Globalisation has transformed how each and every country, as well as the world on a whole, worked economically. Globalisation as the new economy, has gave rise to transborder (especially transregional) flows of capital, goods, services and expertise. The new economy has exulted in the 'death of distance' and claims that internet economics will solve a multitude of regional problems, through electronic access to services (banking, medicine, education, entertainment) or establishment of digital enterprises.
This phenomena is distinguishably apparent in the form of economic activities all over the world.
The rise of multinational coporations ( MNCs ) is a crucial aspect of economic globalisation. They manage production establishments or delivers services in at least two countries. They import raw materials or components and export goods all over the world, making them actively involved in globalisation. Such companies now account for over 33 per cent of world output, and 66 per cent of world trade. Significantly, something like a quarter of world trade occurs within multinational corporations.
An example of a MNC is Coca Cola, a drink we are extremely familiar with. Introduced in 1886, Coca Cola, or Coke, originated from USA. However, now as we can see, it is made widely available and accessible in more than 200 countries. Coke is one of the world's most recognizable and widely sold commercial brands. The company actually produces a syrup concentrate for Coca-Cola, which is then sold to various Coca-Cola bottlers throughout the world who hold franchises for one or more geographical areas. The bottlers produce the final drink by mixing the syrup with filtered water and sugar (or artificial sweeteners) and fill it into cans and bottles, which the bottlers then sell and distribute to retail stores, vending machines, restaurants and food service distributors. The Coca Cola company a typical example of a horizontally integrated MNC, which manage production establishments located in different countries to produce the same or similar products. The fact that it has production and distribution in different countries contribute to economic globalisation.
The sports brand Adidas is yet another MNC which play a significant role in economic globalisation. It has its headquaters and factory outlets in Herzogenaurach, Germany.
This point about MNCs well illustrates the idea of globalisation.
The growth of multinationals and the globalization of their impact is wrapped up with the rise of the brand. One of the key elements of MNCs is that these companies look to 'outsource' products, components and services. Nike, Levi, Coca Cola and other major companies spend huge sums of money in promoting and sustaining their brands. One strategy is to try and establish particular brands as an integral part of the way people understand, or would like to see, themselves. Having a brand, the world has a similar perspective of the goods and services these MNCs provide.
In a nutshell, what makes MNCs play a vital in globalisation :
- regional and global integration of markets with production, research, product development, manufacturing and investment dispersed across a range of countries ( PRODUCTION and MANUFACTURING )
-sourcing of capital and services, eg accounting, advertising, on a global rather than national basis ( BRANDING )
-international networking of enterprises through joint ventures, alliances and asset sharing ( FRANCHISES )
-export of production outside the First World ( EXPORTATION )
Basically, the core idea is that the involvement of many countries in the world demonstate that MNCs is a major role in globalisation in the economic aspect. Globalisation has shaped economies of countries of the world, while the economic activities these individual countries carry out cause globalisation. It is an interdependant relationship; neither can survive without the other.
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Although the factories of this company as limited to certain countries, the distribution / export of its products are worldwide. It is the official FIFA world cup supplier, supplying soccer team kits to many participating countries. Adidas products are commonly found in many countries, thus the typical three parallel stripe official logo on the company's clothing and shoe designs is not new to any of us. This MNC manages production establishment in certain countries, but export largely to the world. 