This report has been commissioned by the Youth Minister to provide the Federal Standing Committee on Globalisation with the view of the youth of Australia to Australia adopting a globalisation policy. This report will outline Globalisation, discuss the advantages and disadvantages of adopting such policy will use a case study of Nike Corporation to explain why Australia should adopt a policy of Globalisation.
Definition of Globalisation
Globalisation is defined in the dictionary as "The growth to a global or widespread scale". However, under a more economic definition, the term "Globalisation" describes the increased mobility of goods, services, labour, technology and capital throughout the world.
The advantages and disadvantages of globalisation have been debated and studied heavily in recent years. Some economists of globalisation say that it helps developing nations "catch up" to industrialised nations much faster through increased employment and technological advances. Critics of globalisation say that it weakens national sovereignty and allows rich nations to ship domestic jobs overseas where labour is much cheaper.
Here are some examples of both advantages and disadvantages of globalisation.
Advantages of Globalisation include:
* Increased free trade between nations
* Increased liquidity of capital allowing investors in developed nations to invest in developing nations
* Corporations have greater flexibility to operate across borders
* Global mass media ties the world together
* Increased flow of communications allows vital information to be shared between individuals and corporations around the world
* Greater ease and speed of transportation for goods and people
* Reduction of cultural barriers increases the global village effect
* Spread of democratic ideals to developed nations
* Greater interdependence of nation-states
* Reduction of likelihood of war between developed nations
* Increases in environmental protection in developed nations
Reference: ( http://www.darkseptemberrain.com/ideas/advantages.html) General Info of the Globalisation Policy.
Disadvantages of Globalisation include:
* Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor
* Increased likelihood of economic disruptions in one nation effecting all nations
* Corporate influence of nation-states far exceeds that of civil society organizations and average individuals
* Threat that control of world media by a handful of corporations will limit cultural expression
* Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage
* Greater risk of diseases being transported unintentionally between nations
* Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity
* International bodies like the World Trade Organization infringe on national and individual sovereignty
* Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources
* Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries
Reference: (http://www.darkseptemberrain.com/ideas/disadvantages.htm) General Info of the Globalisation Policy.
Case Study The Nike Company
Logo from 1990-2000
The Nike Sporting Company is a massive, multi-billion dollar corporation. The Nike Company has factories and outlets all over the world, starting with a new generation of sport shoes, Nike have increasingly to change. Since the mid 1990's to present date; Nike has begun the production of other products such as watches, clothing, bags, golfing gear and even parting with other companies (Phillips) to produce new Nike electronic products. Nike has expanded incredibly over the past 10 years including acquiring All Star Converse, one of their biggest past rival companies.
History of the Company
Nike has been a leader of sports wear and designs for four decades, sponsoring athletes like American record-holder Steve Prefontaine, who becomes the first major track athlete to wear Nike shoes. The corporation was founded by Phil Knight and Bill Bowerman in 1971 and has expanded rapidly ever since, with a revenue of $13.7 billion. However, Nike was caught up in a law case in 1998 where they were sued for the use of Sweat shops with underage / under wage employees, Phil Knight formally commits Nike to strict standards for manufacturing facilities used by Nike, including: minimum age; air quality; mandatory education programs; expansion of microloan program; factory monitoring; and enhanced transparency of Nike's corporate social responsibility practices.
Reference: (http://en.wikipedia.org/wiki/Nike%2C_Inc.) Internet based free encyclopedia
The Nike Corporation has outlets and factories all over the globe, with its world headquarters in unincorporated Washington County, just west of Portland. Some of the locations of Nike factories are China, Malaysia, Indonesia and Taiwan.
Reference: (http://ed-thelen.org/loc.htm)l Internet website based on the Nike Corporation.
Phil Knight, Founder of Nike
Why did it become global?
Since 1993, The Nike Corporation commenced sponsoring R&B stars with their products which began a national culture of wear and distributed millions of their products nationwide. Consumers follow the clothes their favouriite celebrities wear, and which Nike was very successful in doing.. Today Nike is also considered being a typical wear for the "superior" athletes, attracting many desiring sports companies to buy their products. The now world-wide company has become very successful in many fields of sport including, basketball, golf, soccer and the Olympic games series. The reason Nike is more successful than other sport companies (i.e. Addidas, Puma, Reebok) is because they have created an image for the sporting world, not just a brand.
Reference: (http://en.wikipedia.org/wiki/Nike%2C_Inc.) Internet based free encyclopedia
Evaluation of globalisation of companies
Economic impact- This includes the amount and types of jobs available and filled, the profits the company receive each financial year, the increase of international trade, the increase of competition and how effectively the company is bettering its competition, and finally the efficiency of the company in term of employees roles and shrinkage of goods.
Environmental impact: This includes the company's environmental contract and the effectiveness of sticking to this outline, including how products are made, how employees trained to deal with issues involving flora and fauna, and the degree of harm the business causes natural species.
Human rights- This includes treatment of workers and their rights and responsibilities within the company. It also include pay rates, special features i.e. superannuation, leave etc. The company should have a policy that covers the laws of each country and human rights laws throughout the world. This policy needs to be abided by and all personal involved should have a clear understanding of all concepts.
Individual culture- This is the major issue surrounding globalisation, as it is what consumers see daily. The continuing amalgamation of cultures is even more noticeable in today's society. When evaluating whether the company 'Americanised' the product, used differing designs in separate countries to cater for individual needs, and used countries unique cultural assumption.
Case Study Evaluation
Economic impact- Nike will be able to offer lots of jobs for people; however their history of underage workers and minimum wage policy will definitely have an effect on the Australia economy. Nike appears to be doing better than their competition, earning a yearly revenue of $13.7 billion dollars simply because of their lies against the minimum wage policy and the use of sweatshops. Nike is a great example of economic impact on the Globalisation that Australia will adopt because it will greatly increase our export rates to other countries and lowing foreign debts.
Environmental impact- Nike will not have much effect to the environment because most of their products are made in under-conditioned factories. Also, the company will unlikely to harm any nature species.
Human Rights- Nike will definitely have an impact on globalisation if Australia adopts the policy. " Many people are not even aware that sweatshops exist in Australia, let alone Nike's slave factories in Third World countries where they pay workers as little as $3 a day. Public exposure of Nike's practices is one of our main aims". This is spoken by Sarah Peart, spokesperson of the "Anti-Nike" campaign launched against Nike in 2004. "For every one factory worker there are 15 outworkers." The majority of outworkers in Australia are from non-English speaking backgrounds, forced to work out of their homes and often paid as little as $2 per hour. Workers are often unaware of their rights, conditions or even who their employer is. Nike has a very poor reputation on the fact that their products are made from "sweatshops" from third-world countries and even in Australia. This is against the Australian minimum wage policy, which have resulted they being the target of many protest action because of its disgusting treatment of workers.
Individual culture- Nike often abuse the policy of sweatshops they own in third-world countries, "Often, they have nothing more than a load of material dumped on their door step, or they collect it, and they are told to have it done by a certain day", said Curr, member of the Anti-Nike campaign. "That day can be changed or hurried up in the form of speed-ups where outworkers have to stay up all night to finish the job, because instead of picking it up on Friday they want to pick it up on Wednesday and if you don't have it ready then you won't get paid." This is vital to the fact that globalisation is allowing them to abuse the rights of individual culture and human rights. Nike is a leader of a global system of exploitation, they are industry leaders and their mode of manufacture has been to keep moving to countries where workers have the least rights, which is important to the globalisation policy we are currently adopting, Nike will "destroy" the economy easily with their outrageous actions.
Major Reference: (http://www.greenleft.org.au/back/2001/455/455p3.htm)
Home of "Anti-Nike" Campaign.
In conclusion, I think Australia should adopt the "Globalisation" policy because when we focus on the impact of globalisation and open trade in Australia, the benefits are even clearer and better.
Australia's exports have grown three and a half times over the past 20 years, and exports have increased as a proportion of Australian GDP - from just over 10 per cent in 1981 to nearly 20 per cent in 1999/2000. And it is estimated that if we could achieve a reduction of 50 per cent in global protection, Australia would gain an economic boost of more than $7 billion per year.
"By pursuing trade liberalisation over the years, Australia has produced a much more productive and outward-looking economy, with more job opportunities and better wages for workers. Around one in five jobs are now linked to exports, and in regional Australia the figure is one in four. Jobs in the export sector also tend to provide better wages and conditions: on average, exporters in manufacturing pay 25 per cent more than those in non-export industries."
Adopting the Globalisation will enable Australia to have increased exports and lowering foreign debts which overall benefits the Australia economy. What governments and communities need to do is to develop the policies necessary to cope with adjustment to globalisation's changes in a fair and effective manner. If doors close for some, other doors must be opened for them. We need to ensure that all Australians have the opportunity to share the benefits that globalisation can undoubtedly bring.
The advantages of embracing globalisation can open trade which is an overall benefit to Australia.