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Globalisation-where do the benefits lie?

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Introduction

Globalisation-where do the benefits lie? Introduction The term "globalisation", can be defined as the process by which there is both an increasing world market in goods and services and increasing integration in world capital markets. From a general prospective, the term is usually applied to multinational and/or transnational corporations who locate, often manufacturing operations, in alternative countries (predominantly less economically developed countries such as India and Malaysia) in order to reach new markets, source new reserves of raw materials and to take advantage of cheaper labour , while, in most cases, keeping the company's head-quarters in its country of origin. The governments of such newly industrialised colonies tend to encourage this trend, often by lifting trade barriers and reducing corporation taxes as an incentive, in the hope that positive spread effects (the Cumulative Causation Process-see appendix) of economic development would occur, when taking into consideration the multiplier effect; where an initial area of economic development takes place, others soon follow, and thus having a positive effect on the local economy, in terms of employment, increased disposable income and ultimately, increased government revenue. Globalisation can be regarded as a by-product of capitalism and, although seemingly its conveys the positive externalities one might expect to arise from such a process, increasing speculation, particularly from pressure groups and left wing anti capitalist extremist groups suggest the latter. ...read more.

Middle

Recent public scrutiny regarding Nike P.L.C's "un ethical" practises in China (see appendix) have undoubtedly cast a cloud over multi-national corporation's activities in such countries generally, and, indeed, has paved the way to increased regulation. Cadbury-Schweppes' ethical trading and human rights states, "As the Company grows its business in an increasingly global economy, it remains ever mindful of its obligations to meet appropriate international standards". But to what extent does this apply to? Cadbury-Schweppes' launching of the so-called "Fair Trade" chocolate bar in the late 1990s, apart from justifying a higher proportion of added value, therefore profit, than other brands in its portfolio, has, apart from demonstrating to the public that it is "encouraging fair trade", could have harmed other products in its portfolio, as it implies that its other brands do not embrace the concept of fair trade. Moreover, if the concept was applied to more brands in the company's portfolio, not only might there be an unprecedented fall in demand in response to a higher retail price, jealousy would be created amongst the small cocoa bean producers in LEDCs, as a high proportion of the raw material is purchased via the commodity exchange board-thus much of the profit would therefore go to the "middle man", as oppose to the small individual farmers. ...read more.

Conclusion

However, in retaliation, one could argue that Cadbury-Schweppes' "half hearted" policy over fair trade indicates that it is the tip of the ice burg and that one must treat what one reads in superficial annual reports with the utmost scrutiny, as, more than often, consumers are, in such cases, often mislead. Although Cadbury-Schweppes demonstrates an undoubted concern regarding child-slave labour, its participation in advocating "fair trade" can be regarded as merely a publicity stunt, in order to generate an increase in revenue and perhaps customer loyalty in addition. One could, at this point, conclude that instead of exploiting children in Outer Mongolia, that Cadbury-Schweppes is in actual fact, exploiting the customer! However, if, as mentioned in the analysis, the provision of utilities was implemented in the relative areas, and a higher percentage of profit from India, Africa and Asia was reinvested into such practises, Cadbury-Schweppes could use their influence in using this as a turning point within the industry, rather than the whole concept of "fair trade" merely being used in a half hearted manner, for profit maximisation. It has proved to be a success with the fruit growing and distribution industry with giants such as Del Monte, and has enabled the relative corporations to reap the benefits of westernised public support and ultimately loyalty, as it has done the growing communities of their respective country. ...read more.

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