INTERNATIONAL FINANCIAL MANAGEMENT

1. THE BUSINESS SCHOOL
UNIVERSITY OF JAMMU
REPORTON - “RISKS & OPPORTUNITIES OF GOING GLOBAL ”
SUBMITTED BY:
RADHIKA GUPTA
ROLL NO – 32- MBA-14

2. How to Take Your Company Global
Global growth can be both daunting and rewarding. Here are the steps to take, the mistakes to
avoid, and the basics of exporting and importing.
The American market for almost everything is huge, but it's not large enough for many
entrepreneurs. For these growth-minded business owners, the rest of the world is their oyster.
Seeking international growth by going global as an importer-exporter offers opportunity a
plenty. Some of the specific advantages presented by successfully growing globally include:
 You can extend the sales life of existing products and services by finding new markets
to sell them in.
 You can reduce your dependence on the markets you have developed in the United
States.
 If your business is plagued by destabilizing fluctuations in your markets due to
seasonal changes or demand cycles, you can even out your sales by tapping markets
with different or even countercyclical fluctuations.
 You can exploit corporate technology and know-how.
 Finally, by entering the global marketplace, you'll learn how to compete against
foreign companies-and even take the battle to them on their own ground.
The overriding reason to go global, of course, it to improve your potential for expansion and
growth. The obvious opportunities are the markets in Canada, Mexico, Europe and Japan. But
those only scratch the surface. There are many other fast-growing, less-competitive markets.
Just spin the globe and you can find an opportunity to sell something, somewhere. Unearthing
just the right opportunity for you involves more work, of course. This information will get
you started on that work.
Questions to Ask Before You Start
Experts agree that growing a business in America is risky enough. But what if your
aspirations prompt you to debut your concept in a foreign land instead? Wesley Johnston,
professor of marketing and director of the Center for Business and Industrial Marketing at

3. Georgia State University in Atlanta, highlights the factors that can either make or break your
business when you try to grow by going global. Here are key questions to ask yourself:
 Will the product sell well in the targeted culture? Think market research. The good
news is most American products and services are embraced overseas. But if many of
your potential consumers are lactose-intolerant, you'd want to steer clear of opening
an eatery that sells only cheese pizza, says Johnston.
 Is your target market familiar with your product or service? If not, be prepared to
invest a lot of time and money in consumer education. On the flip side, if you're the
first one to introduce a new and exciting concept, "the product then becomes
synonymous with your company name or chain," Johnston explains.
 Do you feel comfortable in that country? Since you'll probably have to live there
temporarily to operate the chain in its early stages, you'll need a working knowledge
of the language and culture.
 What is the infrastructure like? Can you get Western-style accommodations and
support? How good are the roads? Are your supplies guaranteed? What about the
reliability of hot water?
If you don't get the answers you want with the first foreign market you're considering
entering, that may not mean your idea is poor-just that you picked the wrong place. "It's a big,
big world out there," Johnston says. "I don't think there's any one idea that won't work
somewhere."
The Pitfalls of Exporting
Along with promise, going global carries an equally heavy load of peril. From chasing too
many opportunities to getting whacked by currency fluctuations, the game of international
expansion has many threats that domestic-only businesspeople never see. You can grab the
brass ring of growth by going global, but only if you avoid the pitfalls.
The moment you've been waiting for has finally arrived, and you're ready to export your
product. Now what? Your first order of business is to heed the hard lessons learned by those
who have gone before you. Many have blundered, but that doesn't mean you have to. Below
are some of the most common exporting mistakes, according to John E. Cleek, program
director at the Bloch School of Business Administration at the University of Missouri in
Kansas City.

4.  Failing to plan your strategy. "Small businesses are particularly vulnerable to this
problem, but larger ones are often guilty of the same mistake," says Cleek. "It takes
far more time to extract yourself from problems created by lack of planning than it
would to do it right the first time."
 Chasing inquiries the world over. Just because dozens of countries show interest
doesn't mean you're ready to market your product everywhere. Patience is key. "It
takes discipline to respond to an inquiry from a country about which you know very
little," Cleek says.
 Assuming if it works in America, it will work anywhere. Not true-you need to tailor
your sales and marketing efforts to each country. Don't ignore the cultural differences
that shape the marketplace. The same goes for pricing, shipping, payment terms and
packaging.
 Assuming business will be done in English. Familiarize yourself with the local
language. Says Cleek, "It is the height of ignorance to expect other people to learn our
language to buy from us."
Going Global
Doing business around the world can seem a long way from doing business in your
hometown. But each year countless small businesses make the trek. Like most long journeys,
going global can be boiled down to a series of steps. Here are the six basic steps to going
global:
1. Start your campaign to grow by international expansion by preparing an international
business plan to evaluate your needs and set your goals. It's essential to assess your
readiness and commitment to grow internationally before you get started.
2. Conduct foreign market research and identify international markets. The Department
of Commerce is an excellent source of information on foreign markets for U.S. goods
and services.
3. Evaluate and select methods of distributing your product abroad. You can choose
from a variety of means for distributing your product, from opening company-owned
foreign subsidiaries to working with agents, representatives and distributors and
setting up joint ventures.

5. 4. Learn how to set prices, negotiate deals and navigate the legal morass of exporting.
Cultural, social, legal and economic differences make exporting a challenge for
business owners who have only operated in the United States.
5. Tap government and private sources of financing-and figure out ways to make sure
you are getting paid. Financing is always an issue, but government interest in boosting
exporting and centuries of financial innovation have made getting funding and getting
paid easier than ever.
6. Move your goods to their international market, making sure you package and label
them in accordance with regulations in the market you are selling to. The
globalization of transportation systems helps here, but regulations are still different
everywhere you go.
Understanding Another Culture
One big difference between doing business domestically and internationally is culture.
According to Hilka Klinkenberg, founder of Etiquette Internationalin New York City, less
than 25 percent of U.S. business ventures abroad are successful. "A lot of that is because
Americans don't do their homework or because they think the rest of the world should do
business the way they do business," she says. Klinkenberg offers the following tips to avoid
making costly mistakes in international business meetings:
 Build a relationship before you get down to business. "That entails making small talk
and getting to know one another without [immediately] getting into business
discussions," she says.
 Don't impose time limits. Says Klinkenberg, "Keep [the meeting] as open as possible
because it adds strength to your negotiating position."
 Do your research. Learn at least a few pointers and facts about the country; it shows
you respect your potential partners' cultural heritage. Also, get comfortable with the
basic words in their language.
 Bring your own interpreter. If they provide the interpreter, warns Klinkenberg, "the
interpreter is going to have the other person's [interests] at heart, not yours."

6.  Understand body language. "People think [body] language is universal-it's not," she
says.
 Dress with respect and authority. This should be self-explanatory. If it's not, seek the
help of an image expert.
Financing Help From the Import-Export Bank
As with any growth plan, expanding internationally requires financing. And growing globally
requires special capabilities when it comes to finances. One of the most popular sources of
financing for businesses expanding overseas is the Export-Import Bank of the United States.
The Ex-Im Bank, as it's commonly known, is an independent U.S. government agency that
has helped finance overseas sales of more than $300 billion in U.S. goods and services since
1934.
The Ex-Im Bank guarantees working capital loans for U.S. exporters and guarantees
repayment of loans or makes loans to foreign purchasers of U.S. goods and services. It also
offers U.S. exporters credit insurance to protect against nonpayment by foreign buyers.
To get Ex-Im Bank help, your product or service must have at least 50 percent U.S. content.
The bank will finance the export of all types of goods or services except for most military-
related products.
Finding a Foreign Distributor
As tricky as it can be to obtain financing for a global expansion program, finding foreign
business partners can be even tougher. If you can find foreign distributors for your product,
you will be able to simply sell them your products and let them worry about reselling them at
a profit in their domestic markets. Distributors are nice because they can offer foreign
customers top-notch service and are easier for you do deal with because they typically buy
enough of your product to build up an inventory.
You may be able to find a foreign distributor by simply looking around your home city or
state for a foreign company with a U.S. representative. Trade groups, foreign chambers of
commerce in the United States, and branches of American chambers of commerce in foreign
countries are all good places to start your search for a foreign distributor.

7. International business consultants can provide valuable help the first few times you are trying
to evaluate a foreign distributor. If you prefer to do the job yourself, look for the following
when assessing in a foreign distributor:
 You can eliminate many foreign distributor prospects by deciding whether you need a
stocking or nonstocking distributor. Stocking distributors are generally larger firms
that will commit to purchasing an inventory of your product.
 If your product requires a salesperson knowledgeable about technology and other
special aspects of your product, you will obviously require a distributor who can
provide that type of sales force.
 The best distributor will be one with a track record selling to the companies or
consumers who are target markets for your product.
 Unless you are fluent in the language of the country you are selling to, you should
choose a distributor who can speak your language well.
 You will want prompt, competent responses to your requests for information or
service. Make sure your phone calls, faxes and e-mails are answered in a timely,
satisfactory fashion.
 Meet your prospects in person, and, as always, get and check references.
Importing Products and Services
International trade involves more than shipping U.S. products overseas. For many products,
foreign sources of supply can provide higher quality, lower cost or some other desirable
feature in comparison to U.S. sources. For instance, Italian shoes, French wines and Japanese
cameras are widely available in the United States because of their recognized superiority in
some respects to domestic alternatives.
Importing doesn't have to be limited to goods, either. Many companies have grown by
importing services in imaginative ways. For instance, a large quantity of the data-entry work
that used to be done in the United States is now done by workers in countries such as India
and China. The companies for whom this work is being done have effectively imported the
data-entry services of international workers.
At one time, identifying sources of products to import was a serious challenge for American
importers. But vast improvements in the global telecommunications network have greatly

8. eased that task. Today anyone with a computer and a modem can do Web searches to locate
suppliers virtually anywhere in the world. Furthermore, they can communicate with those
suppliers, exchanging specifications and requirements far more easily, swiftly and
conveniently than ever before. If you have an idea for importing a product made in another
country, it should be easy to find a supplier who can sell it to you. Here are tips for finding a
source of products to import:
 Start by focusing on countries whose imports to the United States are granted favored
status. This means lower import duties and lower cost for you.
 Once you've selected countries as likely sources, contact trade representatives at the
appropriate embassies. They should be able to provide you with lists of manufacturers
of the products you're interested in.
 Attend foreign and domestic trade fairs where companies seeking to export to the
United States are exhibitors.
 Read U.S. and foreign newspapers and magazines, scanning for advertisements and
articles about products you might want to import.
The Internet is having a large impact on the way international business is conducted. This
impact is especially significant when it comes to finding leads for international trade partners.
You can look at TradeNet, the U.S. government's online trade-matching service, for
numerous links, databases, message boards and other tools for finding products to import and
other opportunities to grow your business internationally.
Once you've identified some likely sources of products to import, make contact with the
company and begin gathering information. You'll want to obtain samples of products and, of
course, discuss prices and terms of payment. Take special care to check the quality of the
products-the United States is a sophisticated marketplace, and shoddy products that might
succeed elsewhere will be shunned here.
As in any circumstance where you're checking out a new prospective supplier, ask for
references. Get a referral to a company that has dealt with this supplier before, and call to
check them out.
Shipping procedures are a paramount concern when moving products long distances. High-
value items may be shipped by air, but many products come by ship. This often means transit

9. times measured in months, with the associated risks of missing market opportunities. Make
sure your supplier understands your requirements for delivery and that the shipping procedure
chosen will do the job. Once you are happy with the arrangements, have an attorney
experienced in international trade review the contract.
Why Go Global?
International expansion is not necessarily the best way to grow your company. The U.S.
market is big enough for most small businesses to expand almost indefinitely. But entering
the international arena can protect you against the risk of decline in domestic markets and,
most important, significantly improve your overall growth potential.
Support of Globalization
Globalization means different things to different people and is considered to have both
positive and negative impacts. Opinions vary widely on its influence on national economies.
The major arguments in support of globalization include the following.
• Maximization of Economic Efficiencies
The global integration of economies has prompted a rapid rise in the movement of products,
capital, and labour across the borders. It contributes to the maximization of economic
efficiencies, including the efficient utilization and allocation of resources, such as natural
resources, labour, and capital on a global scale, resulting in a sharp increase in global output
and economic growth.
• Enhancing Trade
Besides rapid trade growth, new patterns on international trade are fast evolving. The creation
of foreign-based affiliates by national firms and of host-country affiliates by foreign parent
companies has led to a rise in intra-firm trade.
• Increased Cross-border Capital Movement
The economic liberalization across the world has paved way for FDIs even in a large number
of developing countries that had a restrictive regulatory framework. This has opened up
business opportunities for transnational corporations to expand their operations by way of
ownership on one hand and benefited developing countries from increased flow of capital and
other forms of finance on the other. Direct investment is increasingly becoming crucial to

10. companies’ international expansion strategies. This has led to the globalization of
manufacturing and fragmentation of the production process into its sub-component parts in
multiple countries.
• Improves Efficiency of Local Firms
The heightened competition by multinationals compels local businesses to adopt measures to
cut down costs and improve quality for survival. On one hand, competition makes the
survival of inefficient businesses difficult; on the other, it encourages firms to evolve
innovative methods to improve productivity. As a result, business enterprises become more
competitive not only domestically but also internationally at times.
• Increases Consumer Welfare
Consumers benefit by increased access to products and services from manufactures across the
world. Import restrictions in a large number of developing countries has deprived consumers
of global brands and the quality thereof. Besides the intensification of market, competition
has also compelled domestic producers to reduce prices. As all domestic and multinational
companies compete with each other to woo the customer, the consumer became the ultimate
gainer
The Bright Side of Globalization
 The rate of growth of the GDP of India has been on the increase from 5.6 %
during 1980-90 to 7% in the 1993-2001 period.
 In the last four years, the annual growth rate of the GDP was impressive at 7.5%
(2003-04), 8.5% (2004-05),9% (2005-06) and 9.2% (2006-07).
 The foreign exchange reserves were $ 39 bn (2000-01), $107 bn (2003-04),$145
bn (2005-06) and $180 bn (in February 2007).
 India’s trade deficit during 1990-1991 to 2006-2007 ranged between 3.6% to
6.9% of GDP.
 The fluctuation in Foreign portfolio Investment were much sharper then FDI, The
FPI rate decreases by 36% from period 1990-00 and again shows upward growth
rate in period 00-07 was 22.1%.

11.  FDI (net) shows a gradual upward growth from $97 million in 1990-1991 to
$3272 million in 2000-2001 and again rising and touching the peak of $8779
million in 2006-2007.
ADVANTAGES:
Firstly, globalization is good for certain countries more, such as those in the First World or
Global North. Rich countries like the USA, UK, Germany etc. can sell more products and
goods to new markets in the Global South or poorer countries. Think of McDonald's and
Starbucks and other big American brands. We can find McDonald's everywhere
(almost).Resources of different countries are used for producing goods and services they are
able to do most efficiently. Consumers to get much wider variety of products to choose from.
Consumers get the product they want at more competitive prices. Companies are able to
procure input goods and services required at most competitive prices. Companies get access
to much wider markets.It promotes understanding and goodwill among different countries.
Businesses and investors get much wider opportunities for investment. Adverse impact of
fluctuations in agricultural productions in one area can be reduced by pooling of production
of different areas. Globalisation helps in briniging whole wolrd as one village. Every
consumer have free and frquent reach to the products of foreign countries. Optimum use of
natural resources possible. Helpful in cost reduction by eliminating cross border duties and
fees. Helpful in employment generation and income generation

12. CRITICISM OF GLOBALIZATION
Globalization is often denounced by social organizations, NGOs, politicians, consumers, and
even the general public on multiple grounds as the sole cause of all ills.
• Developed versus Developing Countries: Unequal Players in Globalization:
The dynamics of the globalization process reveals that developed and developing countries
participate on unequal footings. Developed countries along with their mighty multinational
corporations exert a very strong force globally while developing country governments and
civil society organizations hold much less sway. Developed country governments often
reserve and exercise the right to take unilateral and bilateral actions that have global scope
and implications concurrently with their participation in debates and negotiations. According
to the neo-classical economic theories of equilibria, capital will flow towards areas of cheap
labour but labour will flow towards the areas of expensive labour—thereby raising the cost of
labour where it was once cheap by reducing the available numbers and bringing down the
cost of labour where it was once expensive. Although there have to be some bottlenecks in
the theoretical framework, it seems that the ‘powerful’ countries, the ‘superpowers’
themselves, use their power to create such bottlenecks. In the developed world, quotas,
controls, and oppressive legislation curtailing the movement of people, derogatorily called
‘economic refugees’, are justified in the name of protecting ‘national’ principle but similar
measures are seldom applied against the movement of capital. Economic efficiency is often
one of the strong reasons for advocating globalization in that allowing free movement of
goods and capital across borders would lead to the lowest costs and thus the lowest prices.
But this argument ignores the real social consequences of the search for economic efficiency.
For instance, farmers in developing countries commit suicides as the commodity prices crash,
workers are thrown out of jobs as factories close, unique and specialized businesses are
driven out of the market because they do not have the advantage of economies of scale, etc.
Developing countries are continually preached about on the need to reduce tariffs by
multilateral organizations. Ironically, the West and the European Union impose such rigid
non-tariff barriers that firms from developing countries hardly have any chance to break into
their markets. Global pharmaceutical companies often gang up against drug companies from
developing countries. For most Europeans and Americans, globalization only means two
types of fear: fear of cheap Chinese goods and fear of Islamic immigrants. Business process
outsourcing (BPO) still remains a big political issue in the US. Getting ‘Bangalored’ is often

13. used in a pejorative way in the US to refer to the loss of a job because it has been exported to
India.
• Widening Gap between the Rich and the Poor -
The gains of globalization are not evenly distributed. Under globalization, those who
possess capital and skills are better off, but the middle class is reported to get more and
more squeezed. Noble laureate Joseph Stiglitz observes that globalization is creating rich
countries with poor people. The benefits of globalization have failed to reach the poorest
citizens of the world’s wealthiest country and this was evident when Hurricane Katrina
hit the US province of New Orleans. Globalization has applied intense downward
pressure on the wages of the unskilled and the less skilled of the labour force even in
advanced countries. Globalization is often accused of contributing to the rise in poverty in
developing countries, while in the developed world it is associated with growing
economic inequality, unemployment, and fears about job security, which fuels demand
for trade, protection, and more restrictive trade policies. Globalization, often
characterized by connectedness among countries, has bypassed a huge swathe of territory
from Africa, the Balkans, the Caucasus, Central and Southwest Asia to South Asia, parts
of Southeast Asia, and parts of the Caribbean. Poorer countries’ share in world trade has
fallen over the past 20 years. Income inequality as measured by the Gini coefficient has
risen over the past decades in most regions, such as in developing Asia, emerging Europe,
Latin America, and the newly industrialized economies of Asia as well as in advanced
economies. In contrast, it has declined in sub-Saharan Africa and the Commonwealth of
Independent States (CIS).
The failure of the WTO’s Doha round—because of the tenacity of both the US and
Europe’s persistent refusal to reduce trade-distorting subsidies and of the developing
countries to open up their market access—was bad news for poor farmers in Africa, Asia,
and Latin America. Rich countries spend US$300 billion a year on agriculture
subsidies—more than six times the amount they give away as foreign aid. The subsidies
depress world prices for such agricultural commodities as cotton, peanuts, and poultry,
making it harder for farmers in developing nations to make a living. Despite tall claims of
welfare in the globalized era, more than a billion people in the world still live on less than
a dollar a day. To the policy makers of rich countries, they are simply considered as
forces of threats ranging from illegal immigration to drug smuggling to crime and as
vectors of diseases. Economic failure in countries in the ‘non-integrating gap’ has

14. resulted in a global job crisis leading to migration problems. As the per capita GDP of the
high-income countries grows at a rate of about 66 times that of the low-income countries,
the lure of better-paid jobs has become stronger than ever. Tens of thousand of people
from the hopeless economies of sub-Saharan Africa make desperate attempts to enter
Europe. Unable to compete with cheaper imported grains, many Mexican farmers have
abandoned their rural occupations for a hazardous journey to the US as illegal
immigrants.21 Immigration laws in developed countries have been tightening against a
rising tide of poor migrants, and the planned erection of a 700-mile long fence along the
US– Mexican border has become a symbol of the anti-immigrant sentiment across the
Western world. ‘Globalization’ has become a dirty word in Latin America, the continent
described as ‘the most inequitable’ on the planet. On an average, developed countries
impose tariffs on developing countries four times higher than those on developed ones.
Rich countries have cost poor countries three times more in trade restrictions than they
give in development aid.
• Wipes out Domestic Industry
Opening up of countries for trade and investment for foreign corporations often leads to buying up of
local industry by Western conglomerates. As a result, a few ‘global brands’ dominate the markets, no
matter which country you are in. The clusters of smaller firms in Italy and Germany that were once
successfulexporters have suffered as commoditized textiles, footwear,and toys from China have
swamped the market. To cope up with the competition from cheap imports, companies keep the
production of core parts of their output at their home base and send components for assembly in low-
wage countries such as China
• Leads to Unemployment and Mass Lay-offs
Globalization is reported to have pushed workers from the organized to the
unorganized sector, where they enjoy much less job security and sometimes lower
wages as well. This has aggravated the problems of unemployment, shifting labour
from secured to casual or parttime jobs with little security and lower wages for tasks
requiring lower skills. The process of cost-cutting has raised the share of capital in
value addition. Higher business profits are often attributed to exploitative efficiency
rather than increased opportunities. The bargaining power of trade unions has
considerably declined. In order to save the workers from job losses, trade unions are
often forced to accept cuts in wages and salaries, freezing of numerous monetary and

15. non-monetary benefits, increase in share of temporary workforce, and curbing of
union activities and even lay-offs.
• Brings in Balance of Payments Problems
The liberalization of foreign investment policies results in an increase in foreign
capital inflows that leads to the appreciation of local currency. This adversely impacts
the export competitiveness and in turn the export-intensive manufacturing industry in
the country. Consequently, imports become relatively cheaper and the viability of
indigenous industry even for the domestic market is adversely affected. This has led
to mass lay-offs of the workforce besides exerting pressure on the country’s balance
of payments, especially in developing countries.
• Increased Volatility of Markets
The global integration of economies has made markets highly vulnerable to external
upheavals. For instance, the soaring popularity of the film Titanic in the US created a
boom in the worldwide demand for the gem tanzanite whereas its subsequent
association with a terrorist outfit drastically brought down its prices. Use of lead to
paint toys by Chinese manufacturers evokes serious concerns among consumers
around the world, compelling children in several countries to abandon their favourite
toys, including the Barbie doll. Stock markets have become highly interconnected to
global happenings. Any plunge in the US stock market sends tremors to shareholders
across the world.
• Diminishing Power of Nation States
The global forces, the increasingly transnational character of capital, the erosion and
sometimes the voluntary surrender of state sovereignty have all made countries less
powerful, for instance the transnational alliances such as the European Union. As a
result, less powerful countries find it difficult to control their own destinies and
become victims of forces beyond their control. Diminishing sovereignty is reported to
be the source of many of the ills of the contemporary world. Its citizens lose control
of their day-to-day lives.
 Loss of Cultural Identity-
The proliferation of satellite channels, the Internet, and the means of transportation and
communication have immensely affected the social and cultural values of masses across
the world. Most people agree that globalization is changing our values and making lives
too fast and impersonal. The forces of globalization have led to cultural convergence

16. across countries, and individuals tend to lose their country-specific cultural values and
national identity.
• Shift of Power to Multinationals -
As a result of the globalization of markets and production, a number of transnational
companies, such as Microsoft, General Electric, Unilever, Procter & Gamble, Sony, Ford,
Toyota, etc., have emerged to operate across the globe. The total sales revenue of these
MNCs is greater than the total national income of a large number of midsized and small
countries. The global scale operations of multinationals empower them with enormous
financial and political muscle to monopolize the markets and influence government decision
making. Nations often fear losing their sovereignty due to the shift of power to MNCs and
supernational organizations. Multinationals are often accused of exploiting resources and
abusing the environment. Consequent to economic liberalization, India’s bestselling soft-
drink brands, i.e., Parle’s Thumps Up and Limca, were bought by the global giant Coke.
It is skepticism of the claimed benefits of globalization. Many of these views are held by
the anti-globalization movement. However, other groups are also critical of globalization.
Political scientist and author Claus Leggewie has divided the critics into six groups: leftists,
radical leftists, the academic left, reformers from the business world, critics with a religious
base and right-winged opponents.
ECONOMIC EFFECTS
Limitations on growth
The founder of Local Futures (formerly the International Society for Ecology and
Culture), Helena Norberg-Hodge, has suggested that globalization does not work for all the
economies that it affects, and that it does not always deliver the economic growth that is
expected of it.
Globalization has been described as an "uneven process" in Africa due to the global
integration of some groups happening alongside the marginalization or exclusion of others.
Tensions resulting from this were a cause of the conflict in the Niger Delta.
Power of transnational corporations
Globalization has fueled the rise of transnational corporations, and their power has vaulted to
the point where they can now rival many nation states. Of the world's one hundred largest
economies, forty-two of them are corporations.[4] Many of these transnational corporations

17. now hold sway over many nation states, as their fates are intertwined with the nations that
they are located in. Based inFinland, Nokia represents nearly two-thirds of the stock market's
value, and provides a large share of the nation's tax revenue. With this much power,
managers of the company have unprecedented influence in the politics of Finland.
Also, though transnational corporations could offer massive influence regarding the Third
World, and bring about more pressure to help increase worker salaries and working
conditions in sweatshops, this has not happened to a great extent, emphasized by the2013
Savar building collapse, where over one thousand workers died having been producing
garments to be exported across the world in unsafe working conditions.
Given that the scale on which these corporations operate is so large, problems that they create
can be difficult for elected politicians to deal with.
ENVIRONMENTAL EFFECTS
Damage from transnational corporations
In Nigeria, the exacerbation of environmental problems including air pollution, water
pollution, noise pollution, land degradation anderosion has been attributed to the presence of
the international petroleum industry as a result of globalization.
Infectious diseases
Infectious diseases, such as SARS and Ebola, have traveled across the world due to increased
world trade and tourism.
Invasive organisms
The spread of invasive species has been accelerated by globalization
SOCIAL EFFECTS
Growing inequality
The Governor of the Bank of England, Mark Carney, put forward globalization as a factor of
an increase in the inequality of outcomes in societies.
Loss of languages
Acceleration in language death has been attributed to globalization, and is predicted to
continue.

18. Prejudice
Professor Conor Gearty, of the London School of Economics, has suggested that
global freedom of movement, brought on by globalization, has increased the scope for
prejudice within societies.
DISADVANTAGES:
Due to globalization, many local brands and businesses in poorer developing countries go
bankrupt and can't survive the economic might of these rich countries. Local cultures and
traditions change. Also because of globalization, more and more people are learning and
speaking English to the detriment of local languages. There are more international schools
and the focus now is on the acquisition of this global language rather than their own L1 or
mother tongue. Developed countries can stifle development of undeveloped and under-
developed countries.Economic depression in one country can trigger adverse reaction across
the globe.It can increase spread of communicable diseasesCompanies face much greater
competition. This can put smaller companies, at a disadvantage as they do not have resources
to compete at global scale.It increases the gap between the poor and rich.-income
inequalities-poverty trap-.Cultural convergence-more people are moving towards the western
fashion.Environmental harrm-resourses are used up-scarcity-creates externalities-pollution-
waste products.Demand more of skilled workers and causing redundancy of skilled workers.
Globalization can ruin the environment. Moving things from one area to another wastes oil,
etc.Globalization can ruin local economies. There is a movement that wants to buy local -
especially organic foods.Globalization can lead to hyper-specialization, which can be good,
but also negative. There is something great about being a generalist. Also what if something
goes wrong. To know things generally give an incredible perspective that specialists do not
have.Globalization can be driven by people with "know how" and power and they can
systematically fleece the world.Globalisation is direct attack on local tiny and small
industry.Global companies with hi-fi infrastructure almost ruins the local traditional small
and medium industries.Increases cut throat competition.Globalisation increases monopoly by
countries equiped with know-how and power.