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fashionassessment
and TNCs ; Answers
Name: Class: Date:
1. Transport: 5%
5/100 x 600 = QR 30
Factory costs: 12% 12/100 x 600 = QR 72
Of Which:
Raw materials 7.5% : 7.5/100 x 600 = QR 45
Production costs 2.0% : 2.0/100 x 600 = QR 12
Profit 2.0% : 2.0/100 x 600 = QR 12
Wages 0.5% : QR 3
TNC: 33%
33/100 x 600 = QR 198
Of which:
Research 10% : 10/100 x 600 = QR 60
Advertising and promotion 11.5% = 11.5/100 x 600 = QR 69
Profit 11.5% : 11.5/100 x 600 = QR 69
Retail stores: 50%
50/100 x 600 = QR 300
2. What is globalisation?
The word globalisation comes from the word globe and means the
worldwide coming together of countries and nations. Globalisation is a
process of integration and interaction among the people, organizations
and governments of different nations. It is a process that is driven by
international trade and investment and is aided by information technology.
This process has effects on political systems, the environment, on culture,
on economic development and prosperity in societies around the world.
Advances in technology, such as mobile phones, aeroplanes, telephones
and the internet have made the growth of transport and communication
networks possible. Countries are able to exchange information and goods
more quickly.
The world is becoming increasingly interconnected as a result of massively
increased trade and cultural exchange. Globalisation has increased the
production of goods and services. The biggest companies are no longer
national firms but multinational corporations with subsidiaries in many
countries.
Employment
With globalization, companies have forayed into the developing countries and
hence generated employment for them. But it can turn out to be either good or
bad, depending on the point of view you wish to see it from. It has given an
opportunity to invest in the emerging markets and tap the talent which is
available there. In developing countries, there is often a lack of capital which
hinders the growth of domestic companies and hence, employment. In such
cases, due to global nature of the businesses, people of developing countries too
can obtain gainful employment opportunities. But the developed countries have
lost jobs on account of this shift of jobs to the developing world and hence it is a
pinch felt by people in the First World.
Investment and Capital Flows
A lot of companies have directly invested in developing countries like Brazil and
India by starting production units, but what we also need to see is the amount of
Foreign Direct Investment (FDI) that flows into the developing countries.
Companies which perform well attract a lot of foreign investment and thus push
up the reserve of foreign exchange.
Foreign Trade
While discussing the effects of globalization, how can we forget about the impact
of foreign trade on an economy. Comparative advantage has always been a
factor, even in during old times. While trade originated in the times of early
kingdoms, it has been institutionalized due to globalization. Previously, people
had to resort to unfair means and destruction of kingdoms and countries to get
what they wanted. Today, it is done in a more humane way, with mutual
understanding. People who operate in uncivilized ways have to face the WTO and
other world organizations that have been established with a view to control and
regulate trade activities of the countries.
Spread of Technical Know-How
While it is generally assumed that all the innovations happen in the Western
world, the know-how also comes into developing countries due to globalization.
Without it, the knowledge of new inventions and medicines would remain cooped
up in the countries that came up with them and no one else would benefit. The
spread of know-how can also be expanded to include economic and political
knowledge, which too has spread far and wide. The most obvious example of the
spread of knowledge is that the Western world today is waking up to the benefits
of Ayurveda and Yoga - traditional Indian practices, while the Western antibiotics
are flooding the Indian markets and improving the quality of life (and the
longevity too) of people in India.
Spread of Culture
Not all good practices were born in one civilization. The world that we live in
today is a result of several cultures coming together. People of one culture, if
receptive, tend to see the flaws in their culture and pick up values that are more
correct or in tune with the times. Societies have become larger as they have
welcomed people of other civilizations and backgrounds and created a whole new
culture of their own. Cooking styles, languages, and customs have spread all due
to globalization. The same can be said about movies, musical styles, and other
art forms. They too have moved from one country to another, leaving an
globalization has been criticized for, and it is the accusation that it has opened
floodgates for restaurants and eateries which are insensitive to the religious
beliefs of the host nation. For example, a lawsuit had to be filed against
McDonalds in India, after it was accused of serving beef in their burgers.
Uneven Wealth Distribution
It is said that the rich are getting richer while the poor are getting poorer. In the
real sense, globalization has not been able to reduce poverty. Instead it has led
to the accumulation of wealth and power in the hands of a few developed
economies. Therefore the gap between the elite and the underprivileged seems
to be a never ending road, eventually leading to inequality. Taking any fashion
TNC as an example, we can relate how they give factory workers who produced
the clothing product were given little wages and were not provided with the best
of conditions to work in counts as one of the ways that the developed countries
have taken into their own advantage; to make maximum profits.
This picture shows how wealth is distributed. From this, we can identify the
richer and the poorer countries. The richer countries being where the product is
sold and the poorer where the product is manufactured and made.
Loss of Jobs in MEDCs
Many people from developed nations are losing jobs and that is posing a problem
for them since the companies are outsourcing work to developing countries since
the cost of labor is low and profits the company considerably.
Loss of Culture
Conventionally, people of a particular country follow its culture and time
immemorial.With large number of people moving into and out of a country, the
culture takes a backseat. People may adapt to the culture of the resident
country. They tend to follow the foreign culture more, forgetting their own roots.
This can give rise to cultural conflicts.
Environment Degradation
The industrial revolution has changed the outlook of the economy. Industries are
using natural resources by means of mining, drilling, etc. which puts a burden on
the environment. Natural resources are depleting and are on the verge of
becoming extinct. Deforestation is practiced owing to the non-availability of land,
thereby drastically reducing the forest cover. This in turn creates an imbalance in
the environment leading to climate change and occurrence of natural calamities.
Globalization uses up finite resources more quickly. As an example, China joined
the world trade organization in December 2001. In 2002, its coal use began rising
rapidly (Figure 1, below).
The factory itself was quite unsanitary too. Dirty water was stocked, and dumped
outside as soon as it started raining. Meanwhile, toxic substances were dumped
in regular trashcans. Our only protection was face masks. It was also extremely
hot in the factory, making it difficult to work. [According to China Labor Watchs
report, the factory did not pay workers extra when temperatures rose above 33
degrees Celsius, thus breaking the law]. It was awful. And if you got sick, you
lost your days wages.
Inadequate safety training
When
I worked 11 hours a day, from 8am to 9pm with an hour break for lunch and an
hour break in the evening. Others worked 12 or 13 hours. [The legal limit is 9
hours per day. At this factory, some employees reportedly worked up to 100
hours of overtime per month well above the legal limit of 36 hours of
overtime].
I lived in a cramped, dirty dorm with other factory workers. [Editors Note: It is common
for Chinese factory workers to live in on-site dorms to save money. This also allows them
to work longer hours]. There was no hot water, no kitchen. We lived four to a room, and
had trouble sleeping because some of us worked days, while others worked nights.
The workers wouldnt eat for days on strike as they would want to save enough money to
send back home.
Another example of a TNC with broad range of sweatshops in China and Bangladesh is Nike which has
excessively made the factory owners work until their last ounce of energy.
4. Solutions
a) Media
The media is a very powerful tool for those TNCs (which are now connoted with
slavery and horrible labour) that they can use. People can use the media to make
people more aware of the problems that the factory owners go through. This
would attract attention of many people to boycott and abandon the product so
that it would receive a great deal of loss. This method has been used almost
everywhere and anywhere around the world. An example is Coca-Cola which was
boycotted and received lots of loss heavily.
This wouldnt directly solve the workers problems but, it would force them
reconsider their ways and expand on some sort of change.
Inspection Reports would be made public/ Making supplier lists public
This is one action that the TNC can start with. It will increase transparency
between the customers and the suppliers. In fact, Nike had used this very method
it used where Nike became the first in its industry to publish a complete list of the
factories that it contracts with. This would mean that a proper negotiation been
made between the TNC brand and the factory owners.
The proposed deal would have an enforceable arbitration clause, would require the
use of highly qualified fire and safety inspectors and require those inspection
reports to be made public. It would also mandate that the Western brands pay for any
needed repairs. Workers would also have the right to refuse to enter buildings they
believe are unsafe.
-Since its being done by a non-profit organisation, this expands that there
is no profit being lost by any of the retail stores or even the TNC brand
itself. Thus, this way, even they are happy.
-The customers will have a satisfaction that if the product wasnt produced
unlawfully, and if it used to, then doesnt anymore.
People who would most likely be against this solution are the factory
owners. This would be because they have no upper hand on controlling
the conditions in the factories anymore.
I started, I was given a 10-minute talk on what to do in case of a fire, but that was it. I didnt get any
other safety training. One worker in Barbie factory located in China says. [By law, factory workers must
undergo 24 hours of safety training.] This indicates that if any sort of emergency persists, there would be no
sort of knowledge that the workers would be aware on how to react the correct and safe way.
I worked 11 hours a day, from 8am to 9pm with an hour break for lunch and an hour break in the evening.
Others worked 12 or 13 hours. [The legal limit is 9 hours per day. At this factory, some employees reportedly
worked up to 100 hours of overtime per month well above the legal limit of 36 hours of overtime].
I lived in a cramped, dirty dorm with other factory workers. [Editors Note: It is common for Chinese factory
workers to live in on-site dorms to save money. This also allows them to work longer hours]. There was no hot
water, no kitchen. We lived four to a room, and had trouble sleeping because some of us worked days, while
others worked nights.
The survey will cover 22,500 workers in 30 factories in India, Sri Lanka
and Bangladesh and could be extended to more factories over time.
The system has been tested successfully on 2,000 workers in India and
Sri Lanka over the past year.
"Involving workers themselves in monitoring conditions in supplier
factories is vital, but workers need to be involved not only in identifying
problems but in negotiating the solutions. The best way to do this is
through allowing workers to form and join independent trade unions," said
Sam Maher, a campaigner with Labour Behind the Label.
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