The Challenges of Globalization

taufikur@ugm.ac.id

Process of Globalization
GLOBALIZATION
Increasing movement of goods, services, &

capital accrfoss national borders

Process
Integrate the world economy
Is not trend but international system
(Friedman-Lexus & Olive tree)
Form:
Global market channels (sell): Nokia
Global operations (make): Nike
Global supply chain (buy): Singapore oil refinery

Acceleration of Globalization
Colonialization (Africa, Asia, America)

15th century
After world war II global commerce
world economy
Factor to accelarate globalization
Communication and technology
Transportation system
The rise of transactional corporations
Social and political reforms

Globalization and
Transnational Cos

Debates 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)

2009
http://money.cnn.com/magazines/fortune/global500/2009/full_li
st/

Top 10 MNCs Fortune Global 500 2009

Rank

Company

Revenues
($millions)

Profits
($millions)

Royal Dutch Shell

458,361

26,277

Exxon Mobil

442,851

45,220

Wal-Mart Stores

405,607

13,400

BP

367,053

21,157

Chevron

263,159

23,931

Total

234,674

15,500

ConocoPhillips

230,764

-16,998

ING Group

226,577

-1,067

Sinopec

207,814

1,961

10

Toyota Motor

204,352

-4,349

Figure 9-2

Comparison of multinational corporations

sales and the gross domestic product
of selected nations

9-8

Indonesian GDP 2008 according to 3

Intl Organizations

Organizations

Rank

GDP (million of US
$)

IMF

19

511,765

World Bank

19

514,389

CIA World
Factbook

21

510,800

Major Transactional
Corporations

From 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
Corporations
The 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 worlds 190+ nations.
Control over the worlds largest economic
assets is concentrated in the hands of a
relatively few nations, nationalities, and
companies.

International and Trade

Institutions

International Financial and Trade Instituions

(IFTI)
UN
World Bank
IMF
WTO (ex. GATT)
APEC
G8
G20
Global Climate Summit

Argument for Globalization

Pro
Economic productivity comparative advantage
Eficency reduce prices
Access huge resources (including financial)
Transfer technology
Spread democracy and freedom (Futurist: Allen

Hammond) minimize military conflict

Contra
Job insecurity (impact of race to bottom)
Enviromental and labor standards
Erodes regional and national cultures anti

americansm
Democracy? status quo regims despotism
(Myanmar)

Comparative Political and

Economic System
Democracy Issues political freedom
Fair election
Independent media
Separation 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 living
Free speech
Religious freedom
Due process

Doing Business in a Diverse

World

Wide 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 World
Private (business)
Government (public)
Civil society (nonprofit)
Business

Governme Civil
nt

Form

Profit

Governmen Non-profit
tal

Good
Produced

private

public

group

Control

owner

Voter/ruler

Community

Power

money

laws

Values

Primary
goals

Wealth
creation

Social
order

Experessio
n of value

weaknesse

External

Bureaucrati Amateuris