Globalisation . . is not a serious idea. We, the Americans invented it as means of concealing our policy of economic penetration into other

nations’J.K. Galbraith 1970

By the end of this class you will have had the opportunity to:

Consider the emergence of globalisation Consider the implications of globalisation Consider the implications for small countries

such as Aotearoa New Zealand

Those who do not read and understand history are doomed to repeat it." - Harry Truman

History never repeats itself. Man always does." — Voltaire

Globalisation

What do we mean by globalisation?Why and how has globalisation occurred?What are the characteristics of globalisation?Who are the ‘globalisers’? How do they

spread their ideas?

For those who want to know more… seek out….

Guns, Germs and Steel by Jarred DiamondClimate Wars by Gwynne DyerLook up: Blue Gold: World Water Wars PBS

videos

History first: Imperialism, empires and globalisationImperialism : The policy of extending a nation's

authority by territorial acquisition or by the establishment of economic and political hegemony over other nations.

Development of monopoly capitalism

Industrial capitalism and bankingExport of investment from the centre (USA) to

the peripheryControl of foreign marketsAn example: the British empire

Pax Americana.

Globalisation: In this modern sense, the term has come to indicate the military and economic reach of the United States in relation to other nations

So is globalisation a form of ‘Americanisation’? Or more?

What do we mean by globalisation?

‘Business without borders’, unhindered by national boundaries, .

The ‘Americanisation’ of the world? American products, designs and politics dominating the world ( the ‘new’ empire?’)

The Transnational franchisders: McDonalds, KFC, Starbucks, Dunkin Donuts, Disney, Sky, CNN, GM, GE, Apple, Microsoft, Levis, the Oscars, CSR, Oprah, Letterman and on and on

American values, products, and debt are being globalised ($1.4 trillion 2009)

Backed by immense military might e.g Libya, Iraq, Afghanistan and on and on…

The financial cost of the Iraq war to the American people but what about the cost to the Iraqi people?

March 16, 2003 Meet the Press interview of Vice President Dick Cheney reported that "every analysis said this war itself would cost about $80 billion, recovery of Baghdad, perhaps of Iraq, about $10 billion per year. We should expect as American citizens that this would cost at least $100 billion for a two-year involvement.".[3]

. As of February 2010, around $704 billion had been spent To whom did this vast sum of money go? Halliburtan

http://www.boston.com/news/world/articles/2008/03/06/top_iraq_contractor_skirts_us_taxes_offshore/

   

American arms suppliers in Iraq

A = nuclear program, B = bioweapons program, C = chemical weapons program, R = rocket program, K = conventional weapons, military logistics, supplies

1 Honeywell (R, K)   2 Spectra Physics (K)   3 Semetex (R)   4 TI Coating (A, K)   5 Unisys (A, K)   6 Sperry Corp. (R, K)   7 Tektronix (R, A)   8 Rockwell (K)   9 Leybold Vacuum Systems (A)   10 Finnigan-MAT-US (A)   11 Hewlett-Packard (A, R, K)   12 Dupont (A)   13 Eastman Kodak (R)   14 American Type Culture Collection (B)   15 Alcolac International (C)   16 Consarc (A)   17 Carl Zeiss - U.S (K)   18 Cerberus (LTD) (A)   19 Electronic Associates (R)   20 International Computer Systems (A, R, K)   21 Bechtel (K)   22 EZ Logic Data Systems, Inc. (R)   23 Canberra Industries Inc. (A)   24 Axel Electronics Inc. (A)

(cont)

International activities which enable firms to enter new markets, exploit technological and organisational advantages as well as reducing business costs and risks, and achieving increased economic integration of their activates.

Examples: Fisher & Paykel, Haier, Lenova

Why do organisations want to globalise?

Economies of scale

Economies of scope

Cutting cost of resources

Economies of scale and scope

Economies of scale have meant that volumes produced at home far exceed the sales that companies can achieve at home, forcing them to go international

Opportunities exist for economies of scope through worldwide communication and transportation networks. e.g. DHL

Trading companies handling the products of many companies can achieve greater sales and lower unit costs

Reducing costs

Getting access to cheap resources (see China Blue)

Transnationals need more than simply lower labour costs; they need access to markets e.g. Asia’s growing middle class

China and India have a potential market of 2.4b

Access to technology

Major issuesRelationships – and conflict - between states – Iraq and

USA, India and China Sustainability as nations develop on the back of fossil fuels

e.g. ChinaChina’s appetite for resources driving up world prices and

itrs global search for resourcesDeveloped nations ‘outsourced’ their pollution e.g. waste

plastic back to ChinaChanging peoples’ perceptions of who they are; ‘guest

workers’ in the Middle East to illegal Latino immigrants in USA

Managing displaced workers and their families e.g. Afghans in Pakistan

Leading to multiculturalism of organisations and communities

New challenges and opportunities for the ‘global manager’

Conflicts between transnationals and nationsTransnationals want:

Unrestricted access to resources and marketsControl of all aspects of the firm on a worldwide

basisMaximise shareholder value and minimise taxesEstablishing headquarters in low-tax havens Light regulatory frameworks and minimal

government expenditures i.e. low taxes needed

(Cont)Think in terms of global competitivenessExpect governments to offer grants and

subsidies for their investmentGovernments to cover the costs of basic

infrastructure they need; R & D, universities, communication , transportation networks etc

Look for tax incentivesPrivileged access to domestic markets via public

contracts eg. Health, telecommunicationsIndustrial policies that suit them e.g. labour laws

Democratic governments want:To be re-elected!Electors look for lower taxes while still wanting

more social services e.g. Health spending Strong economies and sound stream of tax

revenueWant external sources of investment, technology

and knowledge which transnational's can supply to create global competitiveness in the national economy.

Want transnational's to increase the extent of their local activities

The conflict?

There are no allies in business, just interests

Many transnationals are far richer and have more power than small national governments

Exxon Mobils 2007 profit: $25.3 bn2011: $41.1 Billion buut pays estimated 17.6 Percent

tax rate

e.g. poor Pacific states such as Pulau and investment from Taiwan, Japan’s bribery of Pacific nations regarding whaling and China’s aid to Africa

Where are we going? As the rich get rich, the poor….Growing inequality gap between rich and poorFailure of ‘trickle down’ theoriesInternational capital chasing bigger profits at the

expense of?The illogic of it; exporting pollution to poorer

countries which degrade the environment which proves increasingly expensive to try to alleviate

Where does this leave managers with regards to sustainability, ethics and corporate social responsibility?

(cont)A self-defeating ‘merry-go-round’China today, Bangladesh tomorrow and then?Speculation, greed and over-heated

economies such as China drive up the price for resources, which means western consumers cut back, leading to lower production in China, rising unemployment and civil chaos and disorder?

Undermining of national governments

What does this suggest for New Zealand management?

Centralisation of strategies and policies ‘off-shore’ e.g. BNZ

Important management decisions taken off-shoreNew Zealand small, regional outpost e.g bankingGlobalisation of ideas and practicesA new breed of manager? Have skills will travel.Affect on local communities whether in New

Zealand or China?