Вы находитесь на странице: 1из 12

Global

Level-marked
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.

How it was before:


Countries used to manufacture products in their home countries. Similar
products used to be in direct competition with each other, but both
companies made the same salaries and production costs. They had the
same customers, used similar suppliers and sold the product at similar
prices. This ensured that same conditions applied to both companies.
However, due to technical, cultural and economic developments, other
companies around the world which manufacture products at different
conditions can now offer their product in the first country, Country A.
Thats why, Country B can sell out a product cheaper in Country B because
it had been produced for less.
What has globalisation led to?
Globalisation has resulted in:

increased international trade


a company operating in more than one country
greater dependence on the global economy
freer movement of capital, goods, and services
recognition of companies such as McDonalds and Starbucks in LEDCs
Reasons for globalisation:

Improvements in transportation - larger cargo ships mean that the cost of


transporting goods between countries has decreased. Economies of scale mean the cost
per item can reduce when operating on a larger scale. Transport improvements also
mean that goods and people can travel more quickly.
Freedom of trade - organisations like the World Trade Organisation (WTO)
promotes free trade between countries, which help to remove barriers between
countries.
Improvements of communications - the internet and mobile technology has
allowed greater communication between people in different countries.
Labour availability and skills - countries such as India have lower labour costs
(about a third of that of the UK) and also high skill levels. Labour intensive industries
such as clothing can take advantage of cheaper labour costs and reduced legal
restrictions in LEDCs.

Positive Impact of Globalisation:


Increased Competition
One of the most visible effects is the improved quality of products due to global
competition. Customer service and the 'customer is the king' approach to
production have led to improved quality of products and services. As domestic
companies have to fight out foreign competition, they are compelled to raise
their standards and customer satisfaction levels in order to survive in the
market. Besides, when a global brand enters a new country, it comes in riding on
some goodwill, which it has to live up to. This creates competition in the market
and a 'survival of the fittest' situation.

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

impression on a culture which has adopted them.


Spread of Education
One of the most powerful effects of globalization is the spread of education.
Today, you can move in the search of the best educational facilities in the world,
without any hindrance. A person living in U.S. can go to another continent for a
new experience which he may not find in his home country. If one is interested,
one can even get a specialization in subjects not indigenous to his country and
then spread that knowledge to the home country. A good example of that is how
the American managers went to Japan to learn the best practices in the field of
mass production and incorporated that knowledge in their own production units.
Legal and Ethical Effects
Gone are the days where the limited jurisdiction became a hindrance in the
prosecution of criminals. These days, due to international courts of justice,
criminals can no longer seek asylum in a foreign country and are thus brought to
justice. Due to globalization, there is also an understanding between security
agencies and police of two or more different countries who come together to
curb global terrorism. Hence, it is now possible to catch the perpetrators of
crime irrespective of which country they choose to hide in.
Negative Impact of Globalisation
Globalization encourages dependence on other countries for essential
goods and services.
With globalization, goods can often be obtained cheaply from elsewhere. A
country may come to believe that there is no point in producing its own food or
clothing. It becomes easy to depend on imports and specialize in something like
financial services or high-priced medical careservices that are not as oildependent.
As long as the system stays together, this arrangement works, more or less.
However, if the built-in instabilities in the system become too great, and the
system stops working, there is suddenly a very large problem. Even if the
dependence is not on food, but is instead on computers and replacement parts
for machinery, there can still be a big problem if imports are interrupted. The
failure of one country has the potential to pull many others down, and with it
much of the system. The only countries that remain safe are the ones that have
not grown to depend on globalizationwhich is probably not many today
perhaps landlocked countries of Africa.
Health concerns
Globalisation has given rise to more health risks. A very customary example is
the dawn of HIV/AIDS. Having its origin in the wilderness of Africa, the virus has
spread like wildfire throughout the globe. Food items are also transported to
various countries, and this is a matter of concern, especially in the case of
perishable items. The safety regulations and standards of food preparation are
different in various countries, which may pose a threat to risk several health
hazards.
Fast food chains like McDonalds and KFC are spreading fast in the developing
world. People are consuming more junk food which has an adverse impact on
their health. Apart from the health concerns, there is something else that

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).

Examples of TNCs (Transnational Corporations):


McDonald's Corporation is the world's largest chain
of hamburger fast food restaurants, serving around 64 million
customers daily in 119 countries. Headquartered in the United
States, the corporation was founded by businessman Ray Kroc in
1955 after he purchased the rights to a small hamburger chain
operated by the eponymous Richard and Maurice McDonald. McDonald's
revenues grew 27 percent over the three years ending in 2007 to $22.8 billion,
and 9 percent growth in operating income to $3.9 billion
Coca-Cola is a carbonated soft drink sold in stores, restaurants,
and vending machines in more than 200 countries.It is produced
by The Coca-Cola Company of Atlanta, Georgia, and is often
referred to simply asCoke (a registered trademark of The CocaCola Company in the United States since March 27, 1944).
Originally intended as a patent medicine when it was invented in
the late 19th century by John Pemberton, Coca-Cola was bought out by
businessman Asa Griggs Candler, whose marketing tactics led Coke to its
dominance of the world soft-drink market throughout the 20th century.Coca-Cola
Nike is a major publicly traded sportswear and equipment supplier
based in the United States. The company is headquartered near
Beaveron Oregon, which is part of the Portland metropolitan area.
It is the world's leading supplier of athletic shoes and apparel and a
major manufacturer of sports equipment, with revenue in excess of
US$18.6 billion in its fiscal year 2008.

Apple is an American multinational corporation that designs and


markets consumer electronics, computer software, and personal computers.
The company's best-known hardware products include the Macintosh line of
computers, the iPod, the iPhone and the iPad. Established on April 1, 1976
in Cupertino, California, and incorporated January 3, 1977, the company was
previously named Apple Computer, Inc., for its first 30 years, but removed
the word "Computer" on January 9, 2007, to reflect the company's ongoing expansion
into the consumer electronics market.
3. Conditions people in LEDCs have to live and work under:

Workers describe 'awful' conditions at Mattel suppliers


Underpaying workers

China Labour Watch estimates that these suppliers annually


steal between 6 million and 8 million euros in wages from
the six factories workers through a variety of means,
including failure to pay overtime and benefits, as well as
underreporting the number of hours worked.
I was paid 1,600 yuan [190 euros] per month, which is really
not enough to live decently with. [In China, the average wage for private sector
workers is about 300 euros. According to China Labor Watchs report, workers at
this factory and others were regularly paid a month late].
Many factories take it upon their advantage to not pay the workers, delaying
their monthly/weekly wage.
Unsanitary conditions

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 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.
Unlawfully long hours

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].

Verbally and physically abused


The workers often got verbally or physically abused if they were slower than others.
Malnourished

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.

This would help by:


-By making the inspections to be public, this throws off any chance of scams or lies.
-The problems would be dealt by the Western brands, as they take responsibility for
their actions and pay for it.
People who would disagree with this would be:
-Retailers and the Western brand managers as they will be the ones targeted to pay
for any renovation required. It shouldnt be a problem because they are all able to
afford it, with the hard currency they have in the West really increases the amount
they get in the LEDC country.
Large TNCs to start funding campaigns for labourers rights
Campaigns such as Clean Clothes, Global Exchange, CAFOD all have similar and
strong goals in mind. Many of these campaigns are also non-profit organisations
which make them all the better to fund. Large TNCs supporting these would help
establish their goals much quicker and in a more proper, official and negotiating
way. This way, they have a large power to back them up. The customers of that
TNC would get lots of positive reactions towards it, hence, increasing its
popularity.
This would help by:
-Factory workers conditions and standards raised for them
-The TNC supporting the campaigns would get lots of good publicity

Use of mobile phones and social networking to provide greater


insight into the lives of those producing goods in far-flung
factories
The high street retailer has signed a deal with Good World Solutions, a
non-profit social enterprise, to carry out research via mobiles in a way
suitable for workers who may not be able to read or write. 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.
Fiona Sadler, head of ethical sourcing for M&S, said factory owners will be
fully informed, but the surveys will be carried out anonymously, rather
than under the direction of bosses. 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.
This would help by:
-Having the factory owners voice heard directly to the campaigners
themselves. Any problems that would persist, would be dealt with
immediately. This includes any in all, abuse, overtime and factory
conditions. The survey would determine which changes need to be made
determining which problems are more serious than others.

-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.

Quotes and Statistics


I was paid 1,600 yuan [190 euros] per month, which is really not enough to live decently with. [In China, the
average wage for private sector workers is about 300 euros. According to China Labor Watchs report, workers
at this factory and others were regularly paid a month late].
When

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.

Picture A

Picture B

Picture C

Оценить