Globalization and Risks for Private Sector Businesses 1) I argue in favor of the motion that increasing globalization will make it less likely for another Bhopal type of incident. To provide a context for the incident, the Bhopal plant of the then multinational giant UCC (Union Carbide Corporation) – now taken over by Dow – developed malfunction in one of its towers that lead to a leak of the deadly MIC (Methyl Iso Cyanide) and this resulted in the deaths of thousands of people. In retrospect, it seems that inadequate safety measures and lack of proper maintenance were the reasons for the disaster.
It is my opinion that with the advent of globalization, there would be a movement towards implementing safety norms in the countries that the transnational’s are doing business at par with the standards in the Western countries. This is one positive spin off of Globalization where the TNC’s usually run their plants much the same way that they do back home. A case in point are the manufacturing plants in China of the TNC’s where companies like GM have chosen to replicate the same structure of the plants that they have back home and thrown in additional buildings like a Dispensary (as required by Chinese law).
Similarly, TNC’s operating in India has their own safety norms that are global in nature and also conform to the relevant local laws. The OECD Guidelines for Multinationals explicitly state that “businesses need to be proactive in complying with the relevant laws and regulations concerning the environment”. The OECD has also laid down clear cut guidelines to follow and non-compliance with this is taken seriously.
This is definitely a pointer to the fact that globalization imposes its own set of rules and regulations on TNC’s with regards to compliance with regulatory mechanisms. The very fact that TNC’s are now in the “global eye” means that they have certain obligations and standards to follow in their operations across the globe. The accountability and responsibility bar is that much higher when the activities of the TNC’s are being monitored by global watchdogs. In conclusion, it is obvious that increasing globalization would reduce if not eliminate instances like the Bhopal incident because of the globalized nature of operations instead of a narrow local focus that is detrimental.
2) With Globalization come several risks for private sector businesses. The single most important danger for the private sector businesses is the effect of imitation/piracy/ counterfeiting of their products. This phenomenon of copying the products of the TNC’s in the countries in which they operate leads to decrease in revenues for the TNC’s. This has become particularly worrisome in countries like China that are awash with counterfeit goods. This is a direct disadvantage of globalization.
Piracy is said to cost businesses nearly 30% of their revenues in the Asian region and hence this is indeed a “danger” to private sector businesses operating in global markets and a threat that has to be taken seriously. The added danger is the fact of local clones eating into the market share of the TNC’s. This is a menace that globalized private sector businesses have to live with and hence they need to take steps to address the same. As Thomas Friedman pointed out, “Glocalization” or the ability to localize the products by the TNC’s to adapt home market conditions may well be the answer to ensure that local imitators are taken care of.
This has to be done without comprising on quality. Further, the issue of piracy and counterfeiting of goods has to be solved through stricter enforcement of laws and regulations related to tackling piracy and counterfeiting of goods. Only then the “danger” to private sector businesses as a result of global operations would be minimized. Sources Friedman, Thomas. 2005, The World is Flat: A brief history of the Globalised World in the 21st Century, Allen Lane, and London. pp 325-329.