Globalization has led to increased economic integration around the world as large multinational corporations seek to expand into new markets and reduce costs. However, this has also created conflicts between the interests of powerful transnational companies and national governments, as well as risks of growing inequality and environmental degradation if not properly managed. For small countries like New Zealand, it means management decisions may increasingly be made offshore and local communities could be affected.
1. Globalisation . . is not a serious idea. We, the
Americans invented it as means of concealing our
policy of economic penetration into other nations’
J.K. Galbraith 1970
2. By the end of this class you will have had the
opportunity to:
Consider the emergence of globalisation
Consider the implications of globalisation
Consider the implications for small countries such as
Aotearoa New Zealand
3. Those who do not read and understand history
are doomed to repeat it." - Harry Truman
History never repeats itself. Man always does."
— Voltaire
4. Globalisation
What do we mean by globalisation?
Why and how has globalisation occurred?
What are the characteristics of globalisation?
Who are the ‘globalisers’? How do they spread their
ideas?
5. For those who want to know more…
seek out….
Guns, Germs and Steel by Jarred Diamond
Climate Wars by Gwynne Dyer
Look up: Blue Gold: World Water Wars PBS videos
6. History first: Imperialism, empires and
globalisation
Imperialism : The policy of extending a nation's authority
by territorial acquisition or by the establishment of
economic and political hegemony over other nations.
Development of monopoly capitalism
Industrial capitalism and banking
Export of investment from the centre (USA) to the
periphery
Control of foreign markets
An example: the British empire
7. Pax Americana.
Globalisation: In this modern sense, the term has come to
indicate the military and economic reach of the United States in
relation to other nations
So is globalisation a form of ‘Americanisation’? Or more?
8. What do we mean by globalisation?
‘Business without borders’, unhindered by national
boundaries, .
The ‘Americanisation’ of the world? American products, designs
and politics dominating the world ( the ‘new’ empire?’)
The Transnational franchisders: McDonalds, KFC, Starbucks,
Dunkin Donuts, Disney, Sky, CNN, GM, GE, Apple, Microsoft,
Levis, the Oscars, CSR, Oprah, Letterman and on and on
American values, products, and debt are being globalised ($1.4
trillion 2009)
Backed by immense military might e.g Libya, Iraq, Afghanistan
and on and on…
9. The financial cost of the Iraq war to the American
people but what about the cost to the Iraqi people?
March 16, 2003 Meet the Press interview of Vice President
Dick Cheney reported that "every analysis said this war itself would
cost about $80 billion, recovery of Baghdad, perhaps of Iraq, about $10
billion per year. We should expect as American citizens that this
would cost at least $100 billion for a two-year involvement.". [3]
. As of February 2010, around $704 billion had been spent
To whom did this vast sum of money go? Halliburtan
http://www.boston.com/news/world/articles/2008/03/06/top_iraq_co
ntractor_skirts_us_taxes_offshore/
10. American arms suppliers in Iraq
A = nuclear program, B = bioweapons program, C = chemical weapons
program, R = rocket program, K = conventional weapons, military
logistics, supplies
1 Honeywell (R, K) 2 Spectra Physics (K) 3 Semetex (R) 4 TI
Coating (A, K) 5 Unisys (A, K) 6 Sperry Corp. (R, K) 7 Tektronix (R,
A) 8 Rockwell (K) 9 Leybold Vacuum Systems (A) 10 Finnigan-
MAT-US (A) 11 Hewlett-Packard (A, R, K) 12 Dupont (A) 13
Eastman Kodak (R) 14 American Type Culture Collection (B) 15
Alcolac International (C) 16 Consarc (A) 17 Carl Zeiss - U.S (K) 18
Cerberus (LTD) (A) 19 Electronic Associates (R) 20 International
Computer Systems (A, R, K) 21 Bechtel (K) 22 EZ Logic Data
Systems, Inc. (R) 23 Canberra Industries Inc. (A) 24 Axel Electronics
Inc. (A)
11. (cont)
International activities which enable firms to enter
new markets, exploit technological and organisational
advantages as well as reducing business costs and
risks, and achieving increased economic integration
of their activates.
Examples: Fisher & Paykel, Haier, Lenova
12. Why do organisations want to
globalise?
Economies of scale
Economies of scope
Cutting cost of resources
13. Economies of scale and scope
Economies of scale have meant that volumes
produced at home far exceed the sales that companies
can achieve at home, forcing them to go international
Opportunities exist for economies of scope through
worldwide communication and transportation
networks. e.g. DHL
Trading companies handling the products of many
companies can achieve greater sales and lower unit
costs
14. Reducing costs
Getting access to cheap resources (see China Blue)
Transnationals need more than simply lower labour
costs; they need access to markets e.g. Asia’s growing
middle class
China and India have a potential market of 2.4b
Access to technology
15. Major issues
Relationships – and conflict - between states – Iraq and USA,
India and China
Sustainability as nations develop on the back of fossil fuels e.g.
China
China’s appetite for resources driving up world prices and itrs
global search for resources
Developed nations ‘outsourced’ their pollution e.g. waste plastic
back to China
Changing peoples’ perceptions of who they are; ‘guest workers’
in the Middle East to illegal Latino immigrants in USA
Managing displaced workers and their families e.g. Afghans in
Pakistan
Leading to multiculturalism of organisations and communities
New challenges and opportunities for the ‘global manager’
16. Conflicts between transnationals and nations
Transnationals want:
Unrestricted access to resources and markets
Control of all aspects of the firm on a worldwide basis
Maximise shareholder value and minimise taxes
Establishing headquarters in low-tax havens
Light regulatory frameworks and minimal government
expenditures i.e. low taxes needed
17. (Cont)
Think in terms of global competitiveness
Expect governments to offer grants and subsidies for
their investment
Governments to cover the costs of basic
infrastructure they need; R & D, universities,
communication , transportation networks etc
Look for tax incentives
Privileged access to domestic markets via public
contracts eg. Health, telecommunications
Industrial policies that suit them e.g. labour laws
18. Democratic governments want:
To be re-elected!
Electors look for lower taxes while still wanting more
social services e.g. Health spending
Strong economies and sound stream of tax revenue
Want external sources of investment, technology and
knowledge which transnational's can supply to create
global competitiveness in the national economy.
Want transnational's to increase the extent of their
local activities
19. The conflict?
There are no allies in business, just interests
Many transnationals are far richer and have more power than small
national governments
Exxon Mobils 2007 profit: $25.3 bn
2011: $41.1 Billion buut pays estimated 17.6 Percent tax rate
e.g. poor Pacific states such as Pulau and investment from Taiwan,
Japan’s bribery of Pacific nations regarding whaling and China’s aid to
Africa
20. Where are we going?
As the rich get rich, the poor….
Growing inequality gap between rich and poor
Failure of ‘trickle down’ theories
International capital chasing bigger profits at the expense
of?
The illogic of it; exporting pollution to poorer countries
which degrade the environment which proves increasingly
expensive to try to alleviate
Where does this leave managers with regards to
sustainability, ethics and corporate social responsibility?
21. (cont)
A self-defeating ‘merry-go-round’
China today, Bangladesh tomorrow and then?
Speculation, greed and over-heated economies such
as China drive up the price for resources, which
means western consumers cut back, leading to lower
production in China, rising unemployment and civil
chaos and disorder?
Undermining of national governments
22. What does this suggest for New
Zealand management?
Centralisation of strategies and policies ‘off-shore’ e.g.
BNZ
Important management decisions taken off-shore
New Zealand small, regional outpost e.g banking
Globalisation of ideas and practices
A new breed of manager? Have skills will travel.
Affect on local communities whether in New Zealand or
China?