Module 3: Market Integration - The Rise of Global Corporations PDF

 Economy is really subject to different ups and downs due to several factors. Monetary system and financial institutions play a significant role in the market flows. The rise of global corporations paves the way for more capital flow, continuous need for products and services, and creation of m...

 Economy is really subject to different ups and downs due to several factors. Monetary system and financial institutions play a significant role in the market flows. The rise of global corporations paves the way for more capital flow, continuous need for products and services, and creation of more employment opportunities. With this module, the students must: Explain the role of international financial institutions in the creation of a global economy; Narrate a short history of global market integration in the 20th century; and Identify the attributes of global corporations. Functions and Constitution of a Global Corporation, BRICS Economies, Non-Equity Modes of Production, Interactive Global Patterns Brought by Global Corporations Global corporations are inseparable to the phenomenon of globalization.  Global corporations are inseparable to the phenomenon of globalization. period – globalization * Early historical followed complex interactive patterns of engagements organized through trade and directly influenced by the emergent and dominant technologies especially in shipping and navigation (Harvey, 1990).  The contemporary global corporation is simultaneously and commonly referred to as multinational corporation (MNC) or transnational corporation (TNC). They are either an international companyor a global company  International companies are importers and exporters, typically without investment outside of their home country. Multinational companies have investment in other countries, but do not have coordinated product offerings in each country. They are more focused on adapting their products and services to each individual local market. Global companies have invested in and  are present in many countries. They typically market their products and services to each individual local market. Transnational companies are more complex organizations which have invested in foreign operations, have a central corporate facility but give decision making, research and development, and marketing powers to each individual foreign market. TNC – Transnational Corporation: An enterprise that engages in activities which add value (manufacturing, extracting, services, marketing) in more than one country (UNCTC, 1991). These types of corporations are called under the generic name of GLOBAL CORPORATIONS. The History of Global  Corporations Colonialism and Imperialism Post World War II era where it was dominated by American Corporations The re-entry of Japanese and European Corporations back to world market Foreign Direct Investment (FDI) is construed to be one of the major elements of the global economic development. 1960-principal turning point for FDI as the major driver of extended global corporate development. 1985-1990 – it grew at an average rate of 30% a year. Due to an increase in FDI, some 20,000 new corporate alliances were formed in the period of 1996-1998 (Gilpin, 2000). 3 FUNDAMENTAL INNOVATIONS: The advent and impact of digitalization and instantaneous global communications. The structural transformation of global commerce from producer-driven commodity chains to buyer-driven. The increasing role performed through the global system by financial elements and the emergence of global financial firm. 3 STRUCTURAL PERIODS: Investment-based Globalization (1950-1970) Trade-based Globalization (1970-1995) Digital Globalization (1995-onwards) Investment-based Globalization(1950-1970) - dominated by  producer-driven commodity or value chains & tended to be dominated by firms with large amounts of concentrated capital on large-scale or capital-intensive manufacturing or extractive industries. - transformation in the dominant manufacturing firms of older developed companies to a more fully extended & integrated organizational forms to a more authentically global firms which required extensive corporate integration of their activities throughout the world. Trade-based Globalization(1970-1995) - the more buyer-driven a country is, the more nodes exist within their networks and the greater either their interdependence on other actors or their imperative to establish extensions of supply, finance and others. Digital Globalization(1995-onwards) - Global corporate structures & operations can be viewed within the ever-changing digital environment as framed by the constant need to develop & adapt. -Symbolic Capital – evident in the increasing value & importance placed on the branding created & owned by the GCs. -Brand Finance – a discipline that ranks corporations in global league tables on the brand value parallel to their ranking by various entities in terms of their aggregate revenue, earnings, etc.  Digital Globalization (1995-onwards) DIGITALIZATION is transforming the classic value chain of manufacturing focused on innovation in which: - Product design & innovation are replaced with driving innovation through digital product design - Labour intensive manufacturing is replaced by digitizing the factory shop floor - Supply chain management is replaced by globalizing through digital supply chain management - Marketing sales & service is replaced by digital customization (Capgemini, 2012)  Digital Globalization (1995-onwards) DIGITALIZATION leads to: - producer-driven streams have progressively integrated their corporate structures to reduce effects of time & distance for services such as design, finance, accounting, advertising, brand development, legal services, inventory control, etc. - buyer-driven streams become digital with companies’ specialization in Internet retailing of goods & services continuing to gain market share over fixed in place marketing and selling. Digital Globalization(1995-onwards) DIGITALIZATION leads to the Quick Response (QR) Management System - the dominant system operates within & between global corporate structures with 3 steps: 1. Retailers adopt integrated electronic point of sale technologies which allow for instantaneous communications between sales, reordering & production units, and delivery control. Digital Globalization (1995-onwards) 2. Firms redesigned internal management practices for faster turnaround of merchandise and allow for more effective inventory control. 3. Retailers and manufacturers establish an integrated supply chain with joint product development planning & inventory control. (Cammet, 2006) Interlocks that exist in the “network of corporate control”  Vitali, Glattfelder, and Battison (2011) – made a study and findings showed that a very highly concentrated structure of ownership and interlocks and a network structure dominated by a very dense core remained in the hands of the firms within the core itself. Brazil, Russia, India, China and South Africa  Have become the most dynamic sector of the global corporate growth. Represented in part by their significant FDI over the past three decades. The importance of global corporations in Brazil, Russia, India, China and South Africa to the current and projected global economy is singular With forty percent of the world population, BRICS economies represent a primary force in both global production and consumption.  The BRICS were unaffected by the US and European Markets in 2007. In relation to China, some globalist views it as having connection with the old socialist order since many of China’s global corporation are owned and controlled by the state (‘state-owned corporations’). They are, in a way financed by the state, and are also, in a way, “endorsed” by the state to its ready buyers. It is the largest developing country outward investor with estimated holdings of US $ 1 Trillion in 2009.  The BRICS economies is the new face of the global corporate reality as their strong domestic markets and their ability to gain capital from within their host countries. BRICS accepts new members Non-equity modes of production.  Have become an increasingly important form of global corporation within the emerging economies. Represent an increasingly vast network of relationships in which global production chains are assembled through contract manufacturing, services outsourcing, contract farming, franchising, licensing, and management contracts. * Viewed as ‘externalization’ for corporation which gains access to benefits within global value chains without direct investment of comparable amounts of capital albeit at the cost of relinquishing elements of control & at reduced profit levels. 1.Those that have arisen as a result of growing national power of the host country responding to the need to aggregate & deploy national capital to provide the bases for economic development. 2.Those that have focused on replicating major consumer pathways in both developed and developing markets. 3.The NEMs which works through contract & other relationships with developed market firms by gaining access to & exploitation of superior innovative technology. Lessened regulation by governments. It is a set of proposed governance structures including rules, norms, code of conduct and standards to render the GCs more accountable to their stakeholders so called Corporate Social Responsibility (CSR). Check and balances provided by NGOs. Need for regulation of the global financial market. After World War II, global corporations were viewed as agents of desired economic development. FDIs were in demand throughout the world. By the end of the 1960’s onward, global corporations were viewed as gaining their economic prominence through a variety of socially destructive means. Global corporations are viewed as agents ofa system that on balance was resulting to greater global wealth inequality, income inequality, lack of effective worker protection, environmental degradation, producing natural cultures of corruption through corporate collusion, and in some instances, threatened national sovereignty. Global corporations are now very powerful that they can create a financial crisis if they want to. Global inequality  The systematic stability and viability of the global financial system Climate issues Therefore, the likelihood that continued global interdependence will produce outcomes favourable for the world as a whole will depend in large part on the willingness of global corporations to embrace the importance of these global goods and their responsibilities for them.  3. BECOMING ELON MUSK Elon Musk is a name that has become synonymous with the future of technology. From his early days as an innovator to the founding of Tesla and SpaceX, this documentary chronicles Elon’s journey in becoming one of the most influential figures in modern history. Follow along as we explore how his passion for science and discovery have revolutionized space exploration and green energy production. With jaw-dropping visuals and gripping narrative, you won’t want to miss this incredible story about one man’s legacy! https://youtu.be/vai3Vh234EE Claudio, Lisandro E. and Patricio Abinales. 2018. The Contemporary World. C & E Publishing, Inc. Quezon City. Steger, Manfred B., Paul Battersby, and Joseph M. Siracusa, eds. 2014.The SAGE Handbook of Globalization. Two volumes. Thousand Oaks: SAGE Publications. Saluba, Dennis J., Carlos, Abigeil F., Cuadra, Jovy F., Damilig, Angelita D., Corpuz, Raizza P., Endozo, Maria Lorena A., Pascual, Marilou P., Hermogenes, Michael C., and Capacio, Jocelyn G. 2018. The Contemporary World. Panday-Lahi Publishing House, Inc. Muntinlupa City.