GLOBALIZATION - forcing competition - opportunities for small companies - sustainable development - worldwide protests against globalization - growing power of MNCs - OECD Guidelines for MNCs - specific consequences - globalization and the environment

last updated 2009 Feb 12
see witiger.com/internationalbusiness/globalizationSustainableDevelopment.htm
 

including material from Global Business Today, 2nd Ed. Hill, McKaig ... and Richardson ISBN-10: 0-07-098411-5

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The debate over the positive and negative effects of globalization is a hot topic for many individuals, agencies, organizations and government departments who find themselves in a position to defend or attack the current globalization trends. We can have an interesting debate in class about the merits of globalization but in the end, whether we like it or not, it is a situation we have to deal with. WTGR

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OBJECTIVES

After reading this online unit, and attending the lecture, the student will     o be able to define what globalization means in the context of int'l business    o understand the effects of globalization in terms of corporate competitiveness    o be able to define U.S. and Canadian differences in opinion on the issue of globalization    o know some of the positions that entities have on the "pro" and "con" side     o be aware of some of opportunities, and challenges, facing SMEs dealing with globalization    o be able to explain how globalization effects sustainable development    o be aware of some of the issues in the worldwide protests for, and against globalization    o be able to explain how globalization effects social justice in some effected regions    o understand how the global activities of large companies may effect national sovereignty     o know some specific examples of the effect of globalization on business in Canada WTGR

INTRODUCTION GLOBALIZATION 2009

The economic "disclocation" of the North American economy in November-December 2008 has created substantial "ripples" which have effected, and are effected by the economic upheavals in Asia (North America's largest trading partner) and Europe. One thing that has become "evident" from the results of the North American economic problems in Q4 2008 is that the economy of Asia's exporters has been effected by  reduced North American consumption  and consequently reduced North American importing  - this "reaction" seems to substantiate claims that Globalization is indeed intense. WTGR

 

INTRODUCTION GLOBALIZATION 2007

"The great challenge facing political leaders today is to persuade the public that continuing to liberalize trade will bring more benefits than costs. Distrust of globalization has probably never been higher in the past 60 years....China and India are among the reasons. There is widespread fear that globalization means job losses and lower wages as the export power of these huge nations grows. So countries are becoming more protectionist, more unwilling to deal with change and make adjustments." David Crane well known economics and int'l trade journalist for The Toronto Star    2006 Dec 31

Definition of Globalization

  o  People around the globe are more connected to each other than ever before.
  o  Information and money flow more quickly than ever.
  o  Goods and services produced in one part of the world are increasingly available in all parts of the world.
  o  International travel is more frequent.
  o  International communication is commonplace.
This phenomenon has been titled "globalization."
From Keith Porterhttp://globalization.about.com/cs/whatisit/a/whatisit.htm

The term “globalization” describes the increased mobility of goods, services, labour, technology and capital throughout the world.
 http://www.canadianeconomy.gc.ca/English/economy/globalization.html

"Globalization is a term for the horizontal and vertical integration of manufacturing and trade on an international level"
www.endgame.org/gtt-globalization.html
 
 
 

Globalization, an example in the forest products industry

 

The vertical integration of the wood products industry "is probably the single most recognized characteristic of the industry" -- for example, most paper sales are by corporations which also control timberland. Now the horizontal integration of the industry is also being completed, as corporations like International Paper spread their operations to dozens of countries." www.endgame.org/gtt-globalization.html 1.

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The reason why we emphasize the forest products industry in a Canadian course on International Business is  historically it was the rich forests of Canada which were one of the big incentives for European explorers to investigate the waterways of our country as a way to ship back logs to Europe for the French and British navy.  currently the forest products industry exporting paper exporting pulp exporting dimension lumber is the biggest industry by dollar amount, and volume, in Canada

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Forestry trade Deforestation Globalization

"The effects of deforestation have been known since ancient times. Empires from Roman to colonial times have expanded to acquire wood supplies for shipbuilding and fuel for industry, and have collapsed when those wood supplies were depleted. The post-World War II ascendancy of U.S. timber corporations has brought the industry to new heights, and promises to take it to new lows as well. The global timber industry has tried to escape the ecological limits to raw materials, and the social and economic limits to markets, by relying on frontiers. While multinational timber corporations use the rhetoric of sustainability and jobs, the centuries-old reality of cut and run continues. Despite the public relations strategies of the corporations, timber industry overcutting has been confirmed by numerous industry, academic, and government studies. Now that the end of the forest frontier is being reached, free trade agreements are threatening to remove the last barriers to total industrialization and depletion."  by George Draffan, Public Information Network, Seattle permission to quote Draffan received in an email  Oct 11th, 2002. Copies of emails kept in the permissions binder

."Globalization forces everyone to compete with the cheapest producers."
see youtube.com/watch?v=YFVzjLqZj7g&feature=related
Italy's 'Made in China' Label

Is this a good thing or a bad thing?

"In the early 1990s, bleached hardwood pulp cost

• $78 per ton to produce in Brazil,
• $156 per ton to produce in eastern Canada, and
• $199 per ton to produce in Sweden."

 - therefore the cutting down of the rainforest in Brazil !
by George Draffan, Public Information Network, Seattle

Globalization of Markets / Customers Globalization of Production Globalization of Government and NGOs as discussed in Hill / McKaig Global Business Today, 2nd Ed.

Chpt 1

The Globalization of Markets / Customers Globalization of markets refers to the "merging of historically distinct and separate national markets into one huge global marketplace" For some products and services "the tastes and preferences of consumers in different nations are beginning to converge on some global norm" - a consequence of the "globalization of the customer" Why is this happening? advances in the technological environment more people travelling information through the web blending across social - cultural environment

Chpt 1

The Globalization of Markets / Customers "Most global markets are not for consumer products ... but markets for industrial goods and materials that serve a universal need the world over".   Industrial Services Industrial Goods Consumer Services Consumer Goods ...

Chpt 1

The Globalization of Markets / Customers   Industrial Services Industrial Goods Consumer Services Consumer Goods ... A tricky concept One the one hand, there is an increasing tendancy for consumer product companies to narrow their "target market segmentation" for certain types of consumer products and services, - this helps achieve very large economies of scale which drive down the price of things such as consumer electronics; yet, for many things, ie cell phone ring tones, there is an increasingly diverse segmentation based on pandering to the diverse social/cultural market. "While modern communication and transportation technologies are ushering in the 'global village', very significant national differences remain in culture, consumer preferences, and business practices. A firm that ignores differences between [nations] does so at its peril"

Chpt 1

The Globalization of Production Globalization of production refers to the "sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production like land, labor, and capital" Why is this happening? advances in the technological environment and  regional advantages and variances in the economic environment have allowed for transportation of larger volume goods over longer distances bigger stuff travelling farther  technology effecting information/communications it is possible to "know" where to buy components parts at cheaper prices the "modular: aproach to manufacturing - few things "made" in a factory, most stuff is assembled from component parts that come from a variety of locations, some national, some international

Chpt 1

The Globalization of Government / Emergence of Global Institutions WTO - World Trade Organization IMF - International Monetary Fund United Nations World Bank As companies grow from national to trans-national organizations, we have seen an emergence of institutions needed to "help manage, regulate and police the global marketplace".

Chpt 1

The Globalization of Government / Emergence of Global Institutions Drivers: decline in trade barriers (as encouraged by WTO and IMF) advances in the "technological environment" - which effects  communications, WWW - we can be in touch with more people, in more complex ways - globalization of TV and entertainment  - blends differences between cultures - allows "immigrant cultures" to remain viable information processing  - allows for more complex decision making - relates to facilitating banking transactions globally - provides capability to know more detail about customers (CRM) transportation  - people, - global travel facilitates global business - contanerization; products, supplies

"Globalization and the  Internet have created  unprecedented opportunities for small and medium-sized  businesses in Canada"
is the title of a Sept 2002 story by Lopez-Pacheco
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KEY POINTS

There are a lot of stories in some media that discuss how Globalization is challenging [read difficult and painful] for small and medium sized enterprises because they are being forced by the competitive environment to sell product and services to their customers, at lower prices ; cause - if they don't, some vendor in another part of the world will steal away their customers. However with every challenge, there are also opportunities - in some situations, the consequences of globalization can be a benefit for SME's cause the "shrinking world" [ facilitated by the developments in the technological environment] can bring more opportunities to SME's that previously they could not deal with. Therefore we have included in this section on Globalization a story from the National Post about how "Globalization and the  Internet have created  unprecedented opportunities for small and medium-sized  businesses in Canada". WTGR

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National Post, September 23, 2002 by Alexandra Lopez-Pacheco

The key thing about this story is that one of the ways small and medium sized companies are dealing with opportunities afforded by globalization is to be bigger companies !!! - and this can be affected through using strategic alliances.

"Globalization and the Internet have created unprecedented opportunities for small and medium-sized businesses in Canada -- an environment where competition is fierce. To take advantage of these opportunities, while avoiding some of the competitive obstacles often faced by the little fish in the big ocean, many of  these businesses are forming partnerships or, more precisely, strategic alliances. "There are various advantages to forming strategic alliances," says Estelle Metayer, president of Montreal-based Competia Inc., a leading competitive intelligence and strategic planning company and publisher of  Competia Online.  "One is the ability to penetrate markets that would be too costly to develop on your own. For example, if you form an alliance with an American partner who can take on your products and distribute them through their network, you could  save a lot of money on the marketing side." Another big advantage  comes from joining forces with a business that can provide your enterprise  with access to expensive  technology you might not  be able to afford otherwise. Management-based  strategic alliances are also             advantageous, Ms. Metayer says. "Often, smaller companies don't have big management teams. So if they need someone who has a certain expertise, but they really can't afford to hire such a person, then they can form an alliance  with a company that has that management expertise."

"Strategic alliances also benefit the big companies. "With large corporations, one of the problems often is the inability to move quickly, because of bureaucracy and more complicated internal politics. Smaller companies are able to react more quickly to changes in the marketplace. So from both parties' perspectives, it serves their needs," he says.  Although the concept of a strategic alliance can sound so appealing to a struggling small business that they might be tempted to run out and get one, experts warn businesses should not rush into partnerships, especially if  another company comes courting."
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Globalization, the development of strong, and sustained protests worldwide
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KEY POINTS

By mentioning the worldwide growing protests movement against aspects of globalization, we are not endorsing the violence by which the protestors are conveying their message - we are recognizing that it has become an issue and some consequences are effecting international business management. The screen capture below comes from a newspaper article following the G8 Summit in Genoa in July 2001 - which was a particular noteworthy event due to the large organized scale of the anti-globalization forces, and the fact the police countered with lethal force. WTGR

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"This is the anti-globalization movement. Sprawling, disparate, powerful. A political force unto itself that, given its international  scope and staggering number of  participants, is unprecedented in history. And, it would appear, at a significant  crossroads." Vinay Menon

Menon makes reference to Seattle, saying that "... Seattle, where approximately 60,000 protesters from all political, social and environmental persuasions managed to  shut down a meeting of the World Trade Organization.  Once perceived as staid centres of international bureaucracy, the WTO, as  well as the World Bank and International Monetary Fund (IMF), are now targets of anti-globalization activists, who regard these institutions as murky  cabals - unaccountable, undemocratic and unwitting facilitators of the corporate  agenda."

Menon, noting comments from Ronald Deibert, a political science professor at the University of Toronto, says that "....another challenge anti-globalization protesters face: Many members of the public can't grasp the abstract, socio-economic principles upon which the movement is based. So critics start dismissing groups as "militant radicals," "Yuppie freaks," "Hippie wannabes," "flat-Earth advocates," "neo-Marxists," "neo-Luddites" and "anti-capitalist pipe dreamers."

Even the term "anti-globalization movement" is misleading. There is no formal structure, no hierarchy. No one leader. No one platform. For some, there isn't  even an "anti" - they believe it's not a question of "if we globalize," but how. There are, instead, widely different groups, with widely different agendas. And  these groups will only get bigger and more effective".
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Globalization, social justice issues - commentary by David Crane - Article 1
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KEY POINTS

Whether or not one agrees with the "social justice issues" being evangelized by some special interest groups - it must be aknowledged that these opinions are increasingly being expressed in many circles and it would be responsible for us to review what these people are trying to communicate. WTGR

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David Crane writing in The Star 2001 Nov 20th "Globalization can't ignore social justice"

Crane's article refers, in part, to the G-20 meetings in Ottawa in mid-November 2001

Crane quotes some of the key figures at the event.

"As Gordon Brown, Britain's chancellor of the exchequer and chairman of the IMF and World Bank weekend meetings, said, "The real issue is not whether you are  for or against globalization, because globalization is moving forward. The real issue is whether you are for or against social justice on a global scale, and I  believe there is an increasing recognition that we have to work together to make the world and the global economy a better place for the world's poor."  According to World Bank president James Wolfensohn, "in the next 30 years, the population of the world will increase from 6 to 8 billion, and virtually all of those 2 billion additional people will live in the developing world. The sooner we are able to grasp the implications of this, the better."

Crane further quotes Wolfensohn adding ""Some form of globalization is with us to stay," Wolfensohn said. "But the kind of globalization is not yet certain: it can be either a globalization of development and poverty reduction - such as we have begun to see in recent decades, although this trend still cannot be taken for granted - or a globalization of conflict, poverty, disease, and inequality." Our huge task is to tip the scales toward good globalization."
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KEY POINTS

So, one of the reasons we discuss globalization and social justice issues is that it relates to issues of stability or instability which in turn are part of the concerns about risk and threat situations for international business in developing economies.. WTGR

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Globalization, social justice issues - commentary by David Crane - Article 2
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David Crane writing in The Star 2003 Feb 9th "Putting a human face on Globalization"

Crane's article refers, the OECD - which we discuss in this course + the Canadian Federal Government web site of Canada's National Contact Point for the  OECD Guidelines for Multinational Enterprises   www.ncp-pcn.gc.ca/menu-en.asp
 

click to see Zambia

Crane writes "When a group of Zambian farmers faced eviction by a Canadian mining company  from lands they were using, they were able to get help in Canada. They were able to remain on the land for some further time as a result of a code of responsible  corporate behaviour developed by the Organization for Economic Co-operation and Development in Paris. The guidelines for multinational enterprises were adopted by the OECD in 2000, and since then have become an important way of holding multinational corporations  to a set of core standards of behaviour."

 " In the process, they have provided companies operating internationally with a set of standards that lets hem know how they should perform.  In the case of the Zambian farmers, they were able to enlist the help of Oxfam Canada, which went to Canada's National Contact Point for the guidelines — each OECD country has to maintain such a contact point where complaints can be  raised — and a dialogue was launched. The TSE-listed company, First Quantum Minerals Ltd. of Vancouver, agreed to allow the Zambian farmers to stay on the land, though not permanently."
 

www.oecd.org click to see get to OECD site

from the OECD site  "The OECD Guidelines for Multinational Enterprises are non-binding  recommendations to enterprises, made by the thirty-seven  governments that adhere to them. Their aim is to help Multinational Enterprises (MNEs) operate in harmony with government policies and with societal expectations."

Crane explains that "The guidelines, which can be found at http://www.ncp-pcn.gc.ca, cover corporate disclosure, employment and industrial relations, the environment, bribery, consumer protection, science and technology, competition, and taxation. They   represent not a bad summary of what should be standard corporate citizenship and  ideally would be taught to all MBA students."

Crane also adds that "the [OECD] guidelines are of value to the International Monetary Fund and the  World Bank in their own dealings with developing countries and international corporations." The point being that companies in contravention of the guidelines cannot be participants in IMF and World Bank projects.
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KEY POINTS

Crane's article is helpful because it ties in Globalization with social justice issues in a real context, and also shows the links to OECD, IMF and World Bank issues. WTGR

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Globalization, social justice issues - commentary by David Crane - Article 3
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David Crane writing in The Star 2004 Feb 25th "Globalization is not the Enemy"

Crane's article refers to an article written by John Saul - husband of the Governor General. In this article, Saul suggests Globalization is bad and Crane counters by explaining that Saul's interpretation is flawed.

Crane argues "Saul's thesis is that globalization is essentially dead, and deserves to be dead because it has been nothing more than an assault on society and the environment  by narrow corporate interests. If that were true, then he would have a case. But of course globalization is much more  complicated than Saul's gross oversimplification.  For him [Saul], globalization is a world in which global markets leave the nation-state powerless to look after the needs of  its citizens.

But there are many concepts of globalization. And while there are some who argue and even advocate the end of the nation-state, more serious discussion of globalization is about how we can create a more prosperous global community, with fairer sharing of the wealth, while sustaining the environmental health of the planet, thwarting international crime and terrorism, and doing all of this in a way that takes into account the views and concerns of people everywhere.

The fundamental problem is that Saul does not seem to understand what globalization is really about. His quarrel  should be with neoconservatism and market fundamentalism, not globalization. It is the neoconservatives, the market fundamentalists that have done damage, and they have done it both at the global level and within the nation-state.  The challenge we face is to sustain globalization in a more human form, not to promote its collapse. More than ever  we will need stronger global rules and institutions if we are to have a stable world in which population could increase  50 per cent by the middle part of this century. We will also need more international trade and investment if the  world's poor are to be lifted out of poverty."
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Globalization and National Soverignty

Trans-national companies growing more powerful than some countries
- The top economies compared to the top companies
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KEY POINTS

The idea for this chart comes from an article in Fortune magazine in July 2000. The article in Fortune in turn was derived from statistics gathered by World Bank, World Development Report 2000. WTGR

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Top 100 Economies (1999) versus Annual Sales of leading companies (Corporations in bold)
	Country/Corporation	GDP/sales ($mil)		Country/Corporation	GDP/sales ($mil)
1	United States	8,708,870.0	51	Colombia	88,596.0
2	Japan	4,395,083.0	52	AXA	87,645.7
3	Germany	2,081,202.0	53	IBM	87,548.0
4	France	1,410,262.0	54	Singapore	84,945.0
5	United Kingdom	1,373,612.0	55	Ireland	84,861.0
6	Italy	1,149,958.0	56	BP Amoco	83,556.0
7	China	1,149,814.0	57	Citigroup	82,005.0
8	Brazil	760,345.0	58	Volkswagen	80,072.7
9	Canada	612,049.0	59	Nippon Life Insurance	78,515.1
10	Spain	562,245.0	60	Philippines	75,350.0
11	Mexico	474,951.0	61	Siemens	75,337.0
12	India	459,765.0	62	Malaysia	74,634.0
13	Korea, Rep.	406,940.0	63	Allianz	74,178.2
14	Australia	389,691.0	64	Hitachi	71,858.5
15	Netherlands	384,766.0	65	Chile	71,092.0
16	Russian Federation	375,345.0	66	Matsushita Electric Ind.	65,555.6
17	Argentina	281,942.0	67	Nissho Iwai	65,393.2
18	Switzerland	260,299.0	68	ING Group	62,492.4
19	Belgium	245,706.0	69	AT&T	62,391.0
20	Sweden	226,388.0	70	Philip Morris	61,751.0
21	Austria	208,949.0	71	Sony	60,052.7
22	Turkey	188,374.0	72	Pakistan	59,880.0
23	General Motors	176,558.0	73	Deutsche Bank	58,585.1
24	Denmark	174,363.0	74	Boeing	57,993.0
25	Wal-Mart	166,809.0	75	Peru	57,318.0
26	Exxon Mobil	163,881.0	76	Czech Republic	56.379.0
27	Ford Motor	162,558.0	77	Dai-Ichi Mutual Life Ins.	55,104.7
28	Daimler Chrysler	159,985.7	78	Honda Motor	54,773.5
29	Poland	154,146.0	79	Assicurezioni Generali	53,723.2
30	Norway	145,449.0	80	Nissan Motor	53,679.9
31	Indonesia	140,964.0	81	New Zealand	53,622.0
32	South Africa	131,127.0	82	E.On	52,227.7
33	Saudi Arabia	128,892.0	83	Toshiba	51,634.9
34	Finland	126,130.0	84	Bank of America	51,392.0
35	Greece	123,934.0	85	Fiat	51,331.7
36	Thailand	123,887.0	86	Nestlé	49,694.1
37	Mitsui	118,555.2	87	SBC Communications	49,489.0
38	Mitsubishi	117,765.6	88	Credit Suisse	49,362.0
39	Toyota Motor	115,670.9	89	Hungary	48,355.0
40	General Electric	111,630.0	90	Hewlett-Packard	48,253.0
41	Itochu	109,068.9	91	Fujitsu	47,195.9
42	Portugal	107,716.0	92	Algeria	47,015.0
43	Royal Dutch/Shell	105,366.0	93	Metro	46,663.6
44	Venezuala	103,918.0	94	Sumitomo Life Insur.	46,445.1
45	Iran, Islamic Rep.	101,073.0	95	Bangladesh	45,779.0
46	Israel	99,068.0	96	Tokyo Electric Power	45,727.7
47	Sumitomo	95,701.6	97	Kroger	45,351.6
48	Nippon Tel & Tel	93,591.7	98	Total Fina Elf	44,990.3
49	Egypt, Arab Republic	92,413.0	99	NEC	44,828.0
50	Marubeni	91,907.4	100	State Farm Insurance	44,637.2

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Globalization, international companies growing more powerful than some countries
- How the actions of a large company can effect the sovereignty of a country

To demonstrate the power that a large company can have over a medium sized country, we searched the newspapers for a story reflecting how a transnational corporation may deal with a contentious issue that negatively effects the sovereignty of a country.
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This Oct 2003 story tells how Ford is planning to cut jobs at a plant in a European country. The President of that country has met with Ford officials but the cuts are going to take place anyway. Belgium is upset that they previously gave concessions to Ford in order that Ford would do business in the country and employee lots of people, but this has not been reciprocated as much as Belgium would have liked. WTGR

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Globalization and poverty

contact was made with the World Bank head office June 9th, 2005 for the purposes of obtaining permission to use this screen capture. Copies of emails kept in the permissions binder

if you are interested, here is the site where you can read the entire text of the World Bank, World Development Report 2000

www.worldbank.org/poverty/wdrpoverty/report/index.htm
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Globalization, some specific examples of the consequences

U.S. company in Mexico
 

In Mexico, a U.S. waste disposal company, Metalclad, was awarded $16.7 million in damages after the state of San Luis Potosi blocked its waste site in the village of Guadalcazar. Local residents complained the Mexican government was not enforcing environmental standards and that the project threatened their water supply. Metalclad's victory established that NAFTA's dispute mechanism reaches to subnational governments, including municipalities." "... in a small town in the  Mexican state of San Luis Potosi, a California firm -- Metalclad -- a commercial purveyor of hazardous wastes, bought an abandoned dump site nearby. It proposed to expand on the dumpsite and to haul toxic waste material and other hazardous stuff and dump it in San Luis Potosi. The people in the neighbourhood of the dump site protested. The municipality, using powers delegated to it by the state, rezoned the site and forbid Metalclad to extend its land holdings.Concerned about the potential hazards of the reopened dump to  the local water supply, the state conducted an environmental impact study. As a result, it rezoned the property and forbid any extension of Metalclad's land holdings. Metalclad, under Chapter 11 of the NAFTA, then sued the Mexican  government for damage to its profit margins and balance sheet as  a result of being treated unequally by the people of San Luis Potosi. A trade panel, convened in Washington, agreed with the company."  http://www.canadiandimension.mb.ca/extra/x0421dc.htm

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Japanese company in Canada, moving to Mexico

In the 1980's, a Japanese subsidiary of the Mitsubishi Electronics group bought the RCA TV plant in Midland, Ontario. Mitsubishi operated the plant successfully for some time until they suffered price competition from other picture tube makers who had operations in areas with lower employment costs. In the mid-1990's, in consideration of the NAFTA opportunities, Mitsubishi closed down the plant in Ontario, and moved operations to Mexico.

Russia cuts off natural gas to Bulgaria
 

UTSC MGTC46 student  Venelina G., in January 2009, emailed to say I have some thoughts on globalization. Yesterday we mentioned quite a few things about globalization and some were cons, but we never discussed how reliable we have become on globalization. I have a particular example in mind. pic provided by Veneline from her facebook page

Veneline says "I am from Bulgarian background and my grandparents still live in Bulgaria. Recently (Dec 31, 2008) Russia stopped all export of natural gas to the European countries over a price dispute and the issue has not been resolved to this day. This does not really affect us here in Canada, but I have spoken to my grandparents recently. In accordance with a Russian model, Bulgaria uses an interesting heating model for buildings. Water is heated in specific buildings around each city using natural gas. Then the boiling hot water is passed into pipes under ground, and using pressure the hot water is lead to neighborhoods, buildings, and houses around the cities. Of course, with the recent absence of natural gas the whole country is left freezing during the winter, as there has been no natural gas to heat the water and there has been no heating in buildings for just about a week. I can't help but wonder how in the 21st century, with so much trade around the world, it is possible for this to happen. As important and positive globalization and international trade have been, countries have become way too reliable on each other and have lost self sufficiency on all levels. I think this is just about another negative side of globalization, as with the uncertain political nature in the recent years countries should at least make certain that if anything was to happen with them they should have a way to cope with it, even if it was a short term solution."

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Russia cuts off natural gas to Bulgaria - PART II !
 

UTSC MGTC46 student  Wendy L, in January 2009, emailed to say "In the news today [2009 Jan 19] , I found an article, "Russia, Ukraine sign gas deal" which relates to the news that our classmate, Venelina, has pointed out earlier for globalization."

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Wendy says "Russia and Ukraine has signed a deal today to restore natural gas shipments to Ukraine after 2-weeks of freezing Europe! http://www.thestar.com/business/article/573410 I just wanted to point out that although this dispute has been resolved.  However, in the article, it has also stated that this is "further complicated by geopolitical struggles over Ukraine's future and over lucrative export route for energy riches...". Indeed, because of globalization, nations may have relied on each other too much but because of globalization as well, technology  has allowed information to be so widely spread that we all know what’s happening on the other side of the world and that, it can greatly impact one’s reputation. Also, in a similar article from Yahoo News – it stated that European Union is now questioning the credibility of Russia and Ukraine as gas suppliers to Europe. I think it is time for European governments to come up with a contingency plan and be a bit more independent so that a similar case will not occur in the future again." WTGR says "yes Wendy, the 'technological environement' (web based info) has resulted in a situation where the customer can be very much aware of what is happening, at the same time, people in the Ukranian diaspora can be made aware of the problems 'back home'.

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Globalization, big companies forcing small companies to compete at an unfair level
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How Canadian Tire's overseas sourcing  led to a Canadian icon losing business

Woods Canada Limited was founded in 1885 and has been a well known Canadian manufacturer of outdoor clothing and equiment. They were most famous for good quality sleeping bags which they made in Canada (in Toronto) right up til 2005 As explained by the president of Woods,  David G. Earthy,   www.woodscanada.com/_Messages/Msg_02_Dec06.html a significant part of Woods business was supplying Canadian Tire - in fact the two companies had a supplier - retailer relationship more than 80 years. Earthy explained Woods had to shut down operations following "...a decision by the Company’s largest customer, Canadian Tire, to discontinue purchasing domestically manufactured sleeping bags." It has been suggested by others in the industry that Canadian Tire (facing competition from Wal-mart and other big vendors of camping equipment) had to further cut costs and was simply geting cheaper sleeping bags from suppliers in China.

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How Walmart's low price policy was accused of shutting down a  North American manufacturing company

An example of North  American workers losing jobs to cheaper labor overseas Schrade is (was) a very old family based American manufacturing company that made, since 1904, a limited range of folding knives and fixed blade knives for decades at their factory in the small town of Ellenville in New York state. Some of their product line can still be seen at  http://www.knivesplus.com/schrade-knives.html Like many small and medium sized manufacturers, Schrade was flattered when Wal-mart expressed interest in buying their product - the obvious consequence was that Schrade would be able to manufacture in larger numbers and have a better chance of staying in business in a competitive marketplace. Over a period of time, Wal-mart became Schrade's largest customer to the point where 80% of Schrade's product was going to the large discount chain. Then, Wal-mart squeezed Schrade by asking them to compete with low priced knives they were beginning to source in China. Schrade could not match the very low price from China so Wal-mart abruptly cut their business with Schrade. Faced with the loss of its largest customer, Schrade crashed in 2004 barely reaching the 100th anniversary of the founding of the company before all its assets were sold at auction as it was forced in bankruptcy. There are a number of "walmart sucks" sites on the web that have this story recounted by walmart insiders, and other similar tales, check  http://www.freewebs.com/wallmartsucks/

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U.S. company closes Cdn subsidiary - job losses result

"Moores plant closing costs 600 jobs" Moores, a Canadian company operating more than 100 retail stores, was bought out by American firm "Men's Wearhouse Inc." in 1998. Moores had done well as a Canadian company and became the largest retailer of men's suits and sport coats in Canada. When they were bought out by the Americans in 1998, Moores had 115 stores and the American buyer had 414 stores. In March 2008, reporter Dana Flavelle with the Toronto Star wrote a story about how the U.S. parent of Moores was cutting back and announced closing Moore's clothing plant in Quebec. Citing "Canada's rising dollar", the U.S. company said "the plant was no longer competitive with lower-cost rivals". students of international business in Canada might know that Montreal used to be the centre of the "made in Canada" clothing business and this recent situation of the Moores factory shutting is yet another example of how globalization has effected an industry sector that previously was a significant employer.  In 2005 (The Toronto Star reported) the Moores plant employed 1,000 people, by early 2008 the U.S. parent had cut that back to 600, and in March 2008 the remaining 600 lost their jobs too. The U.S. parent, "Men's Wearhouse" (in 2008) imports made in Korea for $99 as well as manufacturing in Mexico and Eastern Europe. (Jules Abend)

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Reverse Globalization

UTSC MGTC46 student Kelvin L. emailed in jan 2009 to ask if we would be dealing with Reverse Globalization?. Kelvin explained "An example I can think of is Dell when they brought back their tech support to the United States because they found that shipping their tech centre off to India was not beneficial. " WTGR responds Thanks Kelvin,  1st Reverse Globalization (companies withdrawing from overseas ventures) is something business management students need to understand - however it is a term not yet "confirmed" and less well known because this "backlash" has only existed for a few years whereas globalization and outsourcing seems to be continuing to develop. 2nd "reverse globalization" is also coming to mean the way companies are responding to increased transportation costs - as noted in a recent (2008) paper “Will soaring transport costs reverse Globalization” published by CIBC (Canadian Imperial Bank of Commerce) and written by Jeff Rubin, and his colleague Benjamin Tal. 3rd - the term is not in use long enough to have a consistent meaning In 2007, the term was NOT used related to "bringing back activities", rather it was used to describe companies in emerging markets growing big enough to acquire companies in USA and Europe. Brad Setser writes "Nasser al-Shaali, chief executive of the Dubai International Financial Center (DIFC) Authority, recently used the term "reverse globalization" to describe one likely long-term consequence of the uphill flow of capital: Emerging markets will be buying companies – not just bonds – in the developed world. "

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KEY POINTS

American public opinion is, in the majority, negative towards Globalization. Canadians are even further effected, on an individual basis, by international trade since a higher proportion of Canadians have jobs which are effected by international business competitiveness. WTGR

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Globalization U.S. opinion

Wall Street Journal/NBC News poll found that 58% of Americans believed that trade had reduced U.S. jobs  and wages, a view that is almost never expressed by commentators or those who shape public opinion. from  www.cepr.net/GlobalPrimer.htm

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1.There are positive and negative aspects of Globalization. Some people who champion the negative aspects are very intense in their efforts to persuade others to see their point of view.
www.endgame.org discusses the downside of competition cause by globalization.
 
 
 

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