I chose option G
Running Head: ANALYTICAL ESSAY: GLOBALIZATION AND TRADE 1 ANALYTICAL ESSAY: GLOBALIZATION AND TRADE 9 Analytical Essay: Globalization and Trade Introduction Multinational Corporations (MNC) are often of benefit in countries within the economic brackets of developing countries, Upper-Middle Income and Lower-Middle Income countries, basically because they provide and ensure availability of the necessary support and resources for nationwide socio-economic development. It is a fact that these corporations may, however, exert subtle or overt forms of exploitation upon their host countries. This can be done through the introduction of relaxed codes of ethical standards that exploit the social, economic and development needs of these countries. The investments of these Multinational Corporations within their host countries is significant towards their economic growth and development, to the extent that host governments offer incentives such as tax exemptions and subsidies in order to attract more investments. Role of IBM in the Global Economy The role of Multinational Corporations lies at the intersection of three significant business and development intersections: Corporate Social Responsibility (CSR), sustainable business and Public-Private Partnerships. IBM is an American technology and innovation company in the global economy, with its headquarters in New York. It is considered a giant multinational country given its global reach of 170 countries with a tune of an approximate 370,000 employees. IBM plays a crucial role in the global economy because its operations carry through into the cut-throat fields of business and technology. The solutions provided by the company, such as cloud-based solutions and cognitive computing services have had a significant impact on how the world works. IBM operates on a multinational model with their IBM branches worldwide having their own departments and operations such as delivery, information technology, local manufacturing, financial systems as well as legal departments. IBM has been acclaimed as the world’s leader in Artificial Intelligence (AI) enterprises, as projected by its leading position within the market share of Artificial Intelligence. IBM also enables clients to share data, which is assured of security and privacy as the company runs the world’s greatest cybersecurity infrastructure. The information technology services that the company provides are projected towards enabling businesses to have better outcomes and for the shareholders and managers to make better decisions that not only reap massive profits, but also extend these benefits to their host countries. With the acquisition of Red Hat, the leading global open source provider, IBM targeted to become the world’s leading hybrid cloud provider, a platform that would enable its clients to access the entire business value of the cloud. IBM, in the global market, drives socio-economic development, especially through the influx of Foreign Direct Investments (FDI). Investments are often projected towards new markets as well as revenue growth in its host countries. IBM India IBM India was founded in 1997, and is a private limited company that provides information technology (IT) services. Such services are inclusive of data storage, enterprise applications, training and support, networks and business/technical consulting. While located in India, the company has a worldwide client reach. The Indian market under IBM is subject to the adoption of newer technologies, examples being blockchain and Al. IBM analyzes new technologies via three facets: purpose (the technologies must adhere and make better the goal and vision of IBM), ownership (the data is granted to belong to the owner) and explicability (the new technologies and insights must be free of bias as well as explainable) (Rajaraman, 2015). IBM registers India as a talent hub for the company, even among the corporation’s global reach. However, IBM outlines the lack of business consistency in India basically because of two main reasons: in India, it takes a long time for things to get done, and positions are not consistent, both reasons being detrimental to the smooth operation of IBM in India. In terms of data protection polices in India, IBM deems the country to be at crossroads. According to Rajaraman (2015), the employment of positive policies will push India forward and enable it to play a crucial role within the global economy. Many businesses depend on these data protection services, and it can only be expected of the country to make the right and strategic decisions when it comes to such policies. When it comes to data regulation, IBM proposes the use of precision regulations. The result of data protection policies may very well destroy the digital economy in India, while the original intent was to cater to issues of consumer privacy. This calls for liabilities to be placed against illegal businesses and illegal information. Details about consumer data should be made clear in terms of ownership, the content of the data and whether it can be deleted. The Pathological Pursuit of Profit and Power Bakan, in his book The Corporation: The Pathological Pursuit of Profit and Power, posits that the aim of most corporations is to make profits, often at the pressure of stakeholders and at the expense of their host economies. Bakan addresses these corporations as economic and legal institutions that can set out to pursue their economic self-interests without consideration of the harmful consequences that will be reaped by their host countries. This self-interest may prove detrimental to the society, individuals and even the stakeholders themselves because the interests of most multinationals are often not aligned with the interests of their host countries, and as such may actually inhibit their sustainable economic growth and development (Bakan, 2012). Multinationals exploit their host countries by exporting their profits back to their home country, often after having expended heavy charges in the provision of services within the host country. This foreign exchange outflow moves makes it almost impossible for the host countries to gain any financial benefits from these multinationals. In a bid to evade heavy tax liabilities, some multinationals engage in transfer pricing. Most companies have tainted the idea of Corporate Social Responsibility, and use it as a token gesture, masking the social, economic as well as human exploitation of most multinationals. The governments of host countries have also been instrumental towards the exploitation of their economies by multinational corporations. This is because these governments hand over most of their control to multinationals through the relaxation of legal constraints such as deregulation and privatization. As such, multinationals gain even greater authority within the society and the economy. Cost-Benefit Analysis using Evaluation Criteria Cost-benefit Analysis (CBA) is a systematic and mathematical technique that is used to compare the costs to the benefits of a strategic business action. The importance of CBA is to verify the worth of an investment or a project by ensuring that the benefits are more than the costs, by comparing the benefit ratios to the cost ratios. While making Cost-benefit analysis, it is important to engage, not only the financial and tangible end of the business, but the intangible aspects as well, such as customer and employee satisfaction, the environment and safety. This is because benefits can also be integrated as intangible assets. These benefits as well as costs have to be analysed even with reference to indirect and long-term effects. CBA is an enabler of financial decisions by multinationals such as IBM in India, its host country. CBA technique is best used on projects that involve the use of assets, policy development, capital expenditure and the setting of standards. One of the policy influences for which India could cite exploitation by use of CBA is that most IT companies in India have influenced the stringent American immigration laws. Cost-benefit Analysis is computed by first listing the general descriptions of the action to be taken, given that it is compared under alternative scenarios. The costs and benefits are then identified. Costs are inclusive of principal costs, annual costs, personnel costs and depreciation. The benefits are both monetary and non-monetary, such as increased revenue and production, organizational efficiency, customer and employee satisfaction and cost control. Image derived from: https://www.google.com/imgres The cost-benefit ratio is derived within the stipulated time period, and the different alternatives considered are compared with specific reference to sensitivity to any changes in costs or benefits. The Present Value of Money (PVM) is calculated for future expenses (Nayar & Kumar, 2018). Company stakeholders are the main users of the Cost-benefit Analysis and they use the analysis to reveal the number of ‘Y’ dollars that would be saved with every single dollar hat would be spent on ‘X’. Implementation of any project or program under consideration as a profit initiative would then be given a go ahead, where the benefits/cost ratio is determined to be greater than 1. This ratio proves the feasibility of the ratio. This would be useful for the company when choosing the best solution to the technology services that it offers, offering the greatest return on investment. Image derived from: https://www.economicsdiscussion.net However, concerns have been raised about the efficiency of CBA due to its sometimes misleading tendencies given the manipulation of costs with the aim to produce higher ratios. The conclusions drawn from the cost benefit analysis have proved to only be as good and as effective as the data used. It is thus important to engage strategic evaluation criteria. Image derived from: https://www.google.com Conclusion In conclusion, globalization demands corporations to engage in new and creative processes that drive economic as well as human development towards stability and sustainability without exploiting the needs of these host countries. In matters of the global economy and how multinationals can drive their host countries towards socio-economic development and sustainability, the focus should be on agendas to drive the host countries towards these positive goals by understanding the needs of those clients. Bakan proposes that the failings of multinationals, as driven by their profit margins, can be fixed through the execution of reforms that span from democratic control to legal regulations (Bakan, 2012). References Bakan, J. (2012). The Corporation: The Pathological Pursuit of Profit and Power. Hachette UK. Nayar, K. B., & Kumar, V. (2018). Cost benefit analysis of cloud computing in Education. International Journal of Business Information Systems Rajaraman, V. (2015). History of Computing in India: 1955-2010. IEEE Annals of the History of Computing Name: ...................................................... Year 12 QCAA ECONOMICS