taufikur@ugm.ac.id

The Challenges of Globalization

Process of GlobalizationGLOBALIZATION

Increasing movement of goods, services, & capital accrfoss national borders

ProcessIntegrate the world economyIs not trend but international system

(Friedman-Lexus & Olive tree)Form:

Global market channels (sell): Nokia Global operations (make): NikeGlobal supply chain (buy): Singapore oil refinery

Acceleration of GlobalizationColonialization (Africa, Asia, America)

15th centuryAfter world war II global commerce

world economyFactor to accelarate globalizationCommunication and technologyTransportation systemThe rise of transactional corporationsSocial and political reforms

Globalization and Transnational Co’sDebates continue about

globalization, but virtually everyone agrees that transnational corporations (TNCs) are central to the process.

The sociological study of TNCs is therefore critical to any understanding of contemporary globalization.

Major Transactional Corporations 2006

Fortune: Global 500 (MNCs) 2009http://money.cnn.com/magazines/fortune/global500/2009/full_list/

Top 10 MNCs Fortune Global 500 2009

Rank CompanyRevenues($ millions)

Profits($ millions)

1 Royal Dutch Shell 458,361 26,277

2 Exxon Mobil 442,851 45,220

3 Wal-Mart Stores 405,607 13,400

4 BP 367,053 21,157

5 Chevron 263,159 23,931

6 Total 234,674 15,500

7 ConocoPhillips 230,764 -16,998

8 ING Group 226,577 -1,067

9 Sinopec 207,814 1,961

10 Toyota Motor 204,352 -4,349

9-8

Comparison of multinational corporations’ sales and the gross domestic product

of selected nations

Figure 9-2

Indonesian GDP 2008 according to 3 Int’l Organizations

Organizations Rank GDP (million of US $)

IMF 19 511,765

World Bank 19 514,389

CIA World Factbook

21 510,800

Major Transactional CorporationsFrom Global Fortune (FG) 500 (2009) most (70%)

of the linked companies are concentrated in either Europe or the Americas than shift to Asia (Japan, China, India, South East Asian)

The United States has the largest number of companies in the GF500 (140), the largest number of directors (2,070), the largest number of linkers (310), the largest number of female linkers (57), and the largest number of linked companies (994)

Most of the companies (370/498 or 74.3%) are connected to each other and so part of the network.

Major Transactional CorporationsThe FG500 companies and directors are

concentrated in the “triad” of Europe, the Americas, and Australasia, with the United States, Japan, Britain, France, and Germany (with new emerging from China & India) together accounting for 70% of the companies on the GF500.

These corporations and the directors who run them are headquartered in or are citizens of only 42 of the world’s 190+ nations.

Control over the world’s largest economic assets is concentrated in the hands of a relatively few nations, nationalities, and companies.

International and Trade InstitutionsInternational Financial and Trade Instituions

(IFTI)UNWorld BankIMFWTO (ex. GATT)APECG8G20Global Climate Summit

Argument for GlobalizationPro

Economic productivity comparative advantageEficency reduce pricesAccess huge resources (including financial)Transfer technologySpread democracy and freedom (Futurist: Allen

Hammond) minimize military conflictContra

Job insecurity (impact of ‘race to bottom)Enviromental and labor standardsErodes regional and national cultures anti

americansmDemocracy? status quo regims despotism

(Myanmar)

Comparative Political and Economic System

Democracy Issues political freedomFair electionIndependent mediaSeparation of powers (executive, legislative.

Judicative)Open society (to pursue independent social, religious,

culture goals)Human Rights rights and privileges accorded to

all people (virtue of being human )Standard of livingFree speechReligious freedomDue process

Doing Business in a Diverse WorldWide range of political, social and economic

environments pose complex and challenging operation

Big question:‘At what point, if ever, do violations of political, human, and economis rights become so extreme that companies simply cannot morally justify doing business in a country anymore?’

Global code of Corporate Conduct

The United Nations Global Compact (2000) ”a values-based platform designed to promote institutional learning”

http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html

OECD Guidelines for Multinational Enterprises http://www.oecd.org/dataoecd/56/36/1922428.pdf

The Global Sullivan Principles (GM board member Aparteid era) http://www.globalsullivanprinciples.org/principles.htm

The Caux Principles (working for common goods and human rights) http://www.cauxroundtable.org/index.cfm?&menuid=8

Collaborative Partnerships for Global Problem Solving

A Three-Sector WorldPrivate (business)Government (public)Civil society (nonprofit)

Business Government

Civil

Form Profit Governmental

Non-profit

Good Produced

private public group

Control owner Voter/ruler Community

Power money laws Values

Primary goals

Wealth creation

Social order

Experession of value

weaknesses

External impact

Bureaucratic

Amateurism