Globalization and Multinational Companies Impact

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Questions and Answers

What effect does globalization have on food supply?

Food supply is limited to local production cycles.

Food quality declines due to increased shipping.

Food prices become more stable and predictable.

Food can be purchased from anywhere regardless of season. (correct)

How do multinational companies (MNCs) impact job security?

MNCs provide better benefits leading to job stability.

Jobs in the global economy are more temporary and insecure. (correct)

Job security increases due to global hiring practices.

Jobs become more permanent as MNCs expand.

What cultural impact can result from the growth of multinational companies?

Enhanced preservation of local traditions.

Monoculture formation through reduced local competition. (correct)

Creation of a diverse set of global brands.

Increased interest in cultural exchange programs.

What role do multinational companies play in the division of labor due to globalization?

They shift production to locations with lower costs. Signup and view all the answers

What environmental consequence is associated with increased trade from globalization?

Higher fossil fuel consumption causing pollution. Signup and view all the answers

What was a significant economic shift that occurred after World War II?

Transfer of economic power to corporations. Signup and view all the answers

What primary effect does globalization have on economic integration among countries?

Rapid unification in trade, investment, and capital flow Signup and view all the answers

Which of the following factors contributed to the growth of globalization after World War II?

Development of advanced telecommunication technologies. Signup and view all the answers

Which sector has globalization historically focused on before expanding to services?

Manufacturing Signup and view all the answers

How have free trade agreements impacted global markets?

They have facilitated the reduction of trade barriers. Signup and view all the answers

What is a direct consequence of companies outsourcing service activities?

Provision of lower-cost services to global customers Signup and view all the answers

Which aspect is NOT a type of globalization mentioned in the content?

Environmental Signup and view all the answers

What role does global banking play in globalization?

It enables instantaneous capital flow across borders. Signup and view all the answers

Which technological advancement has significantly aided in the mass movement of goods globally?

Refrigerated and container transport. Signup and view all the answers

What has primarily driven the globalization of economic activities among countries?

Liberalization of trade and investment Signup and view all the answers

What has been a primary motivation behind the promotion of global free trade by multinational companies?

To increase their own wealth and influence. Signup and view all the answers

What is meant by political globalization?

The cooperation and collaboration between different governments Signup and view all the answers

Which organization is known for promoting free trade on an international level?

International Monetary Fund (IMF) Signup and view all the answers

Which of the following best illustrates the integration of globalization in technology and services?

Vizio Flat Panel TV's production process Signup and view all the answers

What impact did the decline in barriers to the free flow of goods have after World War II?

Expanded opportunities for international trade. Signup and view all the answers

What benefit do countries experience when they have few trade barriers, according to the economic type of globalization?

Greater economic partnerships with multiple nations Signup and view all the answers

Study Notes

Globalization: Introduction

Globalization is defined as the rapid integration of economic, cultural, and institutional factors among countries.
This integration is driven by trade liberalization, investment and capital flow, and technological advancements.
Globalization makes the world more accessible to everyone.

Contact Details

Office Hours: Thursdays, 12:30 PM - 1:30 PM
Email: [email protected]

Course Assessment

Participation: 10% (all semester)
Attendance: 5% (all semester)
Group Debate 1 & 2: 10% (all semester)
Quiz 1: 5% (Week 5)
Quiz 2: 5% (Week 6)
Midterm Exam: 20% (Week 8)
Presentation: 5% (Week 15)
Final Exam: 40% (Week 16)
Total: 100%

What is Globalization?

Globalization is not just about manufacturing; modern communication allows companies to outsource service activities to low-cost nations.
Globalization is evident in the example of the Vizio Flat Panel TV, designed in California, assembled in Mexico, with components from South Korea, China, and the US. This wouldn't be possible without globalization.
Google outsources IT infrastructure management, software development, and maintenance to IT services firms in India for cost savings and expertise.
Ford outsourced software development, engineering, and IT to India in 2013 to manage their e-commerce store and provide 24/7 customer support globally.

Types of Globalization

Economic: Countries trading with many others, with few trade barriers.
Social: Ease of information and idea transfer between people, including access to the internet and social media.
Political: Level of political cooperation between countries.

Drivers of Globalization

Decline in Barriers: Reduced trade barriers for goods, services, and capital flow since World War II.
Technological Change: Pre-WWII nations created trade barriers; post-WWII industrial nations removed those to facilitate free flow.
Tariff rates on manufactured products were notably high in the early 20th century (e.g., 44% in the US, 21% in France.) Rates have significantly reduced through to 2002.

Increasing Significance of TNCs

After World War II, corporations gained more economic power and this accelerated growth.
Transnational companies thrive in countries with favorable corporation tax rates and tax breaks. This is often cited as a major driver behind increased MNC activity.
Examples of multinational corporations are included in an image that depicts their global reach.

Causes of Globalization (Improved Communication)

Internet, email, and mobile phones facilitate global communication and operations of MNCs.
Improved technology allows easier communication and information sharing globally.
Satellite TV channels (like Sky and CNN) facilitate international marketing and product promotion.

Causes of Globalization (Improved Transport)

Refrigerated and container transport, bulk shipping, and air transport enable easy global movement of goods.
Efficient transportation is a crucial aspect of worldwide goods movement.

Causes of Globalization (Free Trade)

Trade liberalization refers to reduced trade barriers, enabling worldwide markets.
Multinational Corporations (MNCs) and rich countries actively promote free trade to enrich themselves and increase influence.
International organizations such as WTO and IMF endorse free trade practices.

Causes of Globalization (Global Banking)

Modern communication technologies enable swift and widespread capital flows.
Approximately 1.3 trillion US dollars are traded daily through international stock exchanges in major financial centers.

Causes of Globalization (Growth of Multinational Companies)

The significant growth of MNCs (e.g., Microsoft, McDonald's, Nike) is both a cause and consequence of globalization.
Investments in farms, mines, and factories worldwide play a large role in globalization.
Globalization enables MNCs to operate globally and sell on a massive scale.

Effects of Globalization

Changed Food Supply: Global food supplies are no longer tied to seasons (e.g., availability of fresh produce year-round).
Division of Labor: MNCs seek lower production costs in developing countries – resulting in production shifting in industries to those regions.
Less Job Security: Jobs are often temporary or precarious in our current economy. Surveys show the trend towards workers holding multiple jobs over a working life in the USA.
Damage to Environment: Increased international trade leads to more transportation, causing more pollution and climate change.
Cultural Impacts: Websites like YouTube connect the world but can also diminish local cultures as multinational corporations like Starbucks or similar enterprises take over local cultural centers.

Debate Question

The debate question is: "The Emirati identity won't survive in a globalized culture."

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Description

Explore the profound effects of globalization on food supply, job security, and cultural changes influenced by multinational companies (MNCs). This quiz delves into the division of labor and environmental consequences tied to increased global trade. Test your understanding of these critical issues in today's interconnected world.