ARUSHI GAUTAM 13C

IMPACT ON MNCs DUE TO THE INTENSE DIVIDE BETWEEN PRO-GLOBALISTS & ANTI-GLOBALISTS

The propellers of globalization propagate that globalization is desirable as it leads to higher standards
ARGUEMENT
of living by enhancing economy scale and optimal division of labor. To this, the anti-globalists argue
that scale economies is usually associated with manufacturing which is not the primary sector in the
poor countries which are the exporters of primary goods. Added to that greater openness exposes the
economy to the external shocks.
Many a radical groups define globalization as – “the economic, political and military tyranny of the
Western capitalists over the world”. The focus of both pro and anti-globalists have been multi-facets
ranging from trade related policies, the international organizations like WTO’s transparency over these
policies to the behavior of corporates operating across borders. The corporates have been seen as the
major driver for the globalization and its pros and cons. They are attributed for worldwide trade and
financial liberalization. On the other hand, anti-globalists are of the view that corporates undermine
consumer rights, social developments and environment quality.
SCENARIO FOR The world’s roughly 80,000 multinational corporations (MNCs), long dominated by U.S., European and
MNCs Japanese firms, have been joined by a growing number based in China, India, Brazil and other emerging
economies. MNCs are the engine of a quarter of total world production and their global supply chains
represent about half of world trade. MNCs have played a major role in driving a tenfold increase since
1979, now totaling $16 trillion, roughly the size of entire U.S. GDP.
A wave of anti-globalization protectionism has led to the latent hostility toward global business that
has been festering for decades. The deep rivalry between globalization’s pro and anti, champions and
victims, has exposed enhancing polarization and raw market. Political volatility is on the rise.
Notwithstanding elections in France, the Netherlands and Austria, nationalist political winds threaten
to disrupt the international, liberal order and the institutions upon which it depends. The founding
stones of transnational commerce and finance — WTO, IPO, IMF, EC, NAFTA, et al. — are victims of
protest for serving as instruments of powerful globalists whose worldview diminishes loyalty to place.
EU against US Judicial actions against multinational corporations (MNCs) are now straining transatlantic relations. In
Europe, the European Commission has been leading the charge with ongoing antitrust proceedings
against Microsoft and Google. These are the cases about US companies abusing competitive power, or
about the EU influencing technology policy and promoting domestic alternatives to American
companies, which depends highly on where one's loyalties lie in terms of international ruling system.
Similarly, the US has been known to take action against European companies. After the EU announced
US on Anti-
globalization
that it would require Apple to pay €13 billion (S$19.8 billion) in back taxes, which it alleges were illegally
reduced by the Irish government, the US fined Deutsche Bank, a German company, US$14 billion
(S$19.3 billion) to settle claims relating to its mortgage-backed securities business prior to the 2008
crash.
Donald Trump’s anti-globalization sentiment has weighed on Shanghai’s economy even with the city’s
development of the free-trade zone designed to facilitate cross-border investment and reinvigorate
the most developed metropolis in China. FDI in Shanghai reached just 8.2% of the national total, falling
far short of its expectation of a 15% share.
ARUSHI GAUTAM 13C

One week after Donald Trump’s inauguration, with fears of a trade war spiking, the Economist
CASE IN POINT published a cover story, “The Retreat of the Global Company,” in which it proclaimed that “the biggest
business idea of the past three decades is in deep trouble” and that “the advantages of scale
and…arbitrage have worn away.” And Jeffrey Immelt, GE’s chairman and CEO, has talked about the
company’s “bold pivot” from globalization to localization. A full-scale retreat or an overreliance on
localization would hamper companies’ ability to create value across borders and distance using the rich
array of globalization strategies that are still effective—and will continue to work well into the future.
To tackle this GE decided to localize. The CEO when signaled an end to 7 decades of globalization
represented the urge to have local capability inside a global footprint to have sustainable growth. GE
is now focusing on digital productivity. This is ensured by small sites and more number of machines to
give them the flexibility of producing what they want and where they want. Today, for a global
company, digitalization and advanced manufacturing technologies are bringing more productivity
alongside local investments, giving easier market access. As its second largest market, China has a key
position in GE’s global strategy.
GE understood that it had to adapt to the local market and localize. Dealing with several industry
sectors and managing merger and acquisition projects in China requires a company to develop a
localized identity. GE had to localize its branding, products, services, and operational processes to
shape its reputation in the eyes of customers, employees, partners, and officials. One of the best
examples is the 2008 Beijing Olympics sponsorship campaign. GE developed a localized ad strategy
mixing Chinese symbols, cultural and linguistic references, and creativity to target its audience.

IMPACT DUE TO A coalition of 13 U.S. and European multinationals including BP, DuPont, Google, Intel, Shell and
ENVIRONEMTAL Unilever, representing a market cap of nearly $2.5 trillion, wrote Trump urging (ultimately
ISSUES unsuccessfully) continued U.S. commitment to the Paris Agreement on climate change. Their rationale:
competitiveness, job creation, risk reduction and strengthening climate resilience to ensure a "more
balanced global climate effort, setting long-term objectives, improving transparency, and encouraging
market-based approaches to minimize costs."
A major concern of anti-globalists is that free trade encourages firms from advanced nations to move
manufacturing facilities to less developed countries that lack adequate regulations to protect labor and
environment. This concern has had huge impact on trade between Indian and EU companies as EU
want to trade in products which are made in environment friendly regions having strict restrictions.
As can be seen from Graph 1 the tariffs have stopped decreasing while NTBs are rising showing the rise
of protectionism and hence a state of emergency for MNCs.
ARUSHI GAUTAM 13C

CHALLENGES FACED BY TRADITIONAL MNCs ON ACCOUNT OF INTERNATIONALISATION OF BUSINESS IN

EMERGING ECONOMY

EMERGING Emerging economy refers to those countries that are commencing to participate globally by
ECONOMY & implementing ameliorate programs and are going through economic improvement. Majority of the
OPPORTUNITIES global population lives in emerging markets which implies that the world population is moving from
basic need era to a more consumption oriented era. This tendency has created an associate degree
surroundings for additional new customers of products and services across these rising markets
remodeling them into huge consumption hubs for MNCs. Therefore, MNCs are looking at such
developments as an opportunity to capitalize on and moving their business operations to these
markets which traditionally used to be considered as low production or assembly centers.
The emerging markets present great opportunities for MNCs in terms of large consumer base, high
demand for products and services and new business avenues. However, whether they are domestic or
foreign, MNCs operating in emerging markets face a variety of complex and multifaceted challenges.
These challenges vary from company specific, to country specific and international specific problems.
In a broad view, challenges include MNCs’ decision to pursue: growth paths; strategic direction; new
management approach; risk management approach; and, social responsibility policies.
Sustainable  The real challenge for MNCs is to achieve sustainable growth and profitability in these
Growth emerging markets while contributing explicitly and consistently to the overall well-being of
the human-being.
Political  The challenge of political instability is historically related to developing or rising countries for
Instability MNCs returning from developed nations wherever MNCs from developing
countries contemplate economic risk like charge per unit risk as a larger challenge.
Industrial  Industrial infrastructure is inefficient, lack of belongings right protection, high tariffs, dearly-
Infrastructure won forms, ambiguous rules and laws, non-competitive practices, management of distribution
systems, unreliable and caliber suppliers and overall industrial manipulation
High worth  High worth sensitivity, native wants and restricted buying power square measure the
sensitivity characteristics of rising market.

Corporate social responsibility is growing challenge for the MNCs in

operation in rising countries. MNCs square measure expected to balance their role in
ARUSHI GAUTAM 13C

Geographical  Geographical distance was known inside the prevailing literature, as a challenge exhibit to
Distance corporations when internationalizing. It was absolutely found location factors to be an
outstanding barrier for entrepreneurial corporations, with their analysis indicating that
corporations weren't following group action, as compared to their European counterparts.
Geographical distance was thought-about to be a plausible reason for this, whereby European
corporations have significantly smaller geographical distances to hide so as to achieve a world
presence.
Formal &  Networks are one among the key characteristics for a made international start-up that and
Informal Ties includes each formal (government and business professionals) and informal (friends and family)
relationships. The formal ties comprise varied social group establishments that may be
additional categorized into structure fields (i.e. government) and social group sectors (i.e.
country culture) and making and maintaining such ties will facilitate to combat potential
barriers.