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Globalization and Multinational companies

1.To what extent is globalization driven by multinationals? Use data to argue your answer.

2-Choose a Multinational corporation and a foreign country where the company operates and answer one or two of the below questions. How many jobs have been created by the company in the foreign country since it has been established there? What are the jobs main conditions? Did they hire any local politician?

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Discussion: Globalization and Multinational companies

(i) Globalization is a new generation trade, which mitigated traditional barriers of trade and commerce.  Through Globalization, the ease in international trade got realized, now there are fewer obligations and bottlenecks in doing cross border businesses.   Exports, imports, outsourcing are some of the immediate benefits of globalization, which worked on to provide increase trade opportunities and market to the products across the globe.  Now even companies located in remote underdeveloped and developing countries can get market to their products across the world. Organizations in Developed countries managed to outsource their projects to the developing countries where the labour is available at cheaper rate. Globalization mitigated the problem of skills shortage. Organizations now can get skills from anywhere in the world for their project either by direct deployment of expats in the organization or by outsourcing projects using IT and networking advancements. Multinational organizations are some of the key drivers of globalization. Multinational companies do operate in different countries and in different economic framework of operations varying depending on the host country. They do facilitate interconnectedness of economies.

A typical network of multinational company located in different countries and work on get different operations of its core process done in different countries. For example raw material procurement and processing can be done in developing countries.  It is possible to processing of the semi finished products in other countries. Finishing products can be done in some other country. Also it is possible to get the required sales and marketing of the products in other countries as well based on scarcity for the finished products. All these operations can be done through interconnection of network of MNCs in different country. MNC will be incorporated by infusion of foreign direct investment (FDI), which ultimately will improve the host country economy and quality of life in the region as well. An Example Multinational company is Lenovo (Schmid and polat,2018), founded in China, incorporated in Hongkong and entered market of United States and rose to a competitor position in the country in Personal computer sales and related accessories domain. The company also undertook mergers with IBM. The company has cheap labour and raw material availability in china and doing marketing in United States profitably.

(i) Shell is a multinational company working in the oil rich Nigeria. Shell is working for the exploration of the oil and for enabling exports and revenues building for the country. Though Nigeria is rich in resources and does have the necessary potential for economy build-up, it is lacking the necessary skills for technology for exploration; Shell is working in this regard with Joint ventures. Shell has created a large pool of revenue and employment opportunities to the local people. The key domain is the local contracts, in 2016, about $2.2 Billion worth local contracts were executed in Nigeria to let the local people develop their competency to take up the support activities of the oil exploration. It has created thousands of direct and indirect employment opportunities to the local personnel (Elum et al.,2016). They have hired local political leaders and regional stakeholders as part of their business operations. They deputed them for liasioning and public relations. Infact there are claims that Nigeria has supported JTF also with several billions of dollars to enable its operations in the region.

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