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Multinational and transnational corporations

“We now live in a world of multinational and transnational corporations” (Abercrombie and Warde). What implications does this have for us? This is a question about the effects of globalisation on the world. Globalisation is quite a recent phenomenon, with the term only really being coined in the 1980’s, however the concept has been around for decades, even centuries with the earliest expansion of European capitalism dating back to the early 16th century with the beginnings of colonialism.

However, the rapid growth of globalisation began in the late 19th century with the build up to the 1st World War and the great depression forcing countries to trade. Following WW2 companies began to look globally for expansion with new markets now available. The 2nd industrial divide and development of new technologies, especially in the field of communication led to development of international business and when the Berlin Wall fell and the USSR broke up, capitalism was dominant and new areas of possibility began appearing.

With the communication revolution that is occurring, especially the Internet and large corporations such as McDonalds spreading throughout the world globalisation is a reality that affects every single one of us in one way or another. Globalisation is such

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a big issue (with 2882 academic papers and 589 books written in 1998 alone), it is hard to cover all the affects in one essay, so I will try and cover the most important points within the categories of economic, social, cultural and political.

Many see globalisation as purely an economic fact, and to some extent this is the most important aspect of globalisation. The economies of the world have become global with no more state economies as money flows freely around the world with large organisations to ‘control’ this, such as the World Bank and International Monetary Fund. This increase in international trade has led to 16 times the amount of goods being traded around the world since 1950.

This has made us richer with the creation of many more jobs, and now more opportunities to work abroad as these jobs flow between nations as well as money. According to Professor Garellis, this opening of world markets and harmonisation of international business rules through such agreements as the General Agreement on Tariffs and Trade (GATT) puts enormous pressure on business to relocate as a massive labour force that was once unreachable is now reachable, usually at a much lower cost.

This can be argued as exploitation as labourers are paid much less than they would be in the West. Is this fair? Would they have a job at all without globalisation? Jobs are now created and lost at will with many corporations simply moving to another location in order to maximise profits, many example of this can be seen in Britain over the last decade with many British industries (or foreign industries in Britain) moving elsewhere to maximise their profits and to stay in the competition, trying to compete with companies that have already moved.

This has led to a division of labour in the world, where many of the monotonous, unskilled jobs are now done in the east and in developing countries and the more ‘intellectual’ and skilled jobs are done in the West. For example, many computer components are built in Asia, but are assembled and sold in the USA and Britain. Another of the greatest impacts especially affects that effect us daily are the social and cultural effects of globalisation. Now, more jobs are available as these large companies now have some form of operation in every ‘major’ country in the world.

This means that a wide variety of consumer goods are now available to us all as equipment is exported throughout the world, we can now walk down the nearest high street and purchase something from anywhere in the world. The expansion of these companies also provides new skills and technology to wherever they expand. This expansion, coupled with corporations forging alliances with governments leads to rapid development of technology as there is mass investment, the will to pursue and the expertise to do so.

This has led to many large social impacts. Most notably, the Internet has created an international exchange of information where people can contact each other 24/7 in a matter of milliseconds over a vast telephone and satellite network. The internet and phone network (including mobile phones) have largely contributed to globalisation as ‘international’ business can now be conducted from home. Travel time is now hugely reduced and widely available with long haul planes going anywhere in the world.

This has led to what many sociologist call ‘time compression’ as everything can now be done quicker and on a much larger scale. However, there are bad social consequences too. Many of these large companies have become extremely prosperous and powerful. Some of the larger corporations, such as General Electric (GE) and Microsoft now have incomes much greater than that of many nations and exercise huge amounts of power (for example, GE has a market value close to that of the GDP of The Netherlands – approximately $375,000 million).

This is very undemocratic as these bodies are unelected and in many cases only there to pursue their own personal greed, able to operate secretly and without any social responsibility. The forging of alliances leads to a diminution of a states power and responsibility to its citizens, and has little power over a multinational company. Workers throughout the world can be exploited as it is a question of supply and demand – if you won’t do it for this price there is someone desperate enough somewhere that will.

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