A joint venture is a contractual mode of foreign entry involving a high level of resource commitment by all partners. Answer: False (A JV will not typically require as high a resource commitment as we would see in wholly owned subsidiaries. In addition, there is significant variability in the level of resources contributed by partners. ) Difficulty: Moderate Page: 10 Topic: Foreign entry mode

4. Emerging motivations for internationalization include the desire to enhance the firm’s competitive position and the desire to develop global scanning capabilities. Answer: True Difficulty: Easy Page: 6-7 and ppt slide 1-6 Topic: Motivations for internationalization

5. For an MNE to exist, first foreign countries must provide location-specific advantages to attract the company to invest there, second the company must have ownership-specific advantages that counteract its liability of foreignness, third the company must have the organizational capability to leverage its strategic advantages more effectively internally than externally. Answer: True Difficulty: Moderate Page: 7-8 Topic: Prerequisites for internationalization

6. An MNE with a ‘multinational perspective’ will typically be managed as a coordinated federation. Answer: False (It will typically be managed as a decentralized federation. ) Difficulty: Moderate Page: 11-12 and ppt slide 1-13 Topic: The evolving mentality: international to transnational

7. An MNE with a ‘global perspective’ will typically manage its operations centrally. Answer: True Difficulty: Moderate Page: 12-13 and ppt slide 1-13 Topic: The evolving mentality: international to transnational

8. An MNE with a ‘transnational perspective’ will typically be managed as an integrated network. Answer: True Difficulty: Moderate Page: 13-14 and ppt slide 1-13 Topic: The evolving mentality: international to transnational

Multiple Choice

9. Which of the following correctly describes the sequential evolution in management thinking with respect to the strategic role of foreign operations in emerging MNEs? a. global mentality, multinational mentality, international mentality, transnational mentality. b. international mentality, global mentality, transnational mentality, multinational mentality. c. multinational mentality, global mentality, international mentality, transnational mentality. d. international mentality, multinational mentality, global mentality, transnational mentality.

Answer: d (a, b, and c are incorrect because, although they describe the different ways of management thinking regarding the strategic role of foreign operations in emerging MNEs, they do not describe the evolution of this thinking in the correct sequence. ) Difficulty: Moderate Page: 11-14 Topic: Evolving mentality toward strategic role of foreign operations

10. A franchise, such as McDonald’s, is a _________ mode of foreign entry. a. low commitment, low control b. low commitment, moderate control c. low commitment, high control d. moderate commitment, moderate control

Answer: b (a, c, and d would describe indirect export, contract manufacturing, and joint venture foreign modes of entry respectively. ) Difficulty: Moderate Page: 10 (figure 1-2) Topic: Foreign entry mode

11. A joint venture is a _________ mode of foreign entry. a. low commitment, low control b. low commitment, moderate control c. low commitment, high control d. moderate commitment, moderate control Answer: d (a, b, and c would describe indirect export, franchise, and contract manufacturing foreign modes of entry respectively. ) Difficulty: Moderate Page: 10 (figure 1-2)

Topic: Foreign entry mode

12. Pashpa Co. is a new manufacturer of home appliances. Pashpa wants to go international. Some of the traditional motivations for pursuing internationalization include: a. securing key supplies, seeking new markets, and raising global scanning and learning capabilities b. securing key supplies, seeking new markets, and improving competitive positioning c. securing key supplies, seeking new markets and accessing low-cost factors of production d. securing key supplies, improving competitive positioning, and accessing low-cost factors of production

Answer: c (a, b, and d are incorrect because ‘raising global scanning and learning capabilities’ and ‘improving competitive positioning’ are not traditional motivations for pursuing internationalization, they are emerging motivations. ) Difficulty: Moderate Page: 4-6 Topic: Motivations for internationalization

13. One motivation behind internationalization is to sustain the firm’s competitive position. To pursue a sustainable competitive position relative to its rivals in the athletic clothing industry, Nike attempts to: a. reempt markets, capture global scale, and secure raw materials b. capture global scale, access scarce knowledge, and match competitors c. match competitors, capture global scale, and preempt markets d. exploit factor cost differences, preempt markets, and match competitors Answer: c (a, b, and d are incorrect because ‘securing raw materials’, ‘accessing scarce knowledge’, and ‘exploiting factor cost differences’ may give a company a temporary competitive advantage but not a sustainable competitive advantage. ) Difficulty: Hard Page: 4-7

Topic: Motivations for internationalization

14. _________ suggests that in the first stage innovations are produced in the home developed country; in the second stage they are exported to other similarly developed countries; in the third stage, they start being produced in these developed countries; in the fourth stage they start being produced in low-wage developing countries. a. Vernon’s product cycle theory b. Johanson and Vahlne’s stages theory c. Dunning’s eclectic theory d. Levitt’s globalization theory Answer: a Difficulty: Moderate Page: 5-6, 8 Topic: Motivations for internationalization

15. Which of the following constitutes a list of foreign entry modes that involve the MNE to make a foreign investment a. Greenfield, acquisition, joint venture and capital participation b. Greenfield, acquisition, joint venture and license c. Franchising, acquisition, joint venture and capital participation d. Greenfield, acquisition, cooperation agreements and capital participation Answer: a (Licensing, franchising, and many forms of cooperation may not entail an MNE making an investment. Difficulty: Easy Page: 9-10 Topic: Foreign entry modes

16. OfficeWare Corp. is an MNE that produces and sells office equipment. If the company’s CEO employs a ‘global mentality’ toward the strategic role of the company’s foreign operations, then we would expect that OfficeWare: a. regards its overseas markets as a portfolio of local opportunities. b. leverages its domestic capabilities worldwide. c. regards the world as a single unit of analysis. d. simultaneously responds to local needs, global demands and cross-border learning opportunities.

Answer: c (a, b, and d would represent multinational, international, and transnational mentalities respectively. ) Difficulty: Moderate Page: 11-14 Topic: The evolving mentality: international to transnational Essay

17. The CEO of Paragon Ltd. wants to take his company international. What are the three big questions he must answer before expanding abroad? Answer: The three questions this CEO must answer before expanding abroad are: a. What market opportunities, sourcing advantages or strategic imperatives will drive the company’s international expansion? . How will the company expand its foreign presence – through exports, licensing, joint ventures, wholly owned subsidiaries or some other means? c. How will the attitudes, assumptions and beliefs of Paragon’s employees impact the probability of the company succeeding in its efforts to internationalize? Difficulty: Moderate Page: 1 (box insert) Topic: Internationalization

18. Rana manages an Italian fashion design company. What would motivate Rana’s company to internationalize? Answer: i) Traditional motivations might include: securing key supplies, seeking new markets and accessing low-cost factors of production (e. g. labor, capital, etc. ); (ii) Emerging motivations might include: increasing scale economies to offset significant R&D investments, shortening product life cycles, improving a company’s competitive position and enhancing a company’s global scanning and learning capabilities. Difficulty: Easy Page: 4-7 Topic: Motivations behind internationalization

19. Briefly explain the product cycle of personal computers using Raymond Vernon’s product cycle theory. Answer:

This theory suggests that early in a product’s life-cycle, all the parts and labor needed to manufacture the product will be sourced from the locale in which the product was invented. As the product is increasingly adopted and distributed in global markets, production gradually shifts away from the point of origin. In some cases, the product ultimately becomes a good that is imported into the country in which it was originally invented. For example, in the case of personal computers, during the new product stage, the computer was produced and purchased by consumers in the United States and little export trade occurred.

During the maturing product stage, mass-production techniques were developed and foreign demand (in developed countries) expanded. At this point, the U. S. began to export the product to other developed countries. In the standardized product stage, production moved to developing countries, which then export the product to developed countries. Difficulty: Moderate Page: 5-6 Topic: Product cycle theory

20. Briefly compare and contrast the Uppsala Internationalization Model and the Born Global Model. Under what circumstances is each model most applicable?

Give examples to support your arguments. Answer: According to the Uppsala Model, companies internationalize in an incremental fashion. Typically, they start by utilizing foreign entry modes that require low levels of resource commitment and low levels of control over foreign activities (e. g. exporting). The model conceptualizes subsequent stages in the internationalization process as requiring higher levels of resource commitment and providing higher levels of control over foreign activities (e. g. wholly owned subsidiary). The experience of Toyota is consistent with the Uppsala Model.

According to the Born Global Model, some companies are born global, establishing significant international operations immediately or shortly after the company is launched. These firms do not employ an incremental approach. Instead, these firms aggressively pursue internationalization due to their internal orientation or the need to move quickly due to the nature of their products or services. The experience of many internet companies is consistent with the Born Global Model. Difficulty: Moderate Page: 9-10 Topic: Process of internationalization

21.Roy is the CEO of a multinational apparel company. How would he conceptualize the strategic role of his firm’s foreign operations if he possessed a ‘global mentality’? If he possessed a ‘multinational mentality’? Answer: If Roy possessed a global mentality, he would view the world as a single unit of analysis and he would centralize the management of the firm’s foreign operations. Thus, he would drive the firm to create products for a world market and manufacture them on a global scale in a few highly efficient plants, often located at the corporate center.

However, if Roy possessed a multinational mentality, he would regard foreign markets as a portfolio of local opportunities and manage his company as a decentralized federation. Thus, he would recognize and emphasize the differences between national markets and operating environments and modify his products, strategies and management practices on a country-by-country basis. Difficulty: Moderate Page: 11-13 Topic: Mentalities toward internationalization

22. What is an MNE? Give examples to explain the difference between companies that are considered MNEs and those that are not. Answer:

An MNE is a company that engages in the active management of substantial direct investment in one or more foreign countries and that considers those investments/operations as integral parts of the company, both strategically and organizationally. Thus, companies that solely rely on import-export business are not considered MNEs. They may be considered international companies but not multi-national enterprises (MNEs). Moreover, companies that passively manage an investment portfolio (as opposed to those that actively manage foreign assets) are not considered MNEs. Difficulty: Easy Page: 2 Topic: MNE definition

23.Briefly compare and contrast the four mentalities toward internationalization. Answer: Companies that have an international mentality produce products for the domestic market and only subsequently sell these products overseas. They transfer innovation and knowledge from the parent company to the foreign operators. These companies view themselves essentially as domestic with some foreign appendages. Companies that have a multinational mentality modify their products, strategies, and management practices country by country. These companies view themselves as nationally sensitive and responsive, thus the term multinational.

Companies that have a global mentality create products for a world market and manufacture them on a global level in a few highly efficient plants. These companies view the world, not just individual national markets, as their unit of analysis. Companies that have a transnational mentality are responsive to country-level operations; however, they coordinate these operations to sustain competitive effectiveness and economic efficiency. These companies view themselves as an integrated network. Difficulty: Moderate Page: 11-14 Topic: Mentalities toward internationalization

Free Essays

British Telecommunications and the Drivers of Globalization

Globalization is a phenomenon most often discussed among economists. Most of us have often heard that business is no longer restrained by political or cultural boundaries. Multinational Enterprises (MNEs) expand with little regards of geographical or cultural distance among their target markets. All decisions within a company are made with the additional consideration of how the international world will affect the results of that decision, a factor that most businesses ignored in some earlier decades.

As indicated above, discussions about globalization are mostly about its effects toward the business environment, rather than its causes. Companies are more interested toward how a phenomenon will affect their financial conditions rather than where or what the phenomenon is actually coming form. Within this paper however, I will discuss several drivers of globalization. The drivers will be taken from various perspectives about globalization. To provide more connection to the international business environment, we will use the British Telecom, one of the most successful MNEs in the global communication industry, as a reference to help define and justify the drivers of globalization.

Furthermore, this paper will discuss the view of whether MNEs are actually competing globally or only regionally. There are arguments among scholars that the global economy do not actually existed. Globalization has taken us through national boundaries but it stopped in regional limits. In other terms, MNEs are not actually operating with global factors within their considerations, but rather regional factors. This view will be examined as we discuss the development of British Telecom.

I. Literature Review

II.1Corporations as Principle Drivers

According to Ron Blackwell (2002), corporations are the principle drivers of globalization. In the process of increasing their market share, corporations found that they need to expand further that their national boundaries allowed. While rapidly internationalizing their operations, most corporations fundamentally altered their structure and strategies, boosting the change of their national economy into a more globalize economy.

This phenomena might not be observable in the US or European soil, because the process of corporations breaking through national boundaries have occurred several decades ago. However, the phenomenons are still happening today within the Asian and other developing economies. Economist have long predicted that Asia will be the center of massive economic growth in the near future, and the prophecy is fulfilled as China and India are increasingly integrated to the global economy.

II.2Political, Technological and Social Conditions

III.2.1 Market Oriented-Policies

Beside the principle factor mentioned above, many arguments brought forward other causes of globalization. One of the popular ones is the influence of market-oriented policies. In China for example, the change of governmental policies regarding foreign investment and trade was the greatest factor that supported growth of the economy. Several decades ago, China was a country considered to have a ‘closed economy’. Today, the country is the largest recipient of the world’s Foreign Direct Investment and recognized as the most potential market in Asia (Diaz, 2001).

III.2.2 Communication and Transportation Technology

Technological changes have also contributed to the process of turning the world into a single global economy. The internet spawned the e-commerce, which displayed a tremendous increase in its role in business and trade. As people in modern countries crave the ease of trade provided by the internet, the growth of e-commerce is predicted to last indefinitely. Furthermore, advanced transportation equipment also has a significant role in accelerating the globalization process.

II.2.3   Global Phenomena

Social conditions that supported globalization process consist of several important phenomena. One of those phenomena is the end of the cold war. The reduction of conflicts causes competitive environment for business development and population growth. It was recorded that the number of people on the planet is more than doubled since the 1960’s (Kohl, 2000). Both the reduction of conflicts and the increasing population created more economic, social and environmental linkages, which in the end, spawned globalization. Further analysis and identification of the drivers of globalization will be performed using the British Telecom plc.

II. British Telecommunications

III.1    Corporate Background

British Telecommunication Plc is responsible for approximately 25 million telephone lines in the United Kingdom. The company is an international corporation which own and runs most of the telephone exchanges, trunk network and local loop connections for the vast majority of British fixed line telephones. The company, British Telecom is formed in 1981 and has developed itself into five large business divisions today, they are: BT Retail, BT Wholesale, Openreach, BT Global Services, BT Exact/One IT. The divisions provide communication services ranging from retailing telecoms to consumers to research & development and consultancy.

There are several reasons why the observation on British Telecom is connected to the study of globalization and considered interesting by many. First, the UK telecommunication market was among the first telecommunication market that was deregulated in the early 1980’s. Several of the most influential regulatory innovations, like the price cap regulation was also developed and first implemented in UK telecommunications. Second, the British telecom was the first communication company in the world that was privatized in the early 1980’s. Third, because the UK telecommunication market was the first to be exposed to public interference, communication within the industry is ten years ahead of other European countries.

III.2 Corporate Internationalization

III.2.1 Role of Government Policy

According to the theories mentioned in the second chapter, there are several drivers of globalization with different emphasize on their significance. Generally, economists acknowledge that companies are the strongest driver of globalization and its processes. Despite the fact that this statement might be true for most MNE’s, regarding the British Telecom, I found that governmental policies are the most influential factor comparatively.

Before its privatization in 1984, the British Telecom was granted the right for a monopoly over the fixed line network operations. This boosted the development of the company long enough to provide itself with strong infrastructure to face competitions. Having a major early start at the game, since its privatization, the company has been known as one of the strongest companies in UK. Government monopoly policies which then followed by the market oriented policies helped brought the company to its current position as a market leader in communication (Summanen, 2002).

II.2.2   The Role of Corporate Expansion

The second largest factor, which I believe was the effort within the corporation itself, came in some time after the company was privatized. In 1993, the company announced a joint global alliance through a new joint venture company. This new company is considered as the bridge which leads British Telecom into leading the global telecommunications operator. In order to expand the business by obtaining multinational clients, BT formed and acquired stakes of several joint venture companies overseas. Some of them were Albacom in Italy, Viag Interkom in Germany, Telenordia in Sweden, Dacom in Korea, etc. All of this was performed after there is a leadership change from Sir George Jefferson to Sir Iain Vallance as chairman of the group. This displayed the tremendous role of managerial decisions in the process of BT’s internationalization (Summanen, 2002).

II.2.3   Role of Technology and Social Factors

The changing culture and the increasingly rapid growth of the economy boosted telecommunication business. The 2001residential fixed telephone volumes were recorded to double as much as it was in 1996. Within the same period, local call volumes decreased and national and international call volumes increased. Furthermore, the role of technology in the development of British Telecom can be observed through the statistics also. From 1997 to 2001, calls to mobiles have been recorder to increase tremendously. This increase continues until today (Summanen, 2002).

II.2.4   Competing Globally

In terms of strategic market share, the British Telecom displayed a global approach throughout its lines of business. BT’s overseas activity targets were set to various markets in the world, divided into three segments: the North America market, the Mainland Europe market and the Asia-Pacific region. In North America, the company partnered with MCI to support growth. The largest focus is still in its home market and the mainland Europe using its core brands and the market Asia-Pacific region is still being developed (Sumanen, 2002).


Blackwell, Ron. 2005. ‘Hearing before the US-China Economi ad Security Review Commission Regarding Corporate Globalization Strategies China and the Future of Globalization’.

Diaz-Bonilla, E and S Robinson eds. 2001. ‘Shaping Globalization for Poverty Alleviation and Food Security’. 2020 Vision Focus * Washington, D.C

Kohl, R and K, Orourke. 2000. ‘Whats new About Globalization: Implications for Income Inequality in Developing Countries’ Paper for Organizations for Economic Cooperation and Development Conference on’ Poverty and Income Inequality in Developing Countries’ Paris.

Summanen, Tuamo. 2002. ‘British Telecom: Searching for a Winning Strategy’. Available at:

Free Essays

The Impact of Globalization and the Internet Presents Real

The topic of globalization has become a hotly contested debate over the past two decades. Indeed, the increased integration of international economies have led to costs to some and benefits to others. These costs and benefits are a result of three effects of globalization, that is, expanded markets, cheaper resources or a combination of the two. Firstly, from the business perspective, one effect of globalization is that of expanded markets. This means that a business that had previously only sold its goods domestically can start selling products to other countries and this can increase their profit potential.

Secondly, another consequence of bilateral trade agreements is the access to cheaper resources. Until the start of the 1990’s, the People’s Republic of China was largely closed off to the rest of the world. Many companies in the United States produced their goods either domestically or in areas with slightly less expensive labor. When China opened its market to the rest of the world, however, American companies were able to take advantage of the far cheaper labor.

This is known as outsourcing. Cheaper labor contributes to cheaper costs, which in turn contributes to larger profits. Sometimes, but not always, this may also mean cheaper products and services. Finally, International development, as a consequence of globalization, arises out of a combination of both expanded markets as well as cheaper resources. A prime example of this is India. Before the late 90s, the information technology sector in India was largely in its infancy stage.

However, coupled with an educated yet inexpensive workforce, foreign companies were able to start subsidiaries of high tech activities in cities like Bangalore. This technological know-how spread to local firms, who in turn grew as a result of expanded markets both in India as well as the rest of the world. More and more organizations are getting hooked into the Internet. They use the Internet to promote and sell their products and services, provide customer support, deliver training, and share corporate information with clients, employees, and customers.

Businesses have found that the Internet is a powerful tool to help keep their employees and customers connected. In Vietnam, many organizations know to take advantages of globalization and internet to manage their operations. However, to survive in a competitive environment, they must understand in depth the strategic planning with the support of two above factors. Strategic planning is an organization’s process of defining its strategy , or direction, and making decision on allocating its resources to pursue this strategy.

In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with at least one of three key questions: 1. “What do we do? ” 2. “For whom do we do it? ” 3. “How do we excel? ” With the aid of Internet, firms can use high technology to access the external situation analysis, supplier markets and labor markets. In addition, they can easily find the database of competitors on the internet to design the attractive policy and prices for their own companies.

References list: Wheelen, T. L. , & Hunger, J. D. (2012). Concepts in strategic management and business policy (13th ed. ). Upper Saddle River, NJ: Prentice Hall. Myatt, M. (2011). The impact of globalization on business. Retrieved from: http://www. n2growth. com/blog/the-impact-of-globalization-on-business/ Green , J. (2011). How Does Globalization Affect an Organization’s Business Approach? Retrieved from: http://smallbusiness. chron. com/globalization-affect-organizations-business-approach-20077. html

Free Essays

Globalization vs. Nationalism

Nationalism vs. Globalization The debate on whether U. S. domestic and foreign policy should center on nationalism or globalization has been a long standing one. Before I add my personal opinion to it, I would like to state the advantages and disadvantages of both options and how it woild affect our economy in the long run. Nationalism uses trade protectionism as a basis for its concept. The main objective is to protect domestic resources by deterring foreign trade. This is accomplished through raising tariffs, quotas, and embargoes. It also raises taxes for export subsidies, import licensing, and exchange rates. Riley) Initially, people believe that keeping trade domestic benefits the standard of living because it keeps employment high. Unfortunately, there are unforeseen side effects that have damaging results to the economy. One of the biggest factors is quality control. Since competition of the goods and services offered are reduced, there is no real motivation to produce innovative and technology advanced products. In addition, ineffective factions of business are safe from being edged out by more competent foreign rivals. In the long run, protectionism diminishes the value of a country’s products and cripples its economy.

Globalization, on the other hand, is the opposite of nationalism. It is defined as the “ongoing process of integration of regional economies into a global network of communication and execution. ” (Lovekar) There are many advocates and protestors of globalization. Supporters state how global trade raises GDP, employment, and per capita income for citizens of developing countries. Competition also raises the standard for good, quality products at reasonable prices ultimately benefitting the consumer. Employment, or lack thereof, is one of the hot button topics in the debate over globalization.

Some believe that outsourcing manufacturing, a key part of globalization, causes a loss of jobs domestically. Despite the steady cash flow from trade, developing countries are still growing twice as slow as developed countries. The average worker is still not benefiting from globalization due to their extremely low rate of pay, an enticing factor for outsourcing. So which option is the better policy ti adapt? In my opinion, globalization would be the better option for the U. S. Since they are such a phenomenal force in the global market, enforcing nationalism policies would not only weaken the economy, it would affect other countries as well.

High tariffswould spark initiation tariffs from other countries and start a trade war. The outsourcing of lower skilled jobs to low wage countries is not necessarily a bad thing. It opens up the market for high waged, high skilled jobs that make equivalent products. The demand for these jobs raises the education level does to as many pursue degrees to fill them. So in conclusion, while it may seem ideal for the U. S. to protect its own by stymieing global trade, in the long run its beneficial to use globalization. In addition to stimulating developing countries’ economy, it benefits the consumer through competitive pricing.

Free Essays

Globalization Comparative Essay – Pros and Cons

Globalisation From the 20th century to today, with advanced communication and transport possibilities, grows the ratio of companies and countries providing wide scale of investments and business activities internationally. Moreover, the number of people migrating across the globe is significantly increasing. In other words, the world as we know it today, is different than the world of yesterday. Thus, it is changing into one huge, global, village. The term ‘globalisation’ interprets “worldwide integration and development. ” (Dictionary. om 2012) Like every change, especially those of such a massive volume, also the model of globalised and integrated world is dividing society, not only academic, into two different argumentative positions. Proposition and opposition. Many people believe that the globalisation causes more negatives than positives on the economies of countries in the world. This essay discusses various impacts of globalisation on economies considered from two common points of view. Primary are compared positives and negatives caused by integration of countries worldwide.

Subsequently, it is necessary to realize the importance of the ‘Third world’ in the process of globalisation, therefore this essay also investigates the case of developing countries and various benefits for them as well as the crucial damages caused by liberalisation of their economic environment and entrance of powerful multi-national corporations into local markets. One of the basic characteristics of an integrated world is that countries are more likely to help each other in the case of economic problems, because they are interdependent.

Companies invest internationally, governments cooperate and sign bilateral or multilateral international agreements and establish unions (Commonwealth, NAFTA, EU,…) to simplify trade and flow of capital. Moreover, bank sector operates with the assets all around the world. All these examples belong to the category of international trade. With the formation of world market and multinational investments is strongly connected the sharing of interests spread worldwide.

Therefore, “international trade is taken to be an indicator of interdependence, its high and with some interruptions rapidly growing values are accepted as evidence of the increasing interdependence of nations. ” (IMF 2001) If conditions in countries are sound and economic environment healthy, businesses are making profit, export goods and pay income tax and CLO fees. On the other hand, if one country has various financial or debt problems, economic performance of particular region is weak. Businesses are making loss or are less likely to enter the market and international trade decreases.

This fact motivates states to protect each other from the bankrupt and keep economic environment healthy. For example in European Union is established European Financial Stabilisation Mechanism for the purposes of protecting states from the bankrupt and keeping economic performance satisfactory. “This mechanism provides financial assistance to EU Member States in financial difficulties. ” (European Commission 2012) Globalisation leads to increase in rich-poor gap. In terms of rich-poor gap is meant the difference in wealth between ‘rich north’ and ‘poor south’, in other words, developed and developing countries.

Only wealthy companies can provide financially demanding investments across the borders. Considering fact that firms are profit-maximisers, substantive reason for investing of capital and resources in developing countries is expense reduction; consequently they are enlarging profit. Costs of labour and production intakes, as well as taxes, are not inconsiderably lower than in developed countries. However, all the profit made in developing world flows back to the developed world. According to United Nations Conference on Trade and Development, in year 2007 was net inflow of capital into developing countries 196. bill. USD and overall export of capital was 772 bills. USD. (UNCTAD 2007) Moreover, companies investing abroad are so rich and powerful, that they can rule the market in smaller countries and take a competitive advantage. In developing countries are various problems to be solved by the businesses, beginning with poor infrastructure or lack of qualified workforce, ending with weak financial performance of local businesses to overcome these issues. On the other hand, multi-national companies have much more resources available to enter the market and their strong background provides them a competitive advantage. While local firms often find it difficult to compete with these firms, MNCs appear to be doing very well in spite of the competitive challenges faced. ” (Ogutu and Samuel 2011, p. 1) Globalisation contributes to the improvement of the economies in developing countries. Firms enter the undeveloped market and invest their capital. Afterwards, these companies start to produce goods, employ people and sell their products and services. Furthermore, expands import and export of various supplies and materials in and from a specific country.

Market in particular regions evolves and becomes liberalised as an impact of product exchange and international investments. “…liberalisation leads to further development of a country’s financial system which in turn is thought to enhance productivity in the real economy…” (Arestis and Singh 2010, pp. 11-12) In addition, the national budgets of countries benefit mostly from CLO-fees, income tax and GST set on all sold goods and services. Furthermore, citizens can take an advantage of working opportunities, including personal improvement and further qualification, provided by international companies and, of course, their income increases.

Living standard of the population rises. As the evidence of such globalisation impact is considered the increase in GDP and improvement of economies in developing countries. For instance: “Globalization in India had a favorable impact on the overall growth rate of the economy…growth rate in the 1970’s was very low at 3%… above 8% was an achievement by the Indian economy during the year 2003-04. ” (Goyal 2006, p 168) Contrasty, in the long run vantage point, globalisation causes various damaging negatives to each economy, mostly of smaller, not very powerful (developing and less developed) countries.

The circle of naturally changing periods of productivity and recession in economy is considered to be an economic law. During the recession, which is regularly repeating status of each market economy in the world, the liberalised markets of particular countries, depending on multi-national corporations (foreign bank sector, several industrial sectors), are very threatened. Once recession begins, firms are reducing their production, closing factories and releasing employees. As a consequence is possible to observe fall in productivity, decrease of economic performance and increasing unemployment.

Arestis and Singh assume, that “the financial crisis…” (the period of recession) “…of August 2007 and the subsequent spread of it in the rest of the economy and the world, does not augur well at all for the poor, especially so in the developing world. ” (Arestis and Singh 2010, p 7) If economies depend on those corporations and world market in general, they could find themselves in a disastrous situation. “Impact of the crisis can be realized by dramatically reduced capital inflow and a large private external refinancing…that all reflects on the reduction of export performance and a drastic fall in export markets. (Djordjevic and Stoiljkovic 2009 p 264) For completion of the story of India it is important to adjust situation of Indian economy after year 2006. “Due to globalization, the Indian economy cannot be insulated from the present financial crisis in the developed economies. “ (Prasad and Reddy 2009) Furthermore, according to Prasad’s and Reddy’s research, the Indian economy was affected in various sectors from increase of unemployment, fall in investments and exports,… This whole model of Indian economy describes clearly short- and long-run effects of globalisation process and interdependence of countries in the world.

The integration of economies brings definitely benefits in the short run, but has destructive consequences in the long run, spreading the crisis between countries rapidly. Investigating and considering of all proposing and opposing arguments relevant for the discussion about globalisation, it is possible to conclude that the process of integration and development might have several positive effects on cooperation of the countries and, in addition, short-run positive affect on economies of developing countries.

However, in long-run it is possible to recognize several problems with financial help of the states between each other, based on enormous amounts payable for the countries which have debts. (Greece, Spain, Italy,…) As Dixon suggests, “the bailout fund doesn’t have enough money to rescue both Madrid and Rome. ” (Dixon 2012) Moreover, considering the outflow of capital from developing countries and therefore enlarging the rich-poor gap and profits of multi-national companies, improvement in economies of developing countries could appear as irrelevant.

Destructing effect on the people living in third world countries is in long-run very possible. At least the risk of possible damage is so enormous that it is significant that the globalisation causes more harm than good on the economies not only of the ‘Third world’ countries. Reference list Arestis, P & Singh, A 2010, ‘FINANCIAL GLOBALISATION AND CRISIS, INSTITUTIONAL TRANSFORMATION AND EQUITY’, Centre for Business Research, University of Cambridge, Working paper No. 405, pp. 11-12. Available from www. cbr. cam. ac. uk [22. 9. 2012]

Djordjevic, M & Stojilikovic, S 2009, ‘GLOBALIZATION AND THE CHALLENGES OF THE WORLD ECONOMIC CRISIS’, FACTA UNIVERSITATIS Series: Economics and Organisation Vol. 6, No. 3, 2009, p. 264. Available from: http://facta. junis. ni. ac. rs [22. 9. 2012] Goyal, K A 2006, ‘Impact of Globalization on Developing Countries (With Special Reference To India)’, International Research Journal of Finance and Economics, Issue 5 (2006), p. 168. Available from: www. eurojournals. com/finance. htm [22. 9. 2012] http://blogs. reuters. com/hugo-dixon/tag/european-central-bank/ http://ec. europa. eu/economy_finance/eu_borrower/efsm/index_en. tm http://www. imf. org/external/pubs/ft/fandd/2001/06/streeten. htm Ogutu, M & Samuel C n. d. , STRATEGIES ADOPRET BY MULTINATIONAL CORPORATIONS TO COME WITH COMPETITION IN KENYA, University of Nairobi, Nairobi Kenya, p. 1 Available from: http://www. aibuma. org/ [22. 9. 2012] Prasad, A & Reddy,P 2009,’Global Financial Crisis and Its Impact on India’, J Soc Sci 21(1): 1-5 (2009), 2009. Available from: http://www. krepublishers. com United Nations Conference on Trade and Development 2008, DEVELOPMENT AND GLOBALISATION: Facts and Figures, United Nations Publication, Geneva, p. 16

Free Essays

Globalization and Drug Trafficking

Cheniece Bray Professor Hooper ENGL 1133 P19 12 November 2012 Annotated Bibliography II Working Title: Globalization and Drug Trafficking| Topic Description: Nations worldwide have been facing and losing the war on drugs for some time now. Innocent citizens are affected with the negative side effects due to drug trafficking such as violence resulting in death, lack of government assistance to halt the issue, and increase of crime rates.

In this paper I would like to discuss the actions that can be taken to help stop drug trafficking worldwide, starting with one of the main drug routes from Mexico to the United States and other areas globally. I believe the war on drugs can be defeated if it is attacked by the government on every level federal, state, and local. | Working Thesis: What can be imposed to stop the violence and high crime rate related to drug trafficking and also decrease the flow of drugs across borders? | Source #1| Stout, R. (2012).

Do the United States and Mexico Really Want the Drug War To Succeed? Monthly Review: An Independent Socialist Magazine, 63(8), 34. | This article stands out to me because it addresses one of my many concerns for this topic and that would be what is the government doing in order to defeat this war on drugs? Why is it so easy for drugs to travel past borders where government militia is stationed? Stout presents an argument in this article discussing what militarized efforts are being enforced to stop Mexican cartels as it seems like there is not much being done.

Prosecution of offenders is not enough because even behind bars somehow kingpins still find a way for drugs to be distributed across the border into the United States. Most drug cartels “financed the construction and operation of luxurious night clubs, gourmet restaurants, and gambling activities that attracted large numbers of U. S. residents” (Stout, 2012, p. 2) making it very easy for individuals to gain access to these illegal drugs. | Source #2| Eight Steps to Effectively Controlling Drug Abuse And the Drug Market Retrieved from http://www. csdp. rg/news/news/8steps. htm| This online article offers many alternatives beside persecution that could be used to effectively control drug abuse and the control the striving drug market. I will use this article to help me with ideas of what policies would be best enforced inside Mexico to regulate cartels. The government is not achieving much in the war on drugs by simply putting the offenders in jail because that is costing them a lump sum of money along with the problem still ongoing because the offender will eventually get out and continue to do the same things.

This article describes how the money being used to put offenders in jail could instead but used to treat, prevent, and educate offenders as the law enforcement should understand that their job is not enough to stop these powerful cartels. Drug trafficking is a problem and should be treated as one instead of a burden that continues to get recycled. | Source #3| Gleason C. (2008). Financial Cost of the War on Drugs Retrieved from http://suite101. com/article/financial-cost-of-the-war-on-drugs-a53068 | In this article Gleason demonstrates how much money is being spent to try and stop the war on drugs.

This article will be useful to me because it will help me get a understanding of how much money is spent to house an inmate in jail who has been constantly convicted of using and selling illegal drugs, also providing and paying police officers with drug units to help stop drug trafficking. Gleason’s article was useful and corresponded well the topic I chose over drug trafficking, although this article is biased it helped me formulate an opinion after I observed how much money the government has dispersed and seemingly wasted trying to prevent the use and movement of drug trafficking .

This will be used in my research paper to give an example of the cost in the government trying to solve this ongoing problem. | Source #4| Jenner, M. S. (2011). International Drug Trafficking: A Global Problem with a Domestic Solution. Indiana Journal Of Global Legal Studies, 18(2), 901-927. | In this article Jenner explains many ways in which drug trafficking can be controlled, one of the ways Jenner discusses is the universal legalization of drugs.

I will use this in my research paper as a policy that can be put into place to help eventually stop drug trafficking. Legalization would attack the drug market in a very sensitive matter; if drugs are legal the head “kingpins” of nations delivering narcotics, cannabis, and other drugs are unable to receive a profit from the drug trade therefore defeating the purpose of the whole process which is money and control. If this policy would ever be considered, control would then again be in the hands of the government and out of the violent drug cartels worldwide. |

Free Essays

Mcdonald’s Strategic Management Globalization Strategy

Example 1 Localization strategy of McDonald’s McDonald is using localization strategy in term of choose to localize the language that they use to sell the items especially burger and tries to localize the food itself, localization is absolutely necessary to attract customers across nations. One of the examples is McDonald’s localization of its food menu. u. Even though the menu is to a certain degree standardized all over the world, but some of items are unique to each country and that taste also localize of the local market.

The burger that prepared by McDonald’s well known in all over world. In Japan customer can order a “koroke” burger that which contains katsu sauce, cabbage and mashed potato. In Hong Kong, customers can find a burger that is served between rice cakes not in sesame seed buns. In Malaysia, McDonald customers have much choice such beef burger, chicken burger and fish burger. McDonald provided chicken. Some of religious group do not prefer to take beef so McDonald provided chicken and fish burger for them.

More than that, McDonald in Malaysia do not provide pig meat burger because majority of Malaysia don’t not take pork and would also be upsetting for religious. In India the type of burger totally different from other country because eating beef is against to religious rules. McDonald’s brand is strongly associated with hamburgers, but McDonald open vegetarian restaurants that provide vegetarian burgers. International strategy In the India market McDonald’s accepted the international strategy over franchising to push their main competencies and to customize their goods and service according to the demand of local customers.

This way the business be sure of on local subsidiaries in India to follow the rules and regulations of running McDonald’s and make sure the goods and service must be standardizing. McDonald to complete standardization within an international scale is difficult because of Indian market is more traditionally diverse. McDonald’s standardizes as much as can to make less costs, but they are conscious of cultural differences and have to accepted the perception of “think global, act local” (Hill, 2009).

The subsidiaries provided by international strategy with some freedom, but the main controls belong to with managers at the center of operations in America. The subsidiaries provided by international strategy with some freedom, but the main controls belong to with managers at the center of operations in America. The Indian subsidiaries are approved the power to plan, make and market innovative products that directly respond to the local customers’ preferences According to Hindu population cow is worshipped so McDonald’s does not use beef to prepare burger.

In India McDonalds fully removed beef for pork for Muslims customers. As a replacement for of the ever-popular Big Macs set up in the west, McDonald’s in India serves “Maharaja Macs “ that contain mutton and some vegetarian rice pies. McDonald’s is required to change and adapt their goods and service to local customer demand because the India customers have different favorites due to traditional and religious differences. More than that, in foreign countries there have local food for consumer while McDonalds is among one of the traditionally American fast food.

McDonalds able to maintain the local tastes on condition that it focuses on its main competency of fast food. In Europe, from fast foot roots McDonalds unfortunately straying. In strength to compete like Starbucks, McDonald’s is turn-off the restaurant space extra upscale and easy, while offering in good health and more locally tasty foods. McDonalds also offering rental iPods and Wi-Fi available for customers. However, this strategy not only reduces the product fair play by get used to local tastes, but also changes McDonalds even additional away from its main competitors of fast food

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Globalization in Canada

Globalization in Canada Canada is considered to be one of the biggest countries worldwide, yet as far as it gets from other countries, globalization seems to have a strong impact on the people regardless of what it offers from products and/or services from abroad, it may seem to have taken some of Canada away to the rest of the world too.

Globalization is affecting most of the aspects that control life in Canada, from social aspects, to economical aspects, also reaching to as far as to political aspects, and that may have pushed us ten steps ahead, yet it has blinded us through a few. This has resulted in separating people from each other, where as the immigration of people to Canada is now separating the people of Canada from each other (Gerges, 2006), for example, poor immigrants live in poor communities while other Canadians with more resources (money, land, investments… tc. ) are moving to better and newer suburbs by themselves. (Gerges, 2006) One other issue adding to the peoples fears is that they are afraid that foreigners are going to take credit for what Canadians did, just like what happened with Alexander Graham Bell, where he conducted most of research and work on the telephone in Canada, and now the United States of America is taking credit that the telephone has been made there. Gerges, 2006) As David Kilgour, (2000), says in his website that globalization aims for a borderless world, this has actually resulted in providing ease in laws affecting foreign imports and international trade, which in return provided more choice for Canadians as consumers, leading to higher satisfaction. (Daniels, 1996) it “has led to forming a world government to normalize the existing interaction among countries,” (EconomyWatch), strengthening the rights of countries in addition to the bonds between each.

According to a discussion paper by Ronald Daniels, (1996), investors are now free from abiding by Canadian laws regarding manufacturing, and certain issues, and are now free to move their factories and/or companies to other locations, which negatively affects Canadian exports and international sales. Globalization, however, has decreased unemployment in Canada since most foreign companies open remote of? ces and showrooms in Canada, resulting in employment of the people, eventually helping the economical aspects of the people, and ? nally the country itself.

To some people, globalization seems to have a tightening effect on the people of Canada (Gerges, 2006), but in my point of view, I believe that due to globalization, all the countries, including Canada, are now in rapport with each other, in addition to business being connected and intertwined, Canada is now dependent on other countries, likewise all the countries on each other and Canada, yet it has helped in making Canada more independent, and it has strengthened relations between people, where Canada and its people are known for their hospitality, and their welcoming to different cultures, different people, and different mentalities from all over the world. This has resulted in strengthening the morals of people, and the principle of equity in between people. Globalization has not only helped in doing all this, but it made Canada what is it now; a place for and with everything, and everyone.

REFERENCES Gerges, Andrew. (2006) Effects of Globalization on Canada. Docstoc. September 18, 2011, from http://www. docstoc. com/docs/21489192/Effects-of-Globalization-on-Canada Daniels, Ronald. (1996) Canadian Corporate Governance Policy Options. Industry Canada. September 18, 2011, from http://www. ic. gc. ca/eic/site/eas-aes. nsf/eng/ra01011. html Kilgour, David. (2000) Canada and Globalization. David Kilgour. September 18, 2011, from http://www. david-kilgour. com/secstate/globali3. htm Stanley St. Labs. Effects of Globalization. EconomyWatch. September 18, 2011, from http:// www. economywatch. com/economics-theory/globalization/effects. html

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Globalization and Its Merits and Demerits

[edit]Proto-globalization Main article: Proto-globalization The next phase, known as proto-globalization, was characterized by the rise of maritime European empires, in the 16th and 17th centuries, first the Portuguese and Spanish Empires, and later the Dutch and British Empires. In the 17th century, world trade developed further when chartered companies like the British East India Company (founded in 1600) and the Dutch East India Company (founded in 1602, often described as the first multinational corporation in which stock was offered) were established. [39]

Animated map showing the development of European colonial empiresfrom 1492 to present The Age of Discovery added the New World to the equation,[40] beginning in the late 15th century. Portugal and Castile sent the first exploratory voyages[41] around the Horn of Africa and to the Americas, reached in 1492 by the Italian explorer Christopher Columbus. Global trade growth continued with the European colonization of the Americas initiating the Columbian Exchange,[42] the exchange of plants, animals, foods, human populations (including slaves), communicable diseases, and culture between theEastern and Western hemispheres.

New crops that had come from the Americas via the European seafarers in the 16th century significantly contributed to world population growth. [43] The Puritans migration to New England, starting in 1630 under John Winthrop with the professed mission of converting both the natives of North America to Puritan Christianity and raising up a “City Upon a Hill” that would influence the Western European world, is used as an example of globalization. [44]

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Ir and Globalization

Ir and globalization CONENT: Introduction Body 1. What is Globalization and how it is related with the International Relations; 2. Advantages and Disadvantages of the Globalization; 3. Effectiveness of the Globalization Conclusion NTRODUCTION In my work I talk about the Globalization and its relation with the Globalization where I dwelled upon the Globalization. In the second part I did survey and focused on the advantages and disadvantages of globalization as the statistics show. After hammering out the two factors I wrote about de facto effectiveness of the Globalization and at the end I stated my estimation and conclusion.

International Relation and Globalization As more nations, people, and cultures adapt to the ever changing international community, diplomats, politicians, and representatives must meet and deal with accordingly to the needs and wants of nations. Diplomacy can be exerted in many forms; through peace talks, written constitutions, field experiences, etc. Culture is a familiar term and remains unchanged by definition. However, globalization and international relations have constantly altered culture both positively and negatively.

Globalization increases worldwide technology, and the readability of fast, effective communication and consumption of popular products. Globalization links cultures and international relations on a variety of levels; economics, politically, socially, etc. International relations have used globalization to reach its goal: of understanding cultures. International relations focus on how countries, people and organizations interact and globalization is making a profound effect on International relations. Understanding culture, globalization, and international relations is critical for the future of not nly governments, people, and businesses, but for the survival of the human race. In today’s increasingly interdependent and turbulent world, many of the leading issues in the news concern international affairs. Whether it is the continuing impact of globalization, Globalization – the process of continuing integration of the countries in the world – is strongly underway in all parts of the globe. It is a complex interconnection between capitalism and democracy, which involves positive and negative features, that both empowers and disempowers individuals and groups.

From the other hand Globalization is a popular term used by governments, business, academic and a range of diverse non-governmental organizations. It also, however, signifies a new paradigm within world politics and economic relations. While national governments for many years dictated the international political and economic scene, international organizations such as the World Bank, International Monetary Fund and the World Trade Organization have now become significant role players. In this “Global Village” national governments have lost some of their importance and perhaps their powers in favour of these major international organizations.

As a process of interaction and integration among people, companies and governments of different nations Globalization is a process driven by the International Trade and Investment and aided by Information technology. This process on the environment on culture, on political system, on economic development and prosperity, and on human physical well-being in societies around the world. Advantages and Disadvantages of Globalization Globalization has a range of advantages while it has also disadvantages. The Advantages include GDP Increase; statistics shows that GDP in developing countries has increased twice as much as before.

Unemployment is reduced. Education has increased. Competition on Even Platform: The Companies all around the world are competing on a single global platform which allows better options o consumers. It increased fee trade between nations; The Corporations have greater flexibility to operate across borders. Global mass media ties the world together. Increased flow of communications allows vital information to be shared between individuals and corporations around the world. It increases in environmental protection in developed nations. Spread of democratic ideas to developed nations. Reduced cultural barriers ncreases in the global village effect. The Disadvantages are considered to be Uneven Distribution of Wealth, Income Gap Between Developed and Developing Countries, where the wealthof developed countries continues to grow twice as much as the developing world. Next disadvantage is Different Wage Standards for Developing Countries, which is explained by the following fat that the technology worker may get more value for his work in a developed country than a worker in a developing country thus there are in the later many dynamic, industrious and enterprising people who are well educated and ready to work with rigor.

The reveal of Globalization is also considered as a disadvantage which is explaining by future factors such as war that can be demand the reveal of the globalization and current process of globalization may just be impossible to reverse. There is also another aspect of disadvantage of globalization in media sphere. The threat that control of world media by a handful of corporations will limit cultural expression. And the final in my estimation is the chance of reactions for globalization being violent in an attempt to preserve cultural heritage.

Effects of Globalization With the roster of the mentioned disadvantages and advantages Globalization culminates also effective facts. The following are considered the Effects of Globalization; * enhancement in the information flow between geographically remote locations * the global common market has a freedom of exchange of goods and capital * there is a broad access to a range of goods for consumers and companies * worldwide production markets emerge free circulation of people of different nations leads to social benefits * global environmental problems like cross-boundary pollution, over fishing on oceans, climate changes are solved by discussions * more trans border data flow using communication satellites, the Internet, wireless telephones, etc. * international criminal courts and international justice movements are launched * the standards applied globally like patents, copyright laws and world trade agreements increase * corporate, national and sub-national borrowers have a better access to external finance * worldwide financial markets emerge multiculturalism spreads as there is individual access to cultural diversity. This diversity decreases due to hybridization or assimilation * international travel and tourism increases * worldwide sporting events like the Olympic Games and the FIFA World Cup are held * enhancement in worldwide fads and pop culture * local consumer products are exported to other countries * immigration between countries increases cross-cultural contacts grow and cultural diffusion takes place * there is an increase in the desire to use foreign ideas and products, adopt new practices and technologies and be a part of world culture * free trade zones are formed having less or no tariffs * due to development of containerization for ocean shipping, the transportation costs are reduced * subsidies for local businesses decrease * capital controls reduce or vanquish * there is supranational recognition of intellectual property restrictions, i. e. , patents authorized by one country are recognized in another CONCLUSION

In conclusion I would like to state m estimation that despite all the formidable obstacles and stumbling blocks the effectiveness of the Globalization and cohesive efforts of people and the government will help to stand a positive stead prevail over the disadvantages. It will fortify to prevent migration which is inherent in third-world and back water countries and reduce social inequality which in its turn will benefit the advantages of the Globalization. All these mentioned facts are time-consuming and labour-intensive process but it will distinctly fortify and develop the Globalization.

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Globalization Impact in Brazil

GLOBALIZATION IN BRAZIL HOW HAS GLOBALIZATION AFFECTED THE ECONOMIC, POLITICAL AND SOCIAL CONDITIONS IN BRAZIL? GINA MARIE HELLAND HAUGE MARIE THERESE MAGNUSSON MASTER THESIS August, 2011 Pages: 97 STUs: 240 410 COPENHAGEN BUSINESS SCHOOL MASTER OF SCIENCE IN INTERNATIONAL BUSINESS SUPERVISOR: JOACHIM LUND Department of Business and Politics Executive summary This thesis investigates the concept of globalization and its effects on the economic, political and social development in Brazil. For many years Brazil suffered from economic instability, high inflation and high levels of income inequalities and poverty.

New reforms and opening up of domestic markets has had positive effects on Brazil in terms of stabilizing the economy. Globalization is a growing phenomenon and its effects on the world and people have been enormous. Trade liberalization has led to increased foreign direct investment inflows and it has also increased Brazil’s international trade. During the era of globalization and economic growth, Brazil has received more power within international organizations and has become an important addition to international politics.

But, even if the trade liberalization had positive effects on Brazil during the 1990s, inequality and poverty levels did not decline. This was due to the lack of functioning social policies. Governmental changes in the 21st century led to social reforms and by introducing new policies poverty levels were reduced. Today Brazil is experiencing a growing middle class and a further reduction of inequality levels. For globalization to have a positive effect on Brazil it must be controlled and the working economic reforms must be introduced.

This happened during the mid 1990s and since the beginning of the 21st century Brazil has experienced the benefits of globalization. 2 Table of Contents Executive summary Abbreviations 1. Introduction 1. 1 Background 1. 2 Problem specification 1. 3 Delimitations 1. 4 Methodology approach 1. 5 Literature review and previous research 1. 6 Structure 2. Globalization 2. 1 Definition of globalization 2. 2 Measuring globalization 2. 3 The economic dimension of globalization 2. 4 The political dimension of globalization 2. 5 The social dimensions of globalization 3. Social evelopment in Brazil 3. 1 Overview 3. 2 A historical perspective 3. 3 Social Security Development 3. 4 Rural vs. urban areas 3. 5 Bolsa Familia 3. 6 Social participation 3. 7 Public policy councils 3. 8 Conferences 4. The economic and political history of Brazil 4. 1 Before democracy 4. 2 1985-­1992 – Years of instability 4. 2. 1 The Cruzado Plan 4. 2. 2 The Bresser Plan 4. 2. 3 GDP growth 4. 3 1992-­2002 4. 3. 1 The Real Plan 4. 3. 2 A change in the economy 4. 3. 3 Fiscal Responsibility Law 4. 3. 4 Challenges from the outside 4. 4 Governmental change 5. Brazil s a “BRIC-­country” 5. 1 Origins of the term 5. 2 The development and growth stages 5. 3 Obstacles and financial crises for the BRICs 5. 4 Summits 5. 5 The role of Brazil 6. Economic Analysis 6. 1 Foreign Direct Investment 6. 2 Foreign Trade 7. Political Analysis 7. 1 Mercosur 7. 2 The World Trade Organization 2 5 6 6 8 8 9 10 11 11 11 18 19 21 23 26 26 28 30 32 32 34 34 35 36 36 37 38 39 40 40 40 43 44 45 50 53 53 55 56 58 59 60 60 64 67 67 69 3 7. 3 The International Monetary Fund 7. 4 The World Bank 7. 5 The United Nations 8. Poverty and income distribution nalysis 9. Discussion 10. Concluding remarks Bibliography Appendix 1 71 72 73 75 80 87 90 101 4 Abbreviations BRIC: EU: FDI: IMF: OECD: UN: UNCTAD: WIR: WTO: Brazil, Russia, India and China European Union Foreign Direct Investment International Monetary Fund Organization for Economic Co-operation and Development United Nations United Nations Conference on Trade And Development World Investment Report World Trade Organization 5 1. Introduction 1. 1 Background Globalization is a complex phenomenon that has had enormous effects on the world economy and its people.

Today, one is used to have shirts produced in Bangladesh, the coffee originates from Brazil and the camera is imported from Japan. A few decades ago the word “globalization” barely existed, but today it is a widely used expression and the effects of globalization is discussed in a great number of economic articles and journals. At one extreme, globalization is seen as a force that delivers economic prosperity to people around the world. At the other, globalization is blamed for making rich people richer and the poor poorer.

Globalization is referred to as a process of interaction and integration among people and companies, and the process of globalization have effected the environment in different countries, the culture, the people and the political systems within the economy. Globalization also has a major effect on economic development. Policy and technological developments of the past decades have stimulated international trade and investments to that extent that many believe that the world has entered a new phase in its economic development.

The current wave of globalization has been driven by policies that have opened up economies around the world and by technological developments during the past decades (World Commission on the Social Dimension of Globalization, 2004). Even if globalization in many situations has been referred to as something positive, the word globalization is a deeply controversial term. Proponents of globalisation argue that it allows poor countries to develop economically and socially.

Opponents, on the other hand, argue that globalization has benefited multinational corporations in the Western world at the expense of small, local firms and common people (de Soysa and Vadlamannati 2011). According to Kiggundu, globalization offers developing countries new opportunities and challenges such as economic, political and social development, but it also gives these countries an opportunity to reduce poverty and increase wages, and thereby adding wealth to the economy (Kiggundu, 2002).

There are several different ways to measure and define globalization, but the most used measurement methods are to divine the effects of globalization into one economic, one political and one social dimension and thereby evaluate the effects (Dreher, 2006). Globalization and internationalization are two words frequently used today. Boundaries become smaller and world trade and investments abroad are increasing. The world has 6 become familiar with terms such as ”emerging markets” and ”BRIC-countries”.

Globalization has indeed provided more opportunities for countries and their people. But, obviously countries are facing challenges in the globalization process. Globalization generally refers to an increasing interaction across national boundaries that affect many aspects of life: economic, social, cultural and political. It is a process driven by international trade and investment and aided by information technology. This process has effects on the environment as well as on political systems, and on economic development in societies around the world.

This process has speeded up dramatically in the last two decades as technological advances make it easier for people to travel, communicate, and do business internationally (de Soysa Vadlamannati, 2011). It is hard to say when the globalization process in Brazil started, but what one can say is that it definitely has changed Brazil, economically, politically and socially. Brazil is the largest economy in South America, and is because of its size offering one of the most promising markets in the world (Brazil Country Brief).

Brazil is, together with India and China, ranked as one of the countries that will offer the highest predicted development in the next 25 years. During the past decade, Brazil was number two of the emerging economies in the world receiving high levels of foreign direct investment. The Brazilian economy has faced some substantial changes in the past five decades. During these decades the economy also changed from being a strong state-oriented economy to a more market driven economic model.

In the 1990’s and in the early 2000’s, many market-orientated reforms within trade liberalization and privatization were made. In the beginning of the 1990’s, the country faced economic problems due to high inflation and an unstable economy. This was why the Real Plan was introduced in 1994. The plan aimed to avoid many of the problems with inflation and what it brought in terms of economic instability, and it was based on fiscal adjustment (Gouvea, 2004). In the past decades, Brazil also has attracted a large amount of foreign direct investment (hereafter denoted as FDI).

For many years FDI was restricted to certain sectors and were highly regulated. In the 1990’s, Brazil opened its doors to FDI inflow and the economy experienced an enormous growth in FDI (Baer and Rangel, 2001). When considering overall subjects for this thesis, the authors wanted to go in depth and look at the development of emerging markets as these are becoming more and more important in the global economy. During the first years of the study program, the main focus was on Asia and the development of important economies such as China and India. Therefore, we wanted   7 o focus on a different, but just as important region. South America, and in particular Brazil has shown to be an important player in the international economy, which makes it an interesting market to investigate. 1. 2 Problem specification The aim of this thesis is to investigate the effects globalization has had on Brazil in terms of economic, political and social development. This is a major task and it looks both at how globalization has affected the Brazilian economy and the role of Brazil in the world economy on one side, and the people of Brazil on the other.

To do this one will have to look at many different aspects of the country and its role within the world. The specific and interesting episodes from the country’s economic and political history to what role Brazil plays in the world economy, and also the importance of the Brazilian market in the world is worth noticing. What also falls under this theme is FDI in Brazil, since globalization often starts with the opening up of domestic markets to the global economy.

How is the inflow of FDI in Brazil and how has it developed during the time of liberalization? By looking into the wave of FDI-inflow in Brazil during the past decades, it will be investigated how the economic dimension of globalization has affected the political and the social structure in the Brazilian economy. It is also interesting to look at how higher FDI-inflows in Brazil has affected the poverty and the income inequalities, i. e. if the economic dimension of globalization has helped Brazil to develop socially.

Our research question is as follows: “By investigating the previous and current economical, political and social conditions in Brazil, we want to find out how it has developed during the globalization, as well as what globalization has offered. ” 1. 3 Delimitations Restrictions to this paper are necessary due to the scope of the paper and the limit of time. As the topic is very broad it has been necessary to narrow it down to a specific period of time. The thesis aims to investigate how the recent globalization process in Brazil has affected the economic, political and social structure in the country.

At first a definition of globalization and how globalization has affected Brazil is necessary to set the outline of the thesis. It is also necessary with an overall background of Brazil in terms of historical, economical, political and social development. To be able to make a significant analysis of the globalization process   8 in Brazil the time limit is important. Hence, the paper aims to take a look at the recent globalization process in Brazil, starting in the beginning of the 1990’s until today.

The thesis aims to bring up the problems Brazil was facing in the beginning of the 1990’s, the introduction of the Real Plan, the political development during this period and the social structures in Brazil. In addition to this, the authors will make connections between the economic development and social development in the country, to see if there is a relationship between higher FDI-rates, which derived from a liberalization of the Brazilian market, and social conditions such as poverty and income distribution.

Hence, the thesis aims to link economical, political and social development in Brazil and cannot be used for generalization to other countries. The limitation regarding the time period is necessary in this paper, but it might have dismissed different interesting topics that could have added value to our research. 1. 4 Methodology approach This thesis aims to explain how globalization has affected the economic, political and social structure in Brazil. The first objective is to explain and define important and commonly used terms such as economic, political and social globalization.

Since a main part of the thesis is based on the economic history and development of Brazil, it is significant to define important terms. The thesis approaches the research question primarily with an explanatory approach. An explanatory study is best suited because the paper aims to understand how the globalization has affected the economical, political and social development in Brazil. The goal of explanatory research is to go beyond the traditional descriptive designs of the positivist approach to provide meaning as well as description.

The purpose of explanatory research is broader than descriptive research; it is conducted to build theories and predict events. Objectives for explanatory research include explaining why some phenomenon occurred as well as interpreting a cause-and-effect relationship between two or more variables (McNabb, 2008:100). In this paper there will be conducted an analysis of the effect the globalization process has had on Brazil and how the country has developed during the past two decades.

The research design has furthermore been of quantitative nature, using already existing research papers from organizations such as the United Nations (UN), the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF). In the collection of quantitative data such as FDI-rates, poverty rates and income 9 distribution, The United Nations Conference on Trade and Development (UNCTAD) and the IMF websites have been helpful sources. The authors aim to use secondary data as the main source of information.

For this type of research approach the authors believe that using secondary data is sufficient for answering our research question. In this thesis the aim is to use existing theories and data to analyze. Most of the data has been collected through research and an extensive use of journal articles and reports from reliable sources. Hence, the authors are not aiming to explore new theories. 1. 5 Literature review and previous research The literature this thesis is based on has been gathered from various sources, which are considered recognized and reliable.

The authors have used various literatures within the subject of international business. Specific literature about foreign direct investment and globalization has been used to get a broad understanding concerning the chosen subject. The authors have been aiming at finding as recent literature as possible to get reliable information. Inspiration from respected newspapers such as The Financial Times and The Economist has proven to be helpful when exploring the subject of globalization in Brazil. Within the subject of globalization, there seem to exist different literature and well-known and respected authors.

One of these is Jagdish Baghwati, who is a professor of economics at Columbia University and known for his research within international trade. His book “In Defense of Globalization” (2004) has proven helpful in the research to get a better understanding of why globalization is positive for the world. Another important person within the liberal approach is Axel Dreher, a German economist known for the KOF Index of Globalization. This index measures mainly three dimensions of globalization; the economic, political and social dimension, which has been used as a measurement of globalization in this thesis.

The literature is mainly specialist literature about globalization, both pro and con. For the background part, literature about Brazilian history has been gathered from recognized sources such as Science Direct and Business Source Premier, which are recommended by the CBS library. The authors have also found books on Brazilian history and the development of the Brazilian economy to be reliable sources as they have been written by respected professors at well-known universities. 10 When analyzing income inequality and trade liberalization, a report written by Bergh and Nilsson has been very helpful.

According to this article, there is a positive link between income inequality and trade liberalization, but only for certain types of reforms. These are trade liberalization, deregulation of product and labor markets and economic globalization such as inflow and outflow of FDI. 1. 6 Structure This thesis consists of ten chapters. After a brief introduction where the problem is discussed and specified, the methodology approach and the delimitations are presented. Chapter two is mainly a globalization chapter where a definition of globalization is introduced.

Since globalization can be measured in many different ways, a presentation of the measurements is made in section 2. 2 to 2. 5. In chapter three, the social development of Brazil will be assessed. In chapter four, the economic and political history of Brazil will be presented. Here, the authors will review the history of Brazils economic and political development with focus on the different plans such as The Real Plan and The Cruzado Plan, but also development in terms of economic growth such as GDP.

In chapter five, the authors will evaluate Brazil as a BRIC-country, trying to get a better understanding of why Brazil has had such a strong growth the last decades and what this means to Brazil. In chapters 6 through 8 an analysis of how Brazil has been affected by globalization in terms of economic, political and social aspects will be conducted, and a discussion on this will follow in chapter 9. In the last chapter there will be a conclusion on the findings. 2. Globalization 2. 1 Definition of globalization

An extensive amount of research has been done within the field of describing globalization. According to a report from the OECD the term “globalization” refers to the dynamic and multidimensional process of economic integration within a country and can be explained by the fact that national resources are becoming more and more internationally mobile. Furthermore, globalization has for a long time been used to describe the increasing internationalization of financial markets and the different markets of goods and services.

There are mainly three forces that are contributing to the process of globalization and these are the liberalization of capital movements, the opening of global markets to trade and   11 investment, and the increasing use of information and communication technologies. Governments and international organizations have also played a very important role in the globalization of the world economy. The WTO has for example helped with making global markets more open by reducing trade barriers such as tariffs through trade negotiations, while the IMF has worked to ensure a smooth international monetary system.

Also the OECD has played an important role by liberalizing capital movements. The globalization in terms of trade in goods and services is opening up new and important markets in the world. In terms of financial markets, the increasing trade has triggered a growth in investments abroad and movements in capital over seas (OECD Handbook on Economic Globalization Indicators, 2005). As mentioned before, there are many pros and cons to globalization. Authors such as Jagdish Bhagwati and Martin Wolf argue that globalization provides economic, political and social benefits for the people in the orld. Free markets denote voluntary exchange and the allocation of goods according to supply and demand, where success and failure in the market is based on effort and talents. The ones that are skeptic to globalization fear that unfairness between people such as income inequalities and higher poverty rates will rise when the globalization process heats up. According to these people, globalization will hinder economic and social development in developing countries because it takes away the independence of governments to act in the people’s interests (de Soysa and Vadlamannati, 2011).

It seems appropriate to take a brief look at globalization versus internationalization. Although it seems like two quite similar concepts, there are important differences between globalization and internationalization. It can be said internationalization is a phenomenon that is older than globalization. It is important to note how globalization is different from internationalization. According to Daly, internationalization refers to the increasing importance of international trade, international relations, treaties, alliances, etc.

Inter-national means between or among nations. The nation remains the basic unit, even as relations among nations become increasingly necessary and important (Daly, 1999). According to Petrella, “the internationalization of economy and society refers to the ensemble of flows of exchanges of raw materials, semi-finished and finished products and services, money, ideas and people between two or more nation-states”. The mist visible instruments that are used to measure and monitor the nature, scope and direction of internationalization is   12 rade and population movement statistics. In modern capitalism, internationalization took shape through the conquest of colonies and the rise of mercantilism. George Modelski used the term “globalization” in 1972 to refer explicitly to the European-lead expansion to gain control over the communities in the world and integrate these into one global trading system. The pattern and degree of internationalization has changes over the centuries as old powers have declined and new ones emerged with different interests and strategies (Petrella, 1996:63). Globalization is as mentioned more recent phenomenon. Therefore, the forms and processes occurring are more difficult to capture in a single sentence. In short, globalization refers to the global economic integration of many formerly national economies into one global economy mainly by free trade and free capital mobility (Daly, 1999). Petrella lists some of the principal characteristics of globalization. He mentions that there is a globalization of financial markets and there is a transformation of consumption patterns into cultural products with worldwide consumer markets.

There is globalization of financial markets and there is a diminished role of national governments in designing the rules for global governance (Petrella, 1996:64). The one factor that has changed more than others is about the effect of globalization. For example, the production of wealth in countries such as Germany, France, Japan or Costa Rica is no longer dependent upon the performance of their “local” firms in local technology, capital and labour markets, but instead on those firms which are increasingly part of global networks of financial and industrial corporations.

They respond to strategic interests that are not bound to their own country’s national needs and they are even more dependent on technology designed, produced and transformed everywhere in the world, on capital made available at the global and world level, which is confirmed by the fast growing globalization of financial and capital markets. They are also increasingly dependent on highly skilled labour, not necessarily trained in their own country (Petrella, 1996:68). One can say that internationalization is a predecessor to globalization.

Internationalization seems like a Western phenomenon, the Western states were trading only with each other at some point and now the whole world is trading with each other. Globalization reaches wider than internationalization, and it also grasps a larger part of the world. More countries are involved in the global process it does not only include the more developed countries. Today globalization is hard to avoid and it affects people around the world on a daily basis. 13

According to economists David Dollar and Aart Kray, globalization has since 1980 contributed to a reduction in poverty as well as a reduction in global income inequality (Dollar and Kray, 2001). However, studies have shown that a number of people in different countries hold the view that the benefits and burdens of ”the economic developments of the last few years” have not been shared fairly. In developed countries, those who have this view of unfairness are more likely to say that globalization is growing too quickly- especially in Germany, France, South Korea, Japan and Italy.

In some developing countries, in contrast, those who perceive such unfairness are more likely to say that globalizations is proceeding too slowly. These countries include Turkey, Indonesia, The Philippines, Kenya, Brazil, Mexico and the Central America countries. When working on raising living standards throughout the world it is important to create a climate that enables countries to realize maximum benefits from globalization (BBC World Service Poll). According to Wolf, liberal globalization is a movement in the direction of greater integration, as both natural and man made barriers to international economic exchange continue to fall.

The increased impact of economic changes in one part of the world on what happens in the others is a natural and necessary consequence. In the question of the effect of globalization one has to consider what has happened within developing countries and high-income countries separately. Critics say that globalization only benefits the rich countries. An important term is capitalism and the relationship between capitalism, inequality and globalization. Does capitalism benefit all and does it lead to less inequality within societies? When looking briefly at this the focus will be on Latin America as a region. 14 Figure 1. Liberal apitalism, inequality and welfare states. Source: Schneider and Soskice, 2009 Capitalism is a social formation in which markets and commodity production are pervasive, including capital markets and labour markets. Capitalism is considered to be the most dynamic economic system in economic history. Its driving logic involves the expansion and diversification of multiple markets (Hodgson, 2003). Liberal capitalism has an impact on both the market distribution of income through labour markets, and on redistribution and the welfare state through the preferences of middle class voters, and business on the political system.

With   capitalism comes a greater demand for skilled labour, which leads to a higher educated middle class. More middle class investment in the education system leads to inequality of education outcomes. This increase in education has had a major impact on labour. The focus is now on general skills, which rewards general education. However, this penalizes those with low educational competences, which in turn will lead to a more inegalitarian income distribution. Liberal capitalism leads to weaker unions since the society becomes more individualistic and no one wants to share their wealth.

The median voter from the middle-class does not want a welfare state because recipients of welfare state benefits are the poor. According to Schneider and Soskice, capitalism leads to demand for general skilled labour, which leads to increased inequalities and a minimal welfare state. 15 Keynes draws attention to the disadvantages for demand-led economic development as a result of great inequality in distribution. Too wide a distribution gap results in the rich increasingly saving up their income instead of spending it for investment purposes, while the poor lack sufficient income and thus also purchasing power.

This will lead to a decline in the general demand for investment and consumer goods and thus growth will be limited (Eissel, 2008). Research has shown that capitalism does not benefit all. Inequality has increased among what the World Bank calls the “new globalizers”, its twenty-four countries with an aggregate population of close to three billion people (Wolf, 2004:167). According to the World Bank, the “new globalizers” have approximately doubled their ratio of trade to GDP. These countries include India and China.

On the other hand, about 2 billion people live in developing countries that are trading less today than they did twenty years ago (Soubbotina, 2004:84). It has been argued that trade helps growth and that the poor tend to share in equal proportions with the rich in any rise in subsequent incomes. It has also been argued on the contrary, that inequality rises initially with growth, before declining once again. The evidence suggests modest widening in inequality in growing economies (Wolf, 2004:167,168). According to Leiva, three decades of neoliberal labour policies in Latin America have failed to deliver the promised results.

Neoliberals sees the opening of the economy to international competition, deregulated labour markets and “labour flexibility” as a recipe for eliminating unemployment, poverty and inequality. This is seen differently in Latin America. The expansion of capital enabled by labour market flexibility is seen as the cause, not the solution to rising poverty, inequality and unemployment in the Latin American region (Leiva, 2006). Latin America is a continent with relatively high wages and a history of protection aimed at distributing income from the agricultural sector to the industrial working class.

One would in these cases expect liberalization to create greater inequality (Wolf, 2004:168). Looking at Brazil in relation to capitalism it is clear that with so many poor people and a high level of inequality, capitalism will not benefit the people that are considered poor. The people that are not able to receive an education still rely on the welfare state. In the developing countries it take longer for the poor people to see how they can benefit from capitalism and globalization. 16

Globalization is reshaping how we have traditionally gone about studying the social world and human culture. It is evident that a field of globalization studies now is emerging across the disciplines. The globalization studies arose around sets of phenomena that drew researchers attention from the 1970s onwards. One of them was the emergence of a globalized economy that involved new systems of production, finance and consumption and worldwide economic integration. A second one was new transnational or global cultural patterns, practices and flows, as well as the idea of “global cultures”.

The third was global political processes, the rise of new transnational institutions and the spread of global governance and authority structures. A fourth one was the multidirectional movement of people around the world that involved new patterns of transnational migration, identities and communities. Finally, there is the phenomenon of new social hierarchies, forms of inequality and relations of domination around the world and in the global system as a whole (Robinson, 2007). The scholarly literature on the phenomena has spread, as have specific studies on the impact of globalization.

The increasing literature on globalization reflects the enormity of the task of researching and theorizing the breadth, depth and pace of changes underway in human society in the early twenty-first century (Robinson, 2007). Since this paper is an analysis of how globalization has affected the economic, political and social conditions in Brazil, it is appropriate to review the perspectives and effects of globalization. According to McGrew there are four modes of analyzing globalization. These are defensive globalism, critical globalism, post-globalism and glocalism.

In the view of defensive globalism, globalization is an existing and enduring condition that is changing societies around the world. The view can be divided into liberal and transformationalist perspectives. Globalization is generally seen, in the liberal view, as a benign process that has continuities with the past and historical changes. It is primarily economic in nature and leads to increasing integration through the market and technology. Liberal theorists Martin Wolf and Jagdish Bhagwati emphasize how globalization is re-structuring the world economy.

As trade has become more open and there is now a transnationalization of production, this creates a new world division of labour. This facilitates the rise of new economic powers such as China, India and Brazil. The liberals show awareness to the fact that there are problems associated with globalization, and they adopt the view that it can be made to function better (McGrew, 2007). 17 The transformationalist position is that globalization is unique in history and that it involves much more than economic changes. There are benefits to globalization, but there are also problems such as great inequality in and across societies (McGrew, 2007).

Castells argues that economic globalization is associated with a divided world, as the gap between the rich and poor widens, whilst much of humanity remains on the margins or is excluded from its benefits (Castells, 2000). Critical globalism takes on a critical view of globalization because it is associated with the extension and transnationalization of power. Theorists say that a new globalized social formation is in the making, which, according to critical globalist theory, requires new ways of thinking about and acting in the world.

Post-globalism says that globalization never occurred or that it is in decline or disappearing. Due to the fact that borders of nation-states are being reasserted, as is the case with the border of United States and Mexico, and nationalism is being revived, this can be seen as involving deglobalization. This view is under the impression that the whole idea of globalization has been “oversold” as a description of social reality, an explanation of social change and as and ideology of social progress. Glocalism is the final mode of analysis.

Holton argues that there is an interpenetration between the local and the global that has to be observed. He says that the global and the national or local may under certain circumstances depend on each other (Holton, 2005). According to Brenner, global and local cannot simply be dissolved into one another due to the fact that they retain their distinctive forms (Brenner, 2004). Hence, the explanation of one needs an account of the other (McGrew, 2007). It is obvious from these modes of analysis that different theorists have different views on the impact of globalization and what its implications are. . 2 Measuring globalization There are many different ways to measure globalization and the effects of it. A proxy often used for globalization is trade openness, which can be measured as total trade of GDP, FDI and portfolio investments. However, trade openness can be influenced by location of a country and access to the sea, which is important to take into consideration. Many efforts have been made to measure and quantify globalization, but the most common ways of measuring it is to split globalization into economic, political and social dimensions.

According to the KOF Index, developed by Axel Dreher, these three measures are used. The advantage of using Dreher’s three dimensions for globalization is that it is the most 18 comprehensive measure, not only taking the trade openness into consideration but also the political and social structure. By looking at Axel Dreher’s index of globalization, we have decided to use the following as a measurement for globalization and the effects of it (see appendix 1).

Economic globalization: This dimension consists of two dimensions, actual capital inflows that measure the extent to which a country is exposed to foreign capital and trade with the world including income payments to foreign nationals. The second part of the economic globalization consists of restrictions of capital and trade flows, which work as obstacles to market access. Political globalization: Measures the degree of a country’s political integration. For example it measures diplomatic relations with the rest of the world and international relations.

Social globalization: Indicators on social globalization can be for example poverty, unemployment and income distribution. Taking Dreher’s globalization index into consideration, we have decided to look at how the economic dimension of globalization has affected the political and social dimension. As proxy for economic globalization, we will look at FDI-inflows in Brazil from 1990 until today. After this, a review of the political landscape in Brazil will be made, telling us a little bit about what happened in Brazil during these years.

Furthermore, as proxies for social globalization we will use poverty rates and income distribution, as these two measurements can say a lot about how the people’s welfare in Brazil has developed during the recent era of globalization. 2. 3 The economic dimension of globalization FDI remains a key element in the rapidly developing globalization process and it provides means for creating direct, stable and long-lasting links between economies. FDI can also serve as an important vehicle for local enterprise development, and it may also help improve the competitive position in the receiving economy.

FDI encourages the transfer of technology and know-how between countries, and it provides an opportunity for the host economy to promote its products more widely in international markets. Additionally, FDI has a positive 19 effect on the development of international trade (OECD Handbook on Economic Globalization Indicators, 2005). FDI plays an important and growing role in international business since it can provide a firm with new markets and marketing channels, access to new technology, products, skills and financing, as well as cheaper production facilities.

For a host country or foreign firm that receives the investment, it can provide a source of new technologies, processes, capital products and management skills, which in turn can provide a strong impetus to economic development (Graham and Spaulding, 2004). The United Nations Conference on Trade and Development (UNCTAD) has defined FDI as “an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor”. In cases of FDI, the investor’s purpose is to gain an effective voice in the management of the enterprise.

The foreign entity or group of associated entities that makes the investment is termed the “direct investor”. Another important term is “direct investment enterprise”, which refers to the unincorporated or incorporated enterprise-a branch or subsidiary, respectively, in which direct investment is made. Some degree of equity ownership is almost always considered to be associated with an effective voice in the management of the enterprise. The Balance of Payments Manual, which has been developed by the IMF, suggests a threshold of 10 percent of equity to ownership to qualify an investor as a foreign direct investor.

This is the level of participation at or above which the direct investor is normally considered as having an effective say in the management of the enterprise involved. However, countries differ in the threshold value for foreign equity ownership, which is seen as evidence of a direct investment relationship. As mentioned it is suggested to be at 10 percent for FDI, for data on the operation of Transnational Corporations (TNC) it involves chosen ranges of between 10 and 50 percent. Countries that do not specify a threshold point rely entirely on other evidence.

This included the companies’ own assessments as to whether the investing company has an effective voice in the foreign firm in which it has an equity stake. The quantitative impact of differences in the threshold value used is relatively small, owing to the large proportion of FDI, which is directed to the majority-owned foreign affiliates. It is necessary to define which capital flows between the enterprise and entities in other economies should be classified as FDI, once a direct investment enterprise has been identified.

Only capital that is provided by the direct investor either directly or through other enterprises related to the investor should be classified as FDI, since the main feature of FDI is   20 taken to be the lasting interest of a director investor in an enterprise. Equity capital, the provision of long-term and short-term intra-company loans (between parent and affiliate enterprises) and the reinvestment of earnings are the forms of investment by the direct investor, which are classified as FDI.

To get a deeper understanding for FDI one need to understand the difference between FDI and other types of investments. Direct investors have different investments motives than investors in portfolio investments. Investors that invest in FDI intend to have a long-term relationship with the foreign company to enable them to have a significant influence on their management. Portfolio investors or other investors may also have a long-term outlook, but they have no intention of establishing a long-term relationship with the management of the foreign company in question.

Portfolio investors either invest a relatively small amount in the voting shares of the foreign company or acquire other types of claims in the foreign company (UNCTAD, 2009). In the past decade, FDI has come to play a major role in the internationalization of business. New information technology systems and decline in global communication costs have made management of foreign investments far easier than in the past. Proponents of foreign investment emphasize that the exchange of investment flows benefits both the home and host country (Graham and Spaulding, 2004). . 4 The political dimension of globalization The political dimension of globalization is all about the political forces that shape the waves of globalization in a country. Political decisions such as openness to trade, income distribution and membership in international organizations are all things that might affect the way globalization hits a country and its people. According to Acemoglu and Yared, openness to globalization is the same as openness to trade, and how open a country chooses to be to foreign investments is mainly a decision that the government takes.

This means that changes in the political atmosphere can change the whole process of globalization for a country. They also state that countries that are experiencing greater militarization and those countries witnessing greater militarization among their trading partners have seen smaller increases in trade over the past 20 years. This means that political changes and a strong military could be a reason for a smaller increase and exposure to the globalization.

Political integration is a dimension of the globalization process that binds states together through bilateral contact and as members of international organizations. A higher participation from one country in global 21 politics, closer the political ties between governments and lead to greater cooperation. The political integration within a country is definitely a reason for the welfare of the people of the state (Acemoglu and Yared, 2010). The political dimension of globalization has been discussed in the globalization literature ever since globalization was “discovered”.

The emphasis has been on the decline of the nationstate under the impact of global forces. When globalization increases, boundaries are becoming smaller and borders are erased. For some, the process of globalization has opened up new possibilities while globalization for others has lead to a loss of independence. One of the most common forms of political globalization is the worldwide spread of democracy. Democratic government exists in some form in most parts of the world and where it does not, as for example in China, there is a considerable demand for it by democratic movements.

Since the collapse of the Soviet Union and the end of the communist regimes in Europe after 1991, democracy has become the universally acceptable form of government (Delanty and Rumford, 2007). Taking Dreher’s measurements of globalization into consideration, political globalization can be measured as a degree of a country’s political integration. To analyze the impact of it, one can analyze the political forces that have affected the growth in the country in question. Political globalization can also be measured by diplomatic relations with the rest of the world and international relations.

Hence, a good way of assessing this way of globalization would be to look at a country’s integration with the rest of the world as for example membership in international organizations, but also to look at what forces that has been behind a country’s decision to open up its markets to trade (Dreher, 2006). According to the WTO Trade Policy Review, globalization is making all nations increasingly independent, which means that the world needs better global rules, policies and institutions that ensure that globalization does not lead to larger inequalities around the world.

People experience both opportunities and problems with an increasingly interconnected world, and the importance of politics and stable institutions is increasing. Policies within nations continue to be a key factor in determining whether or not countries and people benefit from globalization. According to the report, globalization leads to economic adjustment in all countries, both industrialized and developing. New economic opportunities emerge, but they may demand new skills and may also appear in new locations.

Relocation of production between countries can destroy jobs in one place and create employment in others. Whole regions where production is concentrated in declining sectors suffer, while other sectors   22 benefit from new opportunities. The whole role of the political dimension of globalization is that governments need to manage these changes in coordination with key actors to support adjustment and new opportunities and to protect citizens from insecurity. The challenges are especially important in many of the developing countries, where unstable institutions and infrastructure are key problems.

The basis for good governance is a well-functioning democratic political system that ensures representative and honest governments that are responsive to the needs of the people, which means more than just holding of regular and free elections. It also involves respect for the human rights of the people, and involves basic civil rights such as freedom of expression. Financial liberalization exposes countries to greater risks of economic fluctuations, and can be especially devastating when a financial crisis occurs.

This risk requires a strengthening of the role of the government in providing social protection for the people. At the same time as globalization create new jobs it can also relocate jobs, which mean that some people get new jobs while other people lose theirs. This effect on employment emphasizes the need for stronger people that can only contribute and benefit from globalization if they are endowed with knowledge skills and values and with the capabilities and rights needed to pursue their basic needs. They need employment and incomes, and a healthy environment.

These are the essential conditions that empower them to lead a self-determined, decent life, and to participate fully as citizens in their local, national and global communities. These goals, which are at the heart of the Millennium Declaration1, can only be reached if national governments ensure a good education, basic infrastructure and the environment needed to create the institutional framework for it (World Commission on the Social Dimension of Globalization, 2004). 2. 5 The social dimensions of globalization

One can say that there are people that benefit from globalization while others do not. Globalization has by critics been called a global apartheid, with increasing inequalities and huge contrasts between those who benefit from it and those who do not. As an example of this, one can take Bill Gates, who earned 120 million USD per day in 1999 while 1. 3 billion people still live on less than one USD per day. Another example is the industrial countries, 1 The Millennium Declaration was adopted in 2000 by all 189 member states of the UN General Assembly.

The Declaration sets out within a single framework the key challenges facing humanity at the threshold of the new millennium, outlines a response to these challenges, and establishes concrete measures for judging performance through a set of inter-related commitments, goals and targets on development, governance, peace, security and human rights. (http://www. undg. org/index. cfm? P=70) 23 which have 88 percent of all Internet users while 2 billion people do not even have access to electricity.

At the same time, it is important to remember that globalization provides opportunities for human development (The Social Dimensions of Globalization, 2000). The social dimension of globalization refers to the impact globalization has on the life of the people in the country. Concerns are often raised about the impact globalization has on employment, working conditions, income and social protection. The social dimension of globalization also includes security, culture and identity. These will however, not be assessed as measurements in this paper (International Labour Organization).

There are no doubts that globalization brings potential for development and wealth creation. But there are many different views and perceptions among people as people are concerned about its economic and social impact. Some argue that the present model of globalization has created problems such as unemployment, inequality and poverty, while others argue that globalization helps to reduce these issues. These problems predated globalization of course, but it is clear that for globalization to be politically and economically sustainable, it must contribute to their reduction.

Hence, the goal of globalization is what meets the needs of all people (International Labour Organization). While some people benefits from the waves of globalization, others suffer from it. Concerns about increasing income inequalities in the world have become more and more widespread over the past 20 years. Rising income inequality does not generate concern only in the high-income countries, but also in emerging markets where fast growth has led to concerns about growing income differences.

To be able to make an analysis of income distribution, inequalities and poverty, it is necessary to distinguish between these terms since they are often confused. According to Duncan, there is no doubt that between the richest and the poorest countries the gap in average incomes has been growing for the last decades. But, one must also consider that many of the poorest countries some decades ago, does not count as one of the poorest countries today. It is also important, according to him, that global welfare should be measured in terms of people, not countries.

China and India together, for example, account for close to half of the world’s population. Both countries have been increasing the per capita GDP very quickly in recent years, much faster than the high-income countries. Within developing countries, research has not been able to find any systematic relationship between economic growth and changes in income inequality. Within globalization and inequality, it is interesting to look at what role globalization played in   24 changes in income inequality. Most research on this issue has been concentrated in recent years on the changes in income inequality in the high-income countries.

The focus has been on whether the widening wage gap in the US or the increasing unemployment in the EU is due to increased imports of labour-intensive goods from developing countries (Duncan, 2000). Poverty, on the other hand, as a public concern is now widely considered to be a multidimensional problem, whether it is at the global, national or community level. According to Lister, “how we define poverty is critical to political, policy and academic debates about the concept” (Lister, 2004:12). Three alternative conceptions of poverty have evolved as a basis for international and comparative work since the 1880s.

The ideas of subsistence, basic needs and relative deprivation is what they principally depend on. These ideas have influenced scientific practice as well as international and national policies for over 100 years (Chambers, 2006). The organization distinguishes between “absolute” and “overall” poverty. Absolute poverty has been defined as “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health shelter, education and information.

It depends not only on income but also on access to services. ” Overall poverty is defined as “lack of income and productive resources to ensure sustainable livelihoods; hunger and malnutrition; ill health; limited or lack of access to education and other basic services; increased morbidity and mortality from illness; homelessness and inadequate housing; unsafe environments and social discrimination and exclusion. It is also characterized by lack of participation in decision-making and in civil social and cultural life. Overall poverty occurs in all countries, and can be recognized as for example loss of lives as a result of economic recession, sudden poverty as a result of a war, poverty of lowwage workers and humans that fall outside of family support systems, social institutions and safety nets (Gordon, 2005). The UN agreed upon this definition in 1995, however, in 1998, the organization introduced a new definition that does not distinguish the different levels of poverty. The UN now has the following definition of poverty “Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity.

It means lack of basic capacity to participate effectively in society. It means not having enough to feed and cloth a family, not having a school or clinic to go to, not having the land on which to grow ones food or a job to earn ones living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, 25 and it often implies living on marginal or fragile environments, without access to clean water or sanitation” (Gordon, 2005).

As mentioned above, poverty can be divided into absolute and relative poverty. But, it can also be divided into new and old poverty. Old poverty is when people have a lack of food and basic services as medicine and education. New poverty is drug addiction, violence at home, family break down and environmental degradation. According to The Economist, the problems of new poverty are more complex than the problems of old poverty because they often occur in big, fast growing cities particularly in developing countries (The Economist).

Poverty is a phenomenon that has to be understood as a painful reality experienced by millions of human beings and as a construction of competing conceptualizations, definitions and measures (Lister, 2004:36). What we see from the definitions is that people are in poverty when they are deprived of income and other resources needed to obtain the conditions of life that enable them to play the roles and participate in the relationships and customs of their society (Townsend, 2006).

Income inequality is usually measured by the Gini coefficient; one of the most commonly used proxies of economic inequality. For a completely equal income distribution in which the whole population has the same income, the Gini coefficient will be 0, while a value of 1 indicates that all incomes in a country are concentrated to one single person (The World Bank). 3. Social development in Brazil 3. 1 Overview According to Maluf and Burlundy, Brazil can be classified as a “large middle income country”.

The condition of being a “large country” is an important differentiating factor with implications in terms of socioeconomic patterns, international relations and institutional capacities. A country is usually considered large when it possesses a high population; from the economic viewpoint this factor is expressed in the size of the domestic market, which increases the possibility of diversification in the productive base. In addition to population, a second variable to consider is the country’s geographic scale, a feature that is receiving   26 ncreasing attention not only because of issues related to spatial distribution of people and infrastructure, but also the implications in terms of the availability of natural resources, regional diversity and the need for decentralized strategies, among other questions. Here, the classification “middle income” differentiates economically those countries grouped under the euphemism of “developing countries”, where the income level clearly shows an intermediary condition between the developed countries and the other nations making up the periphery of the global economic system.

It may be presumed that large middle- income countries possess a distinct institutional capacity across the various areas of public action (Maluf and Burlundy, 2007). Generally, the evolution of poverty, especially in Latin America, depends on three elements: the level of inequality, the variation in this level and the economy’s rate of growth. Even if the country displays a more pronounced economic dynamism, which is measured by the GDP growth rate, the conversion of the latter into greater social equity depends on the existing level of inequality and the adoption of measures to reduce it.

In Brazil, the persistence of absolute poverty is largely the result of the well-known inequality in the distribution of income. Poverty levels are more sensitive to alterations in levels of inequality than the variations in economic growth (Maluf and Burlundy, 2007). A term that describes the social conditions in Brazil in quite a way is inequality. When looking at the social development of the country it is important to understand why Brazil has become such an unequal society even though it is such a large economy.

To understand the current gap between the rich and poor in Brazil, one has to look at the socio-historical factors. According to a report by the World Bank written in the late 80s, Brazil has one of the most unequal distributions of national income in the world. Glaring disparities in the living standards, health status and educational attainment of different segments of its population have persisted despite several decades of remarkable economic growth (Bruns and McGreevey, 1988). This has not changed.

According to Beghin, Brazil is still one of the most unequal nations in the world, although it is one of the wealthiest (Beghin, 2008). It has high levels of social spending compared to other developing countries, measured as a share of GNP and of total public spending (Hunter and Sugiyama, 2009). This year, Brazil was ranked as the eighth largest economy in the world, surpassing Italy (DR, 2011). Despite the size of the economy, the income distribution is unequal to such an extent that it can be compared to some of the poorest African countries such as Sierra Leone, Lesotho and Namibia (Beghin,   27 008). In Brazil, the richest one percent of the population – less than 2 million people – have 13 percent of all household income. This percentage is similar to that of the poorest 50 percent, about 80 million Brazilians. This inequality results in poverty levels that are inconsistent with an economy the size of that of Brazil. Also, 30,3 percent of the population, 54 million people, are considered poor, and within this group, 20 million people, 11,5 percent of the population, are ranked as extremely poor (Beghin, 2008).

Brazils high incidence of poverty, low educational achievement, and middling health indicators explain why it ranked 73th globally in overall human development in 2010 (UNDP, 2010). 3. 2 A historical perspective The main reason why so many Brazilian families are living in poverty is not a general lack of resources, but rather their distribution. Inequalities and poverty in contemporary democracies result from tensions between the ethical requirements related to “rights” and the imperative of economic efficacy; between the legal order that promises equality and the reality of exclusion brought about by the exercise of power.

Back in time, in many western countries, there came a time when social disparities were so extreme that society mobilized g