Globalization: WHO PAYS THE BILL ?

Globalization of business is seen by many as creating wealth that benefits nations and individuals worldwide. Peter Wocke, of the World Bank, credits globalization with providing essential ingredients os success to entrepreneurs and corporations in developing regions. A multinational firm brings a reliable electricity source to local farmers, manufacturers, and businesses by building a hydroelectric dam in Uganda. A banana grower in Ecuador expands his agribusiness into Russia and China, allowing him to channel profits to protect a local tropical rain forest. World Bank loans support a network of entrepreneurs in South Africa and upgrade bank services in Latin America.

However, entry into the world economy also causes its share of problems. Critics of globalization believe that international business mainly increases the wealth of corporations and investors at the expense of the poor. They say that it supports dictators, fails to relieve the massive debts of developing countries, and spoils the environment. There are growing protests over labor exploitation and the export of jobs, and questions have been raised about the value and morality of the trade precepts guiding the world. In what seems quickly have become a tradition, opponents of globalization regularly disrupt meetings of the World Trade Organization. Protestors, police, and policy makers also encounter ongoing clashes at meetings of the IMF.

Proponents of globalization believe it is simplistic to blame globalization for worldwide poverty. The causes of poverty are numerous and complex, including war, diseas, corruption, illiteracy, and lawlessness. However, as a result of protests, many international firms and organizations have begun to revise some of their practices, suggesting that a middle ground be found.

In 2003, the IMF released a report that stated that countries that follow IMF suggestions often suffer a “collapse in growth rates and significant crises” and admitted it was considering changes in its practices. Since the protests begun the World Bank has also made changes to the way it operates by shifting its focus away from government loans to microcredit schemes, and incresing the input from locals in countries it is trying to help. As the worldwide process of adjustment to globalization continues, the negotiations between those who benefit it and those who lose out will continue.

SHOULD THE IMF COMPENSATE THE VICTIMS OF ITS PAST MISTAKES ? HOW ABOUT A TURKISH, ARGENTINIAN OR RUSSIAN PERSPECTIVE ?

Mexico and the United States: WILL NAFTA CHANGE ?

 Under NAFTA, all tariffs between the U.S. and Mexico are scheduled to disappear completely by 2008. Since the process is gradual, every year more Mexican products have been losing their protective tariffs and their market share to cheaper American goods. Mexico’s farming and agriculture contribute only 4 percent to the total ecenomy, but nearly one quarter of the mexican workforce lives off the land. Decreasing agricultural tariffs affects a much greater portion of the population than the same process in the United States, where only 2,5 percent of the population is engaged in farming.

There are severe difficulties due to farm subsidies. Farmers in the U.S. are subsidized, on average, about $40 per acre, while farmers in Mexico receive about half that for the same amount of land. Making this disparity even worse is the fact that farms in Mexico are far smaller, averaging just 13 acres each,  a result of land reforms set in place after Mexican revolution. Government official in Sinaloa,  a rural state in northwest Mexico, claim that about 15 percent of the farm subsidies are embezzled by corrupt bureaucrats and never reach the farmers. Farmers in Mexico also face diesel prices that are 40 percent higher than those in the U.S., while electricity and credit are one third more expensive. These differences exist because many industries in the Mexican ecenomy, particularly power and fuel, are public and private monopolies protected by Mexican Constitution. These monopolies face no competition and so have no incentive to add infrastructure, improve service, or lower costs. Yields in Sinaloa average 8.5 tons of corn per hectare, nearly the same as in the United States, further evidence that the problem is not efficiency but rather the high cost of farming in Mexico. The Mexican farming industry is facing world competition when selling its products but must accept local cost conditions for their production.

Mexico has made significant export gains in labor -intensive crops like cucumbers and tomatoes, while U.S. producers with  more capital – intensive farms increased exports of rice, cattle, dairy products, and apples nearly 15 percent during the same period. The Mexican government has been using antidumping duties and sanitary restrictions to bar the entry of U.S. agricultural products into its markets. However, as more and more tariffs are being lifted, Mexican politicians are calling for the delay of tariff reduction and in some cases the renegotiation of NAFTA.

Experts claim that the tariff reductions would increase unemployment in the countryside, adding pressure on the border as more farmers would try to enter the United States illegally. WHAT DO YOU THINK ?

Mexican trucks still are not allowed into the U.S. beyond 25 miles, even though NAFTA provided for freedom of transport. EXPLORE THE ARGUMENTS ON BOTH SIDES AND LET US KNOW YOUR OPINION.

Low-Cost Labor across Space and Time

Global corporations have long enjoyed the benefits of low-cost labor by manufacturing offshore. Now, a burgeoning export trade in business support and information technology services – sometimes referred to as India, which offers an educated English speaking workforce at a fraction of first-world wages. NASSCOM, India’s assocciation of IT companies, predicts income of $17 billion by 2008 from the export of skilled labor. Aided by technological advances that provide seamless real-time connections with clients, service providers promise fast turn-around as well as low cost. GE Capital Services employs more than 5,000 people at its international call center, while companies such as American Express and Swissair save between 40 and 50 percent by shipping data processing work electronically to India. Concesco plans to shift 2,000 white-collar jobs to India, a sevings of $30 million a year.

Does marketing create peace

One of the biggest surprises of the postwar era has been that historic enemies, such as Japan and the United States, or France and Germany, have not had the remotest threat of war since 1945. Why should they? Anything Japan has that we want we can buy, and on very easy credit terms, so why fight for it? Similarly, why shoul the Japanese fight the United States and lose all those profitable markets? France and Germany, liinked intimately through marketing and the European Union, are now each other’s largest trading partners. Closed countries build huge armies and waste money on guns and troops; open countries spend their money on new machines and tools to crank out Barbie dolls and consumer electronics. Their bright young people figure out how to run the machines, not how to fire the latest missile. For some reason, they not only get rich fast but also lose interest in military adventures. Japan,  that peculiar superpower without superguns, confounds everyone simply because no one has ever seen a major world power that got that way by selling you death,  not shooting you to death. In short,  if you do a great deal of trade with someone, why to fight? The logical answer -you don’t-is perhaps the best news mankind has had in millenia.

The Era of Massive Choices – What to choose and how?

Just two days ago a friend of mine tried to get a new digital calculator for her engineering class. She picked her laptop and started looking for what she wanted. At first it seemed very simple process like any other purchases. Once she clicked on “calculators” icon on one of the online shopping websites, there were 3125 calculators in various categories with different specialty. Then she narrowed her choice to “scientific” calculators but still she had 512 of them in 6 categories from variety of brands. In a meantime she found herself lost in the long array of calculators and spent almost more than 3 hours just on deciding which one to choose while changing her mind several times.  

   I guess she is not the only one spending long hours or days on deciding what to buy in the magic world of online shopping. To many people once the array of the choices extends and grows longer in the web, it becomes much more time consuming to decide between millions of options compared to conventional ways of purchasing.  

   The best thing about the web is that it provides a chance to the customer to find the appropriate product which fits his/her desire and needs most.  The long tail gives an opportunity to eliminate choices to the things those are special to an individual’s wish. The type of the wish doesn’t matter, there are plenty of options each targets particular group or individual.   

  The long tails such as Amazon, eBay, iTunes, Google are few examples of web dinosaurs each creating the new era of massive choices and niches while the length of the tail grows day by day. In these long tails individuals are not just consumers or readers they are also becoming marketers by doing blogs, launching web portals, participating to forums, selling goods. There are significant amount of people who are not following popular things anymore, instead each person goes after his/her own way.

 This new era of massive choices and niches forces marketers to develop all the marketing strategies considering the customer in the center of whole marketing process. Now it is really challenging to reach out and catch potential customers while the habits of target masses are changing rapidly.

Welcome

Dear reader – thank you for coming to Michael C’s Marketing Globe. I hope that you will get just as much out of this blog as I will, by discussing international business and marketing issues. A few decades ago the entire topic was the purview of a few highly specialized specialists – but nowadays the understanding of international issues has broadened enourmously. It had to, since we are all so much more affected by these issues. Just consider that trade used to comprise maybe 10 percent of an economy, now, for many countries the portion is over 50 percent. Even the USA, which has consistently underparticipated in international business now has more than 30 percent of its gross domestic product linked to things international. And we notice it every day, (or at least we should) when we hear about problems with the safety of imports, opportunities to save money by purchasing low cost products,  higher global energy prices, or simply looking at the changing cost of taking a vacation abroad. So there we are, with a blog that is designed to go way beyond the typical watching things happen or , eventually, wondering what happend. Rather, our discussions should help us understand what happens, and, eventually even allow us to make things happen.
So join the group, give us your thoughts, ideas, reactions, share your insights and let us be the one blog to which people rush in search of and with information on the opportunities, challenges and changes in international business and marketing. It can be done!

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