Industrial Economics Assignment

Locating the firms in the Global Economy. What is the impact of Globalization ?

Name : B. Dilip Kumar Vignesh Roll No :108110025 IVth Year, ECE Department

Introduction to Globalization:
Globalization is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. Globalization has increased the production of goods and services. The biggest companies are no longer national firms but multinational corporations with subsidiaries in many countries. Globalization has been taking place for hundreds of years, but has speeded up enormously over the last half-century. Globalisation is a procedure that has been developing a lot all of the world since 1990s. The huge cause of globalization is MNCS (Multi National Companies). MNCS are companies that expand all over the world and tries to take the lead of the markets. These factors (of expansion) may affect the countries in many ways. There are many effects of MNCs but the most effected resources are society, economy and environment.This makes the world become a global village because people start losing their own cultures for western cultures (like: America.). This might have a lot of positive and negative impacts on peoples live through the world. MNCs achievements is to destroy the

traditional cultures and make money this is why they spend a lot of money on advertisements so when people travels any where they can still see it.

Impacts of Globalization:
Positive 1. One world connected. 2. Cheap goods . 3. Better education. 4. More jobs and less unemployment . 5. Improves the position of women in community. 6. More opportunites to travel. 7. Communication between people by cell phones and internet around the world . 8. Awareness of other cultures . that globalisation provides. 9. Less wars.

Negative: 1. Unemployment 2. Cheap labour (exploitation of workers). 3. People forgets their culture and follows the other Cultures. 4. Gap between rich and poor people is widening .

MNCs and Globalisation: (Locating the Firms in the Global Economy) With improvements in transportation and communication, international business grew rapidly after the beginning of the 20th century. International business includes all commercial transactions (private sales, investments, logistics, and transportation) that take place between two or more regions, countries and nations beyond their political boundaries. Such international diversification is tied with firm performance and innovation, positively in the case of the former and often negatively in the case of the

latter. Usually, private companies undertake such transactions for profit. These business transactions involve economic resources such as capital, natural and human resources used for international production of physical goods and services such as finance, banking, insurance, construction and other productive activities. International business arrangements have led to the formation of multinational enterprises (MNE), companies that have a worldwide approach to markets and production or one with operations in more than one country. A MNE may also be called a multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets. Businesses generally argue that survival in the new global marketplace requires companies to source goods, services, labor and materials overseas to continuously upgrade their products and technology in order to survive increased competition.

Important MNCs with respect to Globalization

1)Pepsi 2)McDonalds 3)Ford Motors 4)Hyundai 5) Samsung 6) LG 7) Sony 8) Apple Conclusion:

The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined

entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.

Is Globalisation Good or Bad ?

Globalisation is both good and bad. The positive impacts about globalisation, it allows communications between people, and economy developing, more opportunities for people to get employed and it closes gap between rich and poor countries. The negative impacts about globalisation are wars occurring because of the widening gap between rich and poor people, nature being destroyed from the pollution of the companies, cheap labour, more unemployment, and Multinationals ruling the world and taking the lead of the markets. At the end globalisation is both positive and negative these factors effect society and the environment.