Saturday, January 25, 2020

The power of transnational corporations

The power of transnational corporations Footloose can be defined as free to go wherever one likes or to do as one likes. According to Taggart (2010), he said that organizations which are flexible and no national loyalties in moving their businesses or operations to anywhere quickly freely and have different nations of consumers. Transnational Corporation can be defined as a company that operates in more than one country. According to UNCTAD (2004), a Transnational Corporation (TNC) is an organizations which control the foreign assets other than its home countries, they usually owning certain of equity capital stake. Nestle and Ford is the example of TNCs in the international country. Based to Fox, Tom and Prescott (2004), they stated that globalization has lead the organizations to spread or operate widely to search for cost efficiency and to implement production strategies across states and regions. Nowadays, Transnational Corporations (TNCs) are central players in the economic environment. According to Macleod and Lewis (2004), TNCs has affect the governments policies which not only local but also include international, besides they also affect the agenda of the World Trade Organization (WTO). Moreover, TNCs also affect the economies and eco-system in the developing world, the wage-levels set by them can influence the purchasing power and demand of goods as well. Power of TNCs According to Dunning and Rugman (1985), TNCs has the capabilities to overcome or reduce market imperfections, improving local and international markets, and to develop systemic, network-related rather than just asset-based only. Furthermore, the power or strength of TNCs also include they can support the global market in terms of survival, profitability and growth. According to Christian Aid (2001), he stated that TNCs has increased and growth quickly and dramatically over the past 30 years, there were only 7,000 TNCs available during 1970, however today there are 63,000 parent companies which operating with about 690,000 subsidiaries in the world. (Further information refers to Appendix 1 2). TNCs have involved themselves in different sectors, industries, economic activities in the global market. Most of the TNCs are mainly from Western economies, TNCs now occupy a powerful position in the global economy, which around two-third of international trade. General Electric which is one of the TNCs, had revenues of $126 billion in year 2001, which is more than the combined national incomes of sub-Saharan African countries, except the Republic of South Africa. TNCs are playing important roles in the global economies and it might be possible that they have the power to control over the economy in the future. As Michael Kitson (No date) states, TNCs are very powerful than the previously, nowadays they are playing an important roles and act as powerful players in the global economy. TNCs not only affect the local economic but it is also involve the global economic because they operate in large business which surrounding the world, it would affect the global employment rate and economics. Factors to Move As Footloose The factor that drive TNCs move and operate freely in the international country is the cost of production and also labor cost. This issue usually will be the first and most important reason for TNCs to consider with. According to Schaub (2004), he states that TNCs are profit from a division of labor, they tend to concentrates their operations in those countries which are usually allocate labor-intensive and specialized tasks to peripheral countries. They invest in different geographical areas to get multiple advantages from other countries so that they able to improve their operation in their home country. Many of the US firms are prefer to set up production facilities in the foreign market because they saw an opportunity to reduce production and distribution costs or low threat of their market position. For example, Renault-Nissan is one of the examples of TNCs which manufactures its product in China, Taiwan, and the Philippines, to profit from low-cost, high quality labor. Other than generate huge profits, resources available will be also one of the factors that lead TNCs to operate freely and globally. The resources are referring to human resource management, technology resources and also the resources to build up the products. This can be explaining by the technology advancement, human capital and capabilities, rich of the resources in a country. TNCs will consider all these factors in a country only will decide to operate or set up their manufacturing factory in a new place. Due to limited of capital resources, Intel actually relies extensively on the global manufacturing network, they set up manufacturing company at Penang, Malaysia is because they can get the resources at there and the human capabilities is high. On the other hand, political conditions will also affect the TNCs to operate freely in a country. Since China opens their market to the foreign investors and enters into the international trade, China has become the new and favorite place for TNCs and FDI to make investment and set up new subsidiaries and factories. Chinas rapid integration into the global economy has created many investment and trade opportunities between China and the rest of the world. It has created a lot of business opportunities and employment opportunities for the local people of China. China is a country which has the advance infrastructure, reasonable levels of taxation, cheap labor cost and production cost, and also the conditions that support personal security and the most important is stable political. Examples of TNCs which operate their business in China include Wal-Mart Stores, BP, Royal Dutch/Shell Group, Toyota Motor, Ford Motor and many others. TNCs will rather invest in China than Middle East Count ries as they always suffer with political unstable as well as race discriminations. Barries That Restrict TNCs to Move However, there are some factors such as Trade Barriers that will restrict TNCs to move freely in the international countries. It is usually refers to the external factors that is unable to be control by them. The most common sorts of trade barriers are things like subsidies, tariffs, quotas, duties, and embargoes. While TNCs enjoy the profits they earn, governments are usually concern with the consequences of these products have produced, and these consequences is usually caused by smoking, drinking, asbestos, chemicals and fertilizer/pesticide that can seriously lead to water pollution. Many countries are suffer 80% of their water is polluted by the chemical toxic such as pesticides, fertilizers and herbicides with consequential effects and the nations have to pay higher price for their water. Besides, the other TNCs needs to overcome this entire problem before the consumer can use it or consumed it safely. In this situation, profits of TNCs will be reduce when the citizen pay for w hat an unpolluted and healthy resources or goods, they always have a human right to consumed clean, safe and drinkable water. Besides that, some of the governments argue that TNCs locate in third countries or poor countries just want to make a profit only, they usually pay low wages, especially to those innocent such as women and young children. Some of the people said that TNCs usually look after themselves rather than them. Local labors usually poorly paid, most of the profits will go overseas, and products often of little value to local people and TNCs may pull out anytime. In order to guarantee the life and also the rights of local people, government usually will restrict some rules to protect their peoples. Senegal is the example that the government and the Committee on Economic, Social and Cultural Rights of International concern with the workers rights and health. For your information, Senegalese workers are employed with low wage and do not provide basic social services such as social security, medical check up and health insurance. Hence, TNCs wish to offshore to Senegal must be able to fulfill the requirement of the government whereby treat the local labors fairly. Besides that, culture will be also one of the barriers for the TNCs to offshore or move abroad. Cultural issues would not affect all the TNCs, it is usually refer to the food industry. For example, McDonald is carefully selected suppliers and also producers of their ingredient. The food of McDonald is including beef, chicken, pork, egg, milk, coffee and potatoes. However, pork is not accepted by the people, who are religious Islam; they are anti-pork due to the religious. Hence, if McDonald wishes to franchise their business to those Middle East countries or Islamic countries, they could not sell pork meal and get any pork supplier at there. It is the same case in India, Hindu state that cow are a gift of the gods to human race. Hence, for Hindus do not eat the meat of the sacred cow. McDonalds is the worlds largest user of beef. Therefore, all foods are strictly segregated into vegetarian and nonvegetarian lines to conform with preferences in a country where many Hindus are vegetari an. McDonalds has had to customize its offerings to the tastes and preferences of a Hindu culture that venerates the cow, will not eat beef, and has a large vegetarian population. Cultural factor will affect McDonald to operate their business in a new place such as Islamic country and India. Next, the other barriers that TNCs might face also include customer preferences. Customer preferences are refers to the consumers buying habits, product usage and so on. Nowadays, the living standards and income of peoples have been increase and they tend to enjoy their life. As income increase, so the purchasing power has been increase as well. China would be the best example; Chinas luxury car market is mainly controlled by Audi and Mercedes-Benz. Previously, Toyota will be the first choice for the China as this is more affordable for them. China does have their own automobiles produced such as BYD, Chery, Hafei, Roewe and so on. As the income and lifestyle have been improve, many of the Chinese tend to purchase high quality and foreign car as this is the status recognition for them. Hence, in this case it is a barriers for Toyota as they have the own manufacturing in China. Customer preferences change has cause negative effect to Toyota as it will affect their profits. Customer pr eferences would change anytime and TNCs could not estimate about it, hence before they want to set up new business in a country they need to encounter this problem and think of solutions. Fact to Support TNCs Move As Footloose After analyzing the factors to drive TNCs operate freely and globally, it show that Transnational Corporation can move footloose within the global economy. However, it is not all the TNCs able to move freely, some of the industry might be difficult to move. According to Ha-joon Chang, who is a South Korean economist in Economics and Politics faculty at the University of Cambridge (UK), he notes that there are some industries such as cloth, shoes, foods and garments where the sunk costs are low and firms can be easily footloose, while for the high elements of sunk cost such as chemicals, pharmaceuticals are more difficult to move. Overall, majority of TNCs are moving as footloose in the global economic, and this is support by Dicken (1998), he outlined that TNCs are becoming global corporations, stateless, placeless and locally embedded. Many authors suggest that the ideas of transnational manufacturing investments are footloose and not tied to particular locations and regions. For example, TNCs located in the Republic of Ireland also show signs of being highly footloose. Ireland is a country which their manufacturing industry is heavily dependent on foreign TNCs. The importance of TNCs for the Irish economy is now reflected in the fact that in the manufacturing sector, foreign plants accounted for 47 percent of employment, 77 percent of net output produced and 83 percent of total exports in Ireland in 1995 (Central Statistics Office, 1997). Ikeas Successful Footloose Manufacturing Network (Ferdowsi, 2009) With a network of 1300 suppliers in 53 countries, IKEA which is a Swedish furniture company with à ¢Ã¢â‚¬Å¡Ã‚ ¬14.8 billion sales in 2005 and growing at 15% annually and like to find the right manufacturer for its 9500 products. Ikea usually look for new suppliers with its own 46 trading offices in 32 countries. Major are in Europe, but IKEA want to add suppliers from other regions, especially Asia. In 2005, China, with 18% of all its purchases tops the list, followed by Poland (12%), Sweden (9%), Italy (7%), and Germany (6%). IKEAs suppliers are an integral part of this unique and intelligence system. IKEA design their products with standards modules and procures similar pieces used in different product from the same suppliers. It is a brilliant use of footloose manufacturing. IKEA simplifies what it needs from factories, hence has many potential bidders and gets competitive prices, and does not reveal design of its new products to its widespread and leak-prone supply network. Impact of TNCs to Move As Footloose Besides benefits to TNCs itself, they actually also bring benefits to the country that they operate other than home country. TNCs and the Foreign Direct Investment (FDI) bring in able to improve employment rate, increase productivity, enhance skills transfer and technology transfer, increase volume of exports and also contribute to the long term economic development of the developing countries. The impact for the TNCs itself, they can earn more profits, increasing market share, becoming market leader and so on. While for the local labor, it will create employment opportunities for them, improve their living standards, opportunities for them to learn new skills and knowledge. While for the host country, TNCs actually help to improve the economy conditions, reduce unemployment rate, enhance advancement of technology and attract FDI to invest in their country. Furthermore, TNCs also improve conditions of the private sectors in the countries where they operate, a process which is very important to overall economic growth and economic health. They also bring benefits to the government as they invest money into an economy where it can supplement or free-up government revenues and development assistance funds. Many of the Government tend to welcoming for the TNCs to set up new business of manufacturing factory in their country because they can create more employment opportunities, improve the economy conditions and so on. According to Christian Aid (2001), TNCs bring benefits to the economies of developing countries and improve poor peoples living standard, invest money to build up infrastructure and facilities, provide employment opportunities, their investments can aids in local businesses and also boost up the local economic activities. As a conclusion, TNCs move as footloose has brought a lot of advantages to the community. In this free trade century, many firms tend to expand further in order to gain more profits as well as looking for the opportunities to growth. Although footloose may not suitable to some of the industry, however TNCs tend to move forward and further hence they will try to reduce threats to restrict them to expand globally. In the future, there will be more competitive in the global economics due to the growth of TNCs. (2503 words)

Friday, January 17, 2020

Shareholders Activism

What is shareholder activism? In the last decade, and especially after the global financial crisis, shareholders of publicly listed companies have started to be more active and advance their views to the board of directors. It should be noted right from the beginning that the intensity of the shareholders activism is not correlated with the state of economy.Therefore, the management of a publicly traded company should not assume that in times of relatively strong economy shareholders will turn a blind eye to issues affecting them (Taylor Wessing LLP, 2012, p. 1). To better understand the concept of shareholder activism, a tentative definition is required. According to the European Corporate Governance Institute (ECGI), â€Å"shareholder activism is the way in which shareholders can assert their power as owners of the company to influence its behaviour† (ECGI, n.d. , para. 1).Shareholder activism has both proponents and opponents. Those sympathising the emancipation of the shar eholders argue that â€Å"when companies perform poorly, shareholders activists are said to play the role of fire brigades that bring about change and more quickly than would have been the case had the fire brigade been on strike† (ECGI, n. d, para. 3). On the other hand, opponents think of shareholder activism as â€Å"a euphemism for disruptive, uninformed, populist ranting† (ECGI, n.d. , para. 4).The rise of shareholder activism in Canada and abroad In the world of business the concept of shareholder activism has lost its novelty a long time ago. However, the last few years saw an increase in the level of this kind of activity. â€Å"Investors appear to be feeling increasingly empowered to intervene in the management of public companies† (Taylor Wessing LLP, 2012, p. 2). The reasons are multiple.Mediatized international scandals involving some of the biggest companies in the United States of America, such as Enron and Worldcom, have led to changes in the legi slation regarding the corporate governance and the directors’ independence. Moreover, the public access to information on unjustified executive compensation and bonuses, and the recent financial crisis have put the shareholders’ patience to test. Closer to home, some changes in the Canadian corporate law have encouraged shareholders to take action whenever they felt their interests were not properly considered by the management.In an interview for Calgary Herald, Noralee Bradley, a partner with Osler, Hoskin & Harcourt, points out some of the changes in the Canadian legislation: A request by five per cent of shareholders can now compel a company to call a shareholder meeting; proxies can now be solicited by an unhappy shareholder through informal public statements such as press releases, without issuing a formal dissident proxy circular; and, a dissident can now privately solicit proxies from up to 15 shareholders before going public with a proxy circular.  (as cited in Burton, 2012, para.7) Another reason for the rise of the shareholder activism in Canada identified by Bradley is the increase in size of pension funds and hedge funds. The size enables these funds to take a stand whenever the companies are underperforming, or they do not meet their targets (as cited in Burton, 2012, para. 8). In the United States of America the situation is almost similar.Some of the most important characteristics are: (1) â€Å"greater financial firepower [†¦] permitting them [the activists] to make larger and more investments† (Noked, 2013, para. 3); (2) the emergence of new activist funds started by individuals who worked for other similar funds; (3) the degree of sophistication has increased, meaning that activists are hiring financial and legal advisors, and they run more professional campaigns.Also, many of the activists have switched their platforms to seek long-term involvement with their target companies; (4) increased attention from the med ia, which is usually sympathetic with the activists and it is always a low cost way to pressure companies (Noked, 2013, para. 4 – 7). Forms of shareholder activism According to Admati and Pfleiderer (2006), shareholder activism can take any of several forms: proxy fights or battles, takeovers, strategic voting, or shareholders’ proposals (p. 1).Other forms of shareholder activism include private discussions or public communication with the board of directors and management (or negations), publicity or press campaigns, blogging or other electronic ways of outing the underperforming managers, talking with other shareholders, calling shareholder meetings, shareholder resolutions, litigations and settlements, whistle blowing, and in extreme cases â€Å"voting with ones feet† and â€Å"seeking to replace individual directors or the entire board† (ECGI, n. d. , para. 1).Many of the tactics employed by the activists do not need any further explanations, but some of them require special attention not only because they are more complicated and not so easy to understand by an untrained observer, but also because they are the best course of action. Proxy fights. â€Å"A proxy is a person to whom a principal with voting authority delegates his voting rights† (MIPR, n. d. , para. 1). A proxy fight usually involves a battle for other shareholder proxies and it is typically in opposition to management (MIRP, n. d., para. 3). According to Burton (2012) a proxy fight has the goal to â€Å"force change on an unwilling company† (para. 4). Shareholder resolutions. â€Å"Shareholders exercise most of their influence over how the corporation is run by passing resolutions at shareholders’ meetings. Decisions are made by ordinary, special or unanimous resolutions† (Industry Canada, 2011, para. 8). In Canada, ordinary resolutions may involve the election of directors or the appointment of auditors, and only a simple majority is r equired (Industry Canada, 2011, para.9). On the other hand, special resolutions must be approved by two thirds of the votes and usually involve fundamental changes, like selling all of the corporation’s assets, or amending the corporation’s name (Industry Canada, 2011, para. 10). Usually management will oppose many of the shareholder resolutions leading to a rather lengthy process in which the sponsoring shareholder and the management summarize their opinion and try to get to a common view (MIPR, n. d. , para. 5). Say-on-pay vote. In the UnitedStates of America, â€Å"the say-on-pay vote asks investors to vote on the compensation of the top executives of the company – the CEO, the Chief Financial Officer, and at least three other most highly compensated executives† (SEC, 2011, p. 1). â€Å"In Canada, say-on-pay began as an investor-led campaign that started in 2007, when the big five banks were asked if they would offer shareholders an annual advisory vo te on executive compensation† (Alberta Venture, 2012, para. 9). It is important to note that say-on-pay give investors a non-binding vote, which makes this vote simply an expression of support, or disapproval (McFarland, 2012, para.12). Voting with their feet. Another tactic employed by activists is to vote with their feet. This is an extreme situation in which the investor sells all the shares of the company and exists the corporation. Historically, this was the most common form of shareholder activism, until proxy battles became more common (Taylor Wessing, 2012, p. 2). Canada is ready for shareholder activism Shareholder activism is not something new in Canada, in fact it is slowly becoming business as usual.Agrium Inc. , Canadian Pacific Railway Ltd., SNC-Lavalin Group Inc. , Telus, and Rona have all been involved in cases of shareholder activism during 2012 and 2013 (Dmitrieva & Pasternak, 2013, para. 2). â€Å"There were 42 cases of shareholder activism among Canadian f irms last year, almost double the 22 a year earlier† (Dmitrieva & Pasternak, 2013, para. 4). Shareholder activism can take many forms, but proxy battles and say-on-pay could prove the most effective in the Canadian corporate world. The legislation has changed and has become more shareholder friendly.Proxy battles are more frequent in Canada and according to Jeffrey Gandz, a professor of strategic leadership at the Richard Ivey School of Business in London, Ontario, â€Å"If it’s happening more, it’s probably because it pays† (as cited in Dmitrieva & Pasternak, 2013, para. 7). Gandz’s statement is backed by facts that indicate an increase in the value of the shares issued by the companies involved in proxy battles. The same view is shared by Robert Staley, a partner at the Bennett Jones law firm in Toronto. â€Å"We’re going to see more shareholder-driven activism in Canada this year; this is a growing trend.This should increase the share pri ces of companies targeted† (as cited in Dmitrieva & Pasternak, 2013, para. 18). Indeed, each company that was targeted by activists recorded and increase in the share prices, from CP Railways Ltd. to Rona and Agrium Inc. These results should motivate shareholders to be more active and to consider proxy battles as a method of voicing their interests. However, proxy fights usually involve strong public attacks on both sides, and some shareholders may wish to keep a low profile. For this reason settlements might seem like a better alternative (Melnitzer, 2013, para. 13).Say-on-pay is another tactic that activists can engage and it is already being accepted by many publicly traded companies. Some of them are Potash Corp. , Manulife, Power Corp, and Bombardier. According to Cornell Wright of Torys LLP’s Toronto office, say-on-pay and majority voting â€Å"allow investors to express themselves to management on frequent basis. The prospect that investors might express their v iew by withholding votes from board members or voting against a company proposal on say-on-pay is in a sense a more nuanced, less costly and lower-risk threat than a proxy fight† (as cited in Melnitzer, 2013, para.20). Say-on-pay votes may not seem like a reliable weapon for Canadian activists, but it will slowly be accepted as a confidence vote for the directors’ compensation and decisions. In Canada, say-on-pay has the potential of increasing the directors’ accountability to the owners of the company. Also, this kind of vote can lead to a better cooperation between the boards and shareholders in order to design a compensation package that will motivate the executives to work harder and maximize the company’s value in the long-run.It is not a surprise to see an increase of say-on-pay votes in Canadian companies because investors are slowly becoming more vocal. It is also not surprising to see an increase in negative votes considering the financial uncerta inty in the business world. Shareholder Association for Research & Education (SHARE) concluded that in 2012 â€Å"4. 5 per cent of Canadian companies had scored less than 75-per-cent support for their pay votes this year, while no companies scored below that level in 2011† (McFarland, 2012, para.6). In the past few years say-on-pay votes in Canada have managed to change the composition of CEOs’ compensation packages to include more share units and stock options. Even though the real benefit is hard to understand very quickly, there is a reason why this tactic should have a big impact in Canada: â€Å"those equity elements more often include additional performance features, requiring a company to meet financial targets before they pay out† (McFarland, 2012, para. 16). ConclusionShareholder activism has become a hot topic in the business world especially after the financial crisis that affected the profits of many publicly traded companies. It is an activity that has both opponents and proponents. Shareholder activism is on one hand just another populist method of influencing the public, but on the other hand is probably the only way to save a company from an underperforming management. Activism has a lot of facets, from proxy battles to takeovers, strategic voting, or shareholder resolutions, from press campaigns and blogging to litigations and settlements, and â€Å"voting with ones feet†.Canada is not immune to these kinds of shareholder activism, but the ones that will really have an impact in the near future are the proxy battles and the say-on-pay votes. Both methods have yielded an increase in the value of the shares of the targeted company. According to Paul Gryglewicz, managing partner at Global Governance Advisors, â€Å"say on pay and shareholder activism are very real and very alive in Canada† (as cited in McFarland, 2012, para. 15).

Thursday, January 9, 2020

Bad Girls Women For Women - 1127 Words

Bad Girls: Women for Women On February 2nd of 2012 artist M.I.A released the music video for her song â€Å"Bad Girls†, the video shows just that, bad girls, who were doing the exact opposite of what their sexual discourse is defined as. The video takes place in a desolate middle-eastern town, it features one of a kind stunt driving as cars drift on two wheels while M.I.A and others casually sit on top of them. It features other amazing car stunts and M.I.A dancing alongside people armed with weapons, there are similar scenes throughout showing this controlled chaos. Though what truly separates this music video from the norm is that women are the ones doing the stunts and holding the guns, while the men are on the sidelines cheering on and dancing in the background. M.I.A and director Romain Gavras show a different reality and change the typical associations of sexuality and power that viewers expect from a music video. The writing of Hà ©là ¨n Cixous in her essay â€Å"The Laugh of the Medusa† relates directly to what M.I.A and Gavras set out to accomplish in their video. In the text Cixous talks emphatically about how women must be for women and place themselves into the masculine world with their own movement, not the ones predetermined by the dominant male cultural codes. 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Wednesday, January 1, 2020

Essay on Wealth

Essay on Wealth The concept of wealth can mean different things to different people. For some people, it is having a nice home to live in, a comfortable car to drive around town, a sufficient bank balance to meet all expenses, and more than enough money to see through life after retirement. For others, it is living in luxurious fashion in opulence and splendor with tons and tons of money at their disposal. Each person has their own specific idea of what wealth means. Their notion of wealth probably arises from their idea of what they would do if they had all the money in the world. Wealth is earned in many ways by different people. Some are blessed with wealth from the moment they are born. Their family could be rich and then they inherit the wealth without any toil of their own. Others work extremely hard to earn their living. They would either work on two or three jobs, or try to launch a profitable business. So, wealth can be gained in many different ways. However, wealth is not truly beneficial if the person earning it has no time to enjoy the benefits of it. Many people work so hard to earn a lot of money that they hardly have any time to spend it. Others have a lot of time on their hands with no money to spend too, but that is another story. Therefore, the best form of wealth is when people have the amount of money they want and have enough time to spend it. This is the kind of lifestyle that can really give meaning to the wealth that people have at their disposal.