Effects of globalization of multinational companies

Introduction

Globalization can be described as the process of extending various social of organizations across the world. Globalization can be said to arise due to the movement of people from one place to another, including things and ideas. Globalization of business organizations has led to some positive aspects as far as businesses and the global economy are concerned. Negative effects that are associated with globalization include the exploitation of workers especially from the third world countries. Some arguments portray globalization as being more harmful than beneficial. The phenomenon describes the relationships among macro-social forces in terms of cultures. The various forces leading to globalization include religious forces, political factors, and economic factors. This paper describes the issues of globalization of multinational companies including the positivity and negativity of this kind of globalization.

Globalization is said to be in a position of increasing financial instability globally through the increasing global trade. This effect comes from the fact that globalization of systems and corporations means that a country’s economy may cause influence to another company from another country in which the globalization process is targeting (Business Essays , 2011 ). An economic problem that may arise in one country as caused by multinational corporations could result to a widespread financial crisis that spreads to the entire world of business. In the case of financial crisis, the rich countries would always tent to gain more money but the poor on the other hand face a decreased access to financial resources as well as natural resources.

While globalization is capable of helping mega-corporations that engage in high level of environmental pollution get away with it, the less powerful business organizations incur many social costs because the law bends in such a way that the mega companies are protected. In many cases, the developing world lose from the action of globalized Multinational Corporation in that the poor availability of economic resources may not provide grounds for fighting with the effect of environmental implications of globalization. Such poor or developing countries are more likely to face mega problems such as a severe effect from global warming, an aspect of environmental pollution by globalized Multinational Corporation. It is however argued that globalization creates an economic advantage to an extent of combating all negative aspects of globalization including environmental pollution. Globalization is said to have led to a great level of economic growth although this kind of growth is realized in the most developed nations from which the multinational corporations are based.

Globalization of Multinational Corporations leads to the exploitation of workers especially in the less developed countries. It would be a common aspect to find Chinese workers being exploited by the United States Multinational organizations as seen in the case of Wall-Mart’s exploitation of Chinese workers in China (Dolack, 2013). While Multinational Corporations from great economic nations such as the US benefit from the existence of cheap labor in the lower economic countries like China, the exploitation of these workers is seen as a negative aspect of globalization of the multinational organizations. On the case of workers and globalization, Multinational Corporations provide employment opportunities to people in the less developed countries. These countries are mainly targeted by the Multinational Corporations since they provide cheap labor and market for these corporations.

Globalization has increasingly led to new demands on companies and organizations to extent their business operations across the world. Multinational corporations are said to be ht main agents of globalization. Most of the multinational corporations benefit from globalization but the effect could be in two directions. While most of the organizations benefit from globalization, the effect could be negative to some corporations despite their nature of operating globally (Button, 2013). The reason why multinational organizations are affected in either way by globalization is that most of them have numerous subsidiaries. Some of these subsidiaries benefit greatly from globalization while other subsidiaries lose from the effect of globalization (Button, 2013). In this case, it comes out that the effect of globalization could be either good or bad. This factor of globalization of multinational companies having negative or positive effect on the corporations, other businesses, workers, or other subjects depends on the type of multinational organization in question.

Globalization in particular gives businesses the ability and increased chance of accessing various markets. These markets could have been difficult to access in the past but globalizations of multinational corporations provide the chance of getting complete access to these markets. With internet, globalization customers from all over the world are able to order products from various regions of the world. While this is the case globalization of multinational corporations tend to diminish this factor in that they want to spread in every region of the world and dominates the market in such a way that inefficiencies could increase (Business Essays , 2011 ). Multinational corporations could operate in a way that is harmful to its consumers and workers especially in the developing countries. While globalization such harmful effects to the developing nations mainly, the positive aspect of globalization covers all the negativities.

Negative impact of Globalization of Multinational Corporations

Multinational Corporations are large companies whose activities are extended globally through the process of globalization. The corporations could be seen to spread the good aspects of developed countries to the developing world but the effect of is more harmful than beneficial in some cases. The issue of economic development associated with Multinational Corporations in the developing nations is doomed by the fact that individual workers are exploited through low salary remunerations provided to them. These corporations disguise themselves through selling their products and services at a lower price than most other local business organizations. The power to sell goods at a lower price than local competitors is provided by the cheap resources in the developing nations including low cost of labor.

Most of the Multinational Corporations gain a stronghold of the local media thus generates superiority in influencing the ideologies of consumerists on people through commercialization. These consumerist are forced by the prevailing conditions to buy goods are produced through a mass production process by these Multinational Corporations whether in the country or in other countries. Having to buy the goods from the Multinational Companies becomes the only way of ensuring higher standards of living by these consumerists in the developing countries in which there is the utilization of cheap labor. Workers standards of leaving could be deteriorated because they work more in a way that contribute significant benefits to the multinational corporation but they get less compensatory wages instead of receiving wages that are equal to their marginal productivity of labor. The media is blocked in way that the bad practices such as workers exploitation through poor working conditions and low wages are hardly portrayed to the public or the required authorities. This aspect of taking power over the media and the local authorities is mainly experienced in the developing countries where corruptions and other related social evils are intense.

In some cases, the multinational corporations may make use of cheap labor in less developed countries and sell their products in the most developed countries. This case can be seen in the case where Wall-Mart, a United State Multinational Corporation, makes use of the Chinese cheap labor to ensure mass production and then ship the products to the United States in order to benefit by selling them at a higher price (Parker, 2013). Instead of China gaining from Wall-Mart, the Multination Corporation exploits the countries labor resources and transports most of the products back to the United States where consumers can buy the products at a higher price. Wall-Mart takes the shape of the historical belief in multinational corporations in that they are able to take control of a country’s economy and having power in political systems of the countries in which they are established.

The reason why they are able to take such position especially in developing countries is that they are said to have so much investments in such countries such that there rejection may result to significant economic problem (Parker, 2013). Multinational Companies are said to take advantage of political systems in the developing nations due to their strong impact on the nations’ economies. The countries find it devastating if the corporations reached a point of removing the many investments from their economies. Some of the economic impact creating fear of imposing strict regulations on such companies includes increased unemployment as those employed in the companies being set off from their jobs. Some evils created by these multinational organizations include paying some top government officials in order to protect the companies from being shut down. Sometime the corporations may have much power to compel the government to make adjustments in the labor policies and other policies that may renter the companies to shutting down.

Given this situation whereby a multinational company has taken full control of the government policies concerning its operations in a certain country, the multinational company may not be punished accordingly for breaking the country’s law. They extent their evil practices in the exploitation of the countries labor and natural resources as well as evading from tax payments (Parker, 2013). Multinational corporations are known to steal huge sums of money through tax evasion especially from developing countries in Africa, parts of Asia, and Latin America.

Some mega multinational corporations like Apple Corporation exploit workers in a big deal such forcing them to work long hours and paying them poorly. Some Apple workers are said to suffer much humiliations as they aspire to engage in the company’s production of iPads and iPhones (Chamberlain, 2011). The exploitation was particularly on the Chinese works engaged in the production of Apple iPad. These iPads and iPhones are produced to be sold to consumers across the world. The case of Apple was too serious to an extent that consumers across the world took their live to prompt an investigation into the working conditions within the company’s factory in Shenzhen, a city in southern China. In the same case, some Chinese sociologists got involved in writing letters to the media in which they called for an end to the persistent restrictive employment restrictions in some of the worker practices. The aspect of worker oppression was said to be whereby the fundamental human dignity of the workers is highly sacrificed to promote the corporation’s development (Chamberlain, 2011). Corporations like Apple are disguised by their image of being superior in quality products. Apple Corporation was mainly established in China to enjoy its many cheap resources in both labor and natural resources.

The major issue in these corporations is exploitation of resources especially in labor. Other than exploiting workers, these corporations deprive them their rights in various ways. In many cases, they are demeaned with a claim that they are inferior due to their country of region.

Positive Impact of Globalization

Globalization has led to much negativity in the developing countries. The positive effects are however greater than the negative effects making the practice relatively beneficial as far as economic growth is concerned. The advantage of globalization is that it creates the power of creating more jobs within the countries that they have been established. Developing countries are characterized by high levels of unemployment but this condition is reduced to some extent when multinational corporations are established in such countries. The creation of jobs mainly occurs whenever large quantities of labor force are required. Most of the Multinational organizations are large to an extent of creating a significant aspect of unemployment level reduction in developing countries. These corporations are mainly established to benefit from the cheap labor in the developing countries. There capacities are large enough to accommodate a significant number of workers. The Coca Cola Company is one of the Multinational Corporations that work towards job creating in the developing countries. The Coca Cola Company has increased its investments in various countries. In Malaysia, the company was established at a cost of 301 million aiming to generate an employment opportunity of more than eight thousand workers (Business Essays , 2011 ).

Multinational Corporations are known to promote technology transfer through their globalization. The transfer of technology however depends on the available resources to be used by the Multinational Organization transferring the technology. The company also has to hav the capacity of achieving the required level of technology so that it could be more competitive in the prevailing market. In many cases, technology in the developing countries is substandard and any improvement means that technology transfer has to occur. Globalization of multinational corporations participates greatly in technology transfer (Business Essays , 2011 ). These new technologies are very helpful to such countries in that they are able to create development in the local aspects in that developing country thereby aiding in economic development. Some developing countries employ high efforts and costs when importing new technologies that can otherwise be established using the incoming corporations or any other ways promoted by globalization of business. Technology is a key aspect of economic development without which many companies may fail to advance in structure and business. Other ways of developing knowledge about new technologies are available such as the use of internet. Globalization of multinational corporations however gives local businesses and organizations a chance of witnessing a practical aspect of technology or innovations (Business Essays , 2011 ). Creativity of multinational corporations can be adopted locally by local business organizations to improve on performance as well as promote various researches aimed at improving business.

Socially, globalization of multinational companies and corporations is able to bring down the number of people living below the poverty line. This change in social and economic status of some individuals in developing countries is usually brought about by job creation by the international companies, which employ workers at all levels of employment. In this case, the standards of living of the people securing employment with the multinational corporations improve greatly. Other than getting jobs, people in the developing countries may end up creating good relationships as they advance their living standards (Fiss & Hirsch, 2005).

Globalization is known to have a positive impact on a country’s economy. Globalization of multinational corporations or companies plays a significant role in generating an economic affluence through the offering of new hope to most of the developing countries (Frank, 1998). Through globalization, trade barriers are reduced creating a chance for easy transaction activities between countries. With the increased globalization of business organizations, trade barriers removed create a free flow of goods, labor, and services from one country to another. The increased cases of globalization of companies create a situation of increased trade (Frank, 1998). The increased trade globally leads to an increase in the general income for the developing countries. Increased income for the developing countries serves as a greater opportunity in stabilizing their economies. This stabilization is accomplished by taking advantage of the increased free movement of goods and services between countries.

Conclusion

Globalization is mainly seen as to create positive impact to any country’s economy. The main reason why businesses, companies, or organizations employ global strategies is that they find globalization being in a position to increase profitability of the company. Companies gain various benefits by employing global strategies. While some companies want to become multinational, those that are already multinational corporations benefit from a broadened market. Globalization makes the companies growing or operating globally to enjoy the benefit of underutilized resources in the less developed regions of the world (Ritzer, 2011). The main problem with globalization or multinational companies is that some employ business practices that are hardly ethical but harmful to the society and economy.

Companies operating through corrupt way to cover their bad practices such workers exploitation, environmental pollution, or creation of inefficiency and market failures should be stopped irrespective of their direct contribution to the country concerned. In many cases, compensations for their harmful practices go to the rich few while those affected end up being uncompensated. Given that the few harmful practices by multination companies are dealt with effectively globalization would have more and stronger positive impacts to the world economy than it is today (Stever, 1972). Globalization is therefore great in improving the economies of all countries including the global economy. Business law in all countries should be established to deal with all evils associated with globalization.

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