LESSON 3: MARKET INTEGRATION

THE RISE OF THE GLOBAL

CORPORATION

BY:
VAILOCES
CASAGAN
RODRIGUEZ
ACABO
PATANGAN
GLOBAL CORPORATION
 also known as a global company, is coined from
the base term ‘global’, which means all around
the world
 To be a global company, you need to introduce
not only your products, but also your company to
people who live In another country.
THE HISTORIC RISE OF THE GLOBAL CORPORATION—THREE
PERIODS

1. In early historical periods(15th-16th century)

-> as both cities and countries extended their reach
beyond their own borders, this view holds, a form of
globalization was initiated which then followed
complex patterns of interactive engagements
organized through trade and directly influenced by
the emergent and subsequently dominant
technologies, especially in shipping and navigation
(Harvey, 1990).
2. 18TH TO 19TH CENTURY
The modern nation state system emerged in ways that
allowed invention and social organization to combine that
vastly increased world capital and the wealth of nation
states. Coupled with an extraordinary rise in global
population that attended the industrial revolution, the
societies that arose would invent new ways to organize the
world itself through colonialism and imperialism that
vastly attenuated their interactions between peoples, states
and regions such that a clearly differentiated era of global
interaction can be said to exist (Harvey, 1990).
3. 1945 -PRESENT
 As the world emerged from the vast destructions of
WWII, economic recovery and expansion were led
overwhelming by American corporations which for a
period from the end of the war until the re-entry of
Japanese and European corporations onto the global
scene essentially stood for what by then had come by
then to be viewed as multinational corporations
(MNCs) (Barnet and Muller, 1974). This period from
the end of WWII to the present can be viewed,
therefore, as a third and distinct period in the
transformation of the global corporation.
MULTINATIONAL CORPORATIONS (MNCS)
  a company that operates in its home country, as well as in other countries
around the world. It maintains a central office located in one country, which
coordinates the management of all other offices such as administrative branches
or factories.
 It isn’t enough to call a company that exports its products to more than one
country a multinational company. They need to maintain an operation in other
countries and must make a foreign direct investmentthere.
 EXAMPLE Ford Motor Company, commonly known as Ford, is an
American multinational automaker that has its main headquarters inDearborn,
Michigan Ford also owns BrazilianSUV manufacturer Troller, an 8% stake in 
Aston Martin of the United Kingdom and a 32% stake in Jiangling Motors.[5] It
also has joint-ventures in China (Changan Ford), Taiwan (Ford Lio Ho),
Thailand (AutoAlliance Thailand), Turkey (Ford Otosan), and Russia (Ford
Sollers)
HOW DO GLOBAL CORPORATIONS FUNCTION? WHAT CONSTITUTES A GLOBAL CORPORATION?

US corporations operating internationally had enormous advantages in the

immediate post-war period as they—virtually alone in the world—emerged
from the war with their productive, organization and distributional
capacities intact. What would take shape as the beginning of contemporary
globalization, however, dates from the economic recovery of capital
structures in Japan and Europe and the re-entry into global markets of their
national corporations. By 1974 Barnet and Muller in a path-breaking
volume could both define the MNC as a major economic global actor and
begin an effective description of how this particular corporate form was
coming to dominate various aspects of global production and exchange
(Barnet and Muller, 1974). A considerable amount of other scholarly work
documents various “waves” of global corporate development through the
subsequent six decades to the present.
The overall structure of this system would stay in place and continue
to develop throughout the 1970s and 1980’s—a period that stands
chronologically just prior to three fundamental innovations that have
substantially changed the character of the global corporation: the
advent and impact of digitalization and instantaneous global
communications;
1. the advent and impact of digitalization and instantaneous global
communications;
2. the structural transformation of global commerce from producer-
driven commodity chains to buyer-driven;
3. and the increasing role performed through the global system by
financial elements and the emergence of the global financial firm.
THE POST-WAR PERIOD CAN BE DELINEATED IN A
NUMBER OF WAYS. GERIFFE FOR EXAMPLE
EMPHASIZES THREE STRUCTURAL PERIODS:

 Investment-based globalization (1950-1970);

 Trade-based globalization (1970-1995);
 Digital globalization (1995 onwards.)
INVESTMENT-BASED GLOBALIZATION
The investment-based period was dominated by producer-
driven commodity or value chains, which in turn tended to
be dominated by firms characterized by large amounts of
concentrated capital focused on large-scale or capital-
intensive manufacturing or extractive industries. The
organization of the dominant global firms during this
period was powerfully influenced by the transformation
within national economies of the older manufacturing
companies wrought by what was viewed as the progressive
“de-industrialization” of these economies through wide-
scale off-shoring of labor applications and its related costs.
TRADE-BASED GLOBALIZATION
 Many corporate structures, especially those in the United States,
operating within the frame of the producer-driven commodity
chain had been organized by what came to be recognized as
“fordist” management principles. U.S. firms in particular had
sought to transport these models abroad to their international
manufacturing holdings. The emergence of Japan as a major
producer nation, especially of automobiles and consumer
electronics from the 1970’s on, brought onto the scene new
models of effective production focused especially on quality and
regimes of flexible production—a move that was echoed within
European firms rejoining the global commodity chains.
DIGITAL GLOBALIZATION
Digitalization has affected the entire structure of how
global corporations operate. Producer driven steams have
progressively integrated their corporate structures to reduce
the effects of time and distance, especially for services
performed within corporate structures such as design,
finance and accounting, advertising and brand
development, legal services, inventory control etc. These
extensive capabilities of control and management at a
distance blend many of the differentiated aspects of product
and service based firms. Digitalization is transforming the
classic value chain of manufacturing focused on innovation
in which:
 Product design and innovation is replaced with
driving innovation through digital product design
 Labor intense manufacturing is replaced by
digitizing the factory shop-floor
 Supply chain management is replaced by globalizing
through digital supply chain management
 Marketing sales and service is replaced by digital
customization. (Capgemini, 2012).
PART THREE: WHAT IS DIFFERENT ABOUT THIS PHASE OF GLOBAL CORPORATE
DEVELOPMENT?

The so-called “developing economies”, and especially

those of Brazil, India, China and South Africa —the so-
called BRICS economies,
--- have become the most dynamic sector of global
corporate growth, represented in part by their significant
FDI over the three decades.
 The number of global corporations from the emerging
market economies listed in the Fortune Global 500,
which ranks corporations by revenue, rose from 47 firms
in 2005 to 95 in 2010.
IN SUMMARY, GLOBAL CORPORATIONS WITHIN THE EMERGING
ECONOMIES APPEAR TO BE OF THREE GENERAL TYPES:

 Those that have arisen as a result of growing national

power of the host country, responding (as in China and
India) to the need to aggregate and deploy national
capital to provide the bases for economic development.
Whether initially capitalized with FDI or state funds,
such firms, such as many China energy and industrial
material firms, have increasingly turned to supplying
their own rapidly growing internal markets while
investing heavily in off-shore material resources (often
in Australia and Africa).
 A second type of global firm has focused on
replicating major consumer pathways in both
developed and developing markets. The Korean
automotive firm, Hyundai is a case in point. In
2011 it achieved a Fortune Global 500 rank of 55,
up from 78 in the previous year. With 80,000 core
employees, it produces to a global market with
significant market penetration on all continents.
 NEMs represent a third type in which working through contract and
other relationships with developed market firms has been the basis
for their rapid increase in size and influence, which in turn has
empowered the firms to establish other complex linkages beyond
core contract markets to build competitive advantage in both global
and domestic markets, usually by gaining access to and exploitation
of superior innovative technology. The relationship between China’s
Foxconn and Apple is a well-known case in point as the
combination of Apple’s own innovative technological capacities and
Foxconn’s abilities to adapt production changes relatively quickly
and with acknowledged high quality elevated Apple into the world’s
highest valued firm in 2012.