Globalization

One of Toyota’s regional headquarters in Jakarta, Indonesia looms large over a shanty town in the northern part of the city. Huge transnational corporations like Toyota often operate in developing nations taking advantage of cheap labor and low production costs. Companies like Toyota, and the way they do business, are an important part of globalization.

What do fashion, potato chips, diapers and dandruff have in common? Proctor and Gamble. Better known simply as P & G, it is a huge TNC (transnational corporation) and is the owner of Hugo Boss, Pringles, Pampers, Head and Shoulders and hundreds of other brands (P & G – go to the “choose by brand” scroll box). It operates as a horizontal monopoly, controlling a diverse number of businesses to insure its survival in our very cutthroat global economy. If people ever quit eating Pringles because they make you fat that’s OK, because then they will get skinny and buy Hugo Boss designer wear, look really good, attract a member of the opposite gender, make a baby and then have to buy Pampers. It all works out in the end for these global behemoths. They are an integral part of globalization, the latest economic process directing human activity and use of space. It is also quite a trendy catch word and oft used to explain all sorts of things going on in the world today.But what exactly is globalization? A generic definition reads something like this; globalization is the increased mobility of goods, services, labor, technology and capital throughout the world. It is due in part to a relaxing of trade barriers between countries and new developments in technology, particularly in the fields of telecommunications and transportation. Some simply describe it as the process of the world getting smaller or people working on a more even playing field economically due to the all powerful leveler the PC. Have a computer, a phone line, reliable electrical outlet and you are in business, literally. You don’t need to have the suit and the money to get the plane ticket to fly around the world to make various business deals. Just dive into the World Wide Web and go to town. The use of new communication tools and techniques is certainly a key aspect of globalization. But it is the giant corporations who are the major players and driving force behind this economic entity. Globalization seems to be one of these things that is easier understood by looking at real life examples of the process rather than investigating various definitions and explanations. Let’s investigate a couple of the major players in the globalization game and see if their stories will shed some light on this rather elusive concept.

The founders of Nike, originally called Blue Ribbon Sports, started selling running shoes out of their cars at local track and field events. Now the company is one of the most recognized brands in the world and is presently in a very tight battle with Adidas for the top spot in the multi billion dollar athletic equipment and apparel industry. It employs some 24,000 people and operates on all the inhabited continents. Nike also operates as a horizontal monopoly acquiring some high profile companies in its 33 years in operation. Cole Haan, Bauer, Hurley and Converse are all owned by Nike. But it hasn’t been all easy going for the global giant. Several years back Nike offered a promotion in which customers could get a personalized slogan placed on their Nike shoes. A potential customer requested that the word “sweatshop” be emblazoned across his new Nikes. The Nike Brass declined citing a bunch of technical legal mumbo jumbo and linguistic gymnastics rather than simply explaining the obvious that they would not produce something detrimental to their own image. The story gained quite a bit of bad press for the company. You can do a quick internet search and find the original or read about it here via a secondary site. Many TNC’s operate factories in less developed countries to take advantage of cheap labor and low production costs and are often accused of running virtual sweatshops. Other typical critiques of TNC’s and globalization include economic entities controlling too much of world affairs, environmental devastation, exploitation of the developing world, and suppression of human rights.

A Scottish owned tea plantation in the Cameron Highlands of Malaysia employing Indians and Indonesians as laborers. These particular housing units were for the workers from Indonesia. A good example of companies from the developed world operating in the developing world to take advantage of cheap labor and low production costs so that we can drink less expensive tea.

Rows of cultivated tea plants in the Cameron Highlands. Interesting thing about tea, if the bushes are not closely cropped and tended to they will grow into a proper tree like shrub reaching heights of twenty to thirty feet. These were very well tended.

Enjoying less expensive tea. This is at the “Smokehouse”, a remnant of the British imperialist lifestyle in Malaysia. It is now a restaurant that serves a very nice high tea. TNC’s are often refered to as the newest batch of imperialists in the developing world.

Kraft is another TNC with a rather interesting story which indicates another aspect of these multinationals that are at the forefront of globalization. Kraft started a long time ago and slowly began creating new food items and buying out others as the company grew. It is now the second largest food company behind another monster in the globalization game, Nestle. The company has branches in many countries around the world, employs almost a 100,000 people and owns many of the most recognizable food brands such as Kraft Cheeses, Oreos, Post Cereals, Kool Aid, Maxwell House coffee, Planters nuts, Nabisco brands, Toblerone, and Oscar Mayer meats to name a few. But what most people do not know about Kraft is that it was acquired by Philip Morris of Marlboro cigarettes fame. In 2003 the company renamed itself Altria Group “to better clarify its identity”. It seemed that it wasn’t such good publicity having Fruity Pebbles cereal and Kraft Mac and Cheese so obviously linked to a cigarette company. So now Kraft is owned by Altria Group which is Philip Morris minus the name change.

Globalization is very evident in the field of professional sports. Sports are big business and like any economic activity are influenced by economic trends. Consider the English Premier League, one of the wealthiest, competitive and well known sports leagues in the world. It is home to many of footballs most high profile teams, players and managers and is also an excellent example of globalization. Thirty years ago, while Bowerman and Knight were still hawking Blue Brands, English football was a very different beast than it is today. The FA Premiere League did not exist. The teams that battled it out in the First Division were primarily made up of players from Britain. The owners and mangers were also most likely Englishmen. The adverts on the pitch and team uniforms carried the logos of British companies. Much of this changed as the tide of globalization began to flood various world markets including the lucrative business of sports. In 1992 the English (FA) Premiere League was introduced to the world and globalization hit the “joga bonita” like a Ronald Koeman free kick (really hard).

Other than the fact that the Premiere League is English, and played in England it is barely English. What???? Consider Chelsea, the league Champions two years running. Most of their players are not English; the owner is a Russian oil magnate, the manager is Portuguese, and their primary sponsors are Samsung, a Korean technology giant and Fly Emirates, the royal airlines of the UAE. Most of the top tier Premier League teams offer similar lineups. It is big business and extremely competitive. Manchester United is one of the most recognizable sports brands in Asia. Singapore has a giant Manchester United store and a while ago I had a very mediocre sandwich at the Manchester United restaurant in downtown Jakarta.

So the next time you go shopping play this little game – select a giant TNC that operates as a horizontal monopoly and only buy its brands. If you select the right TNC(s) you might be surprised how many diverse products you can get! And then go home, kick up your Reeboks (owned by Adidas) poor yourself a nice glass of Tropicana OJ and bust open a bag of Cheetos (both PepsiCo), and enjoy watching John Arne Riise (Norway) in his Liverpool (England) red Jersey with the Carlsberg logo emblazoned across the chest (Denmark) rocket a shot at the Arsenal (England) goal keeper Jens Lehman (Germany) while coaches Rafael Benitez (Spain) and Arsene Wenger (France) yell frantically from the sidelines.

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One Response to Globalization

  1. Mrs. Duell says:

    Mr. Duell,
    What a great look at globalization! You explain it really clearly and use some terrific examples. I imagine that it would also be difficult to personally boycott any of these major TNCs. I could try to boycott Altria, but come on, my baby needs her Pampers and I need my Mac & Cheese!
    – Mrs. Duell

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