Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Santa Rosa Campus
City of Santa Rosa, Laguna

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Module 4 – Economic Relations and The Rise of the

Global Corporation

Learning Objective:

1. To define economic globalization, global corporation and Business Triad

2. To know what are the competitive strategies of global corporation.

3. To understand the different Preferential Trade Agreements Between Developing

Countries

Learning Outcome:
At the end of this module the student should be able to:
1. identify the competitive strategies of global corporations;
2. explain the relevance of changing regulatory environment to the structure and
operation of global corporations
3. To be to identify the major concerns of global managers in operating a global corporation

Overview.
In this lesson we can have a picture of globalization as a business initiative based on the
belief that the world is becoming more homogenous while the distinctions between national
markets are not only fading. Some products eventually dissappear because of severe
competition. Consequently, companies need to globalize their international strategy by
formulating it across markets to take advantage of underlying market, cost, environmental and,
competitive factors.
We need to understand that Economic globalization is a historical process, a result of
human innovation and technological progress. Unless a firm has made its decision to complete
in the global environment, it will subject itself to the pressures single-country firms normally
operate in a relatively homogenous market for their products and services. Consequently,
product design can be fairly standardized for each firm to achieve economies of scale and
deliver a product that appeal to its entire market.

Teacher: The class will start with an Opening Prayer, and will be followed with a Poll Question.
For their attendance sheet.

What is a Global Corporation

A global company is generally referred to as a multinational corporation (MNC). An MNC

is a company that operates in two or more countries, leveraging the global environment to
approach varying markets in attaining revenue generation. These international operations are
pursued as a result of the strategic potential provided by technological developments, making
new markets a more convenient and profitable pursuit both in sourcing production and pursuing
growth.

International operations are therefore a direct result of either achieving higher levels of
revenue or a lower cost structure within the operations or value-chain. MNC operations often
attain economies of scale, through mass producing in external markets at substantially cheaper
costs, or economies of scope, through horizontal expansion into new geographic markets. If
successful, these both result in positive effects on the income statement (either larger revenues
or stronger margins), but contain the innate risk in developing these new opportunities.

“As gross domestic product (GDP) growth migrates from mature economies, such as the US
and EU member states, to developing economies, such as China and India, it becomes highly
relevant to capture growth in higher growth markets. is a particularly strong visual
representation of the advantages a global corporation stands to capture, where the darker
green areas represent where the highest GDP growth potential resides. High growth in the
external environment is a strong opportunity for most incumbents in the market.”

Challenges

However, despite the general opportunities a global market provides, there are significant
challenges MNCs face in penetrating these markets. These challenges can loosely be defined
through four factors:

1. Public Relations: Public image and branding are critical components of most businesses.
Building this public relations potential in a new geographic region is an enormous
challenge, both in effectively localizing the message and in the capital expenditures
necessary to create momentum.

2. Ethics: Arguably the most substantial of the challenges faced by MNCs, ethics have
historically played a dramatic role in the success or failure of global players. For
example, Nike had its brand image hugely damaged through utilizing ‘sweat shops’ and
low wage workers in developing countries. Maintaining the highest ethical standards
while operating in developing countries is an important consideration for all MNCs.

3. Organizational Structure: Another significant hurdle is the ability to efficiently and

effectively incorporate new regions within the value chain and corporate structure.
International expansion requires enormous capital investments in many cases, along
with the development of a specific strategic business unit (SBU) in order to manage
these accounts and operations. Finding a way to capture value despite this fixed
organizational investment is an important initiative for global corporations.

4. Leadership: The final factor worth noting is attaining effective leaders with the
appropriate knowledge base to approach a given geographic market. There are
differences in strategies and approaches in every geographic location worldwide, and
attracting talented managers with high intercultural competence is a critical step in
developing an efficient global strategy.
Combining these four challenges for global corporations with the inherent opportunities
presented by a global economy, companies are encouraged to chase the opportunities while
carefully controlling the risks to capture the optimal amount of value. Through effectively
maintaining ethics and a strong public image, companies should create strategic business units
with strong international leadership in order to capture value in a constantly expanding global
market.
Ref: https://bit.ly/331bc7F

How is Triad Formed?

We have to understand that the United States, Japan and Western Europe account for
almost half of the world’s total consumption. All of them share in certain economic and
demographic conditions such as high GNP values. Therefore, we can say that a firm cannot
truly compete on a global scale if it is not present in this “triad.”
Competitive Strategies of Global Corporation
1. Cost Leadership
2. Differentiation
3. Focus
Globalization Drivers
1. Market Factors
2. Cost Factors
3. Environmental Factors
4. Competitive Factors

Global Corporation
A contemporary global corporation is also known as
1. Multi-national Corporation (MNC)
2. Transnational Corporation
3. International Company
4. Global Company

Readings:
A Research Report on entitled “How are Citizen’s Affected by Corruption?”, page 16-25, Jestor
Library ( https://bit.ly/39xb3tY)

Measurement:
1. A 20 point quiz thru google forms?
 Module 5 – The United Nations and
Contemporary Global Governance

Learning Objective:
1. To understand how the Bretton Wood system was formed
2. To discuss the role and function of United Nations in the World
3. To know what are the competitive strategies of global corporation.

Learning Outcome:
At the end of the topic, the student will be able to:
1. differentiate the two institutions created by the Bretton Woods system;
2. identify which countries benefited most from the Unites Nations; and
3. define Global governance.

Instructions: The faculty will check the status of connection at thirty (30) minutes before the
start of classes, followed by an opening prayer. Engagement will be done using a Poll question
thru google form. For example “1. Describe President Rodrigo Roa Duterte in one word which
will be answered in 5 minutes.”

The Bretton Woods System

The Bretton Woods system was created by world leaders after the First and Second World
War which left ruined and devastated economies. They believed that one way to ensure a
longer-lasting global peace is to set up a network of global financial institutions that would
promote economic interdependence and prosperity. In 1944. The Bretton Woods System was
inaugurated during the United Nations Monetary and Financial Conference to prevent the
catastrophes of the early decades of the century from reoccurring and affecting international
ties.

The Bretton Woods system was largely influenced by the ideas of the British economist
John Maynard Keynes (founder of Macroeconomics) who believed that economic crisis occur
when money is not being spent and thereby, not moving. He emphasized that the government
has to reinvigorate markets with infusions of capital. This active role of governments is
managing spending served as the anchor for what would be called a system of “Global
Keynesianism”. For this reason, the delegates agreed to create two financial institutions
namely- The International Bank for Reconstruction and Development (IBRD or the World Bank)
and International Monetary Fund (IMF). To this day, both institutions remain key players in
economic globalization. (page 16, The Contemporary World by Claudio & Abinales, 2018; Ref:
You Tube Video https://youtu.be/-6bVeDab6UA).

Questions to Answer:
1. What are the two financial institutions created under the Bretton Woods System?
2. How did the two institutions reinvigorated the economically devastated and
poor countries? ( Click video: https://bit.ly/30MlMwF)
3. Who is John Maynard Keynes? Kindly explain Global Keynesianism?

The United Nations

 The United Nations is an international organization founded in 1945.  It is currently made
up of 193 Member States.  The mission and work of the United Nations are guided by the
purposes and principles contained in its founding Charter. Due to the powers vested in
its Charter and its unique international character, the United Nations can take action on the
issues confronting humanity in the 21st century, such as peace and security, climate change,
sustainable development, human rights, disarmament, terrorism, humanitarian and health
emergencies, gender equality, governance, food production, and more.

The UN also provides a forum for its members to

express their views in the General Assembly, the
Security Council, the Economic and Social Council,
and other bodies and committees. By enabling
dialogue between its members, and by hosting
negotiations, the Organization has become a
mechanism for governments to find areas of
agreement and solve problems together. The UN's
Chief Administrative Officer is the Secretary-General.
2020 marks the 75th anniversary of the United
Nations. (Ref: https://bit.ly/30MlMwF)

The UN is divided into six active organs. They are

1. The General Assembly (GA) it is UN’s main deliberative policymaking and representative
organ. Decisions on important questions such as those on peace and security, admission
of new member, and budgetary matters, require a two-thirds majority of the General
Assembly. Decisions on other questions are done by simple majority. Annually. The
General Assembly elects a GA President to serve a one year term of office. Currently all
member states (currently at 193) have seats in GA. The Philippines played a prominent role
in the GA’s early years when Filipino diplomat Carlos P. Romulo was elected GA president
from 1949-1950. (Ref: page 42, The Contemporary World by Claudio and Abinales, 2018)

2. The Security Council (SC) – under the UN Charter, it’s primary responsibility is the
maintenance of international peace and security. It has 15 Members (5 permanent and 10
non-permanent members) with one voting right. Under this Charter, All Member States are
obligated to comply with Council decisions. The Security Council takes the lead in
determining the existence of a threat to the peace or act of aggression. It calls upon the
parties to a dispute to settle it by peaceful means and recommends methods of adjustment
or term of settlement. In some cases, the Security Council can resort to imposing
sanctions or even authorize the use of force to maintain or restore international peace and
security. (ref: https://www.un.org/securitycouncil)

3. The Trusteesship Council – it was established in 1945 by the UN Charter, under Chapter
XIII, to provide international supervision for 11 Trust Territories that had been placed under
the administration of Seven Member States, and ensure that adequate steps were taken
to prepare the Territories for self-government and independence.

4. The Economic and Social Council (ECOSOC) – it  is the principal body for coordination,
policy review, policy dialogue and recommendations on economic, social and environmental
issues, as well as implementation of internationally agreed development goals. It serves as
 the central mechanism for activities of the UN system and its specialized agencies in the
economic, social and environmental fields, supervising subsidiary and expert bodies.  It
has 54 Members, elected by the General Assembly for overlapping three-year terms. It is
the United Nations’ central platform for reflection, debate, and innovative thinking
on sustainable development.

5. The International Court of Justice - is the principal judicial organ of the United Nations. Its
seat is at the Peace Palace in the Hague (Netherlands). It is the only one of the six principal
organs of the United Nations not located in New York (United States of America). The
Court’s role is to settle, in accordance with international law, legal disputes submitted to it by
States and to give advisory opinions on legal questions referred to it by authorized United
Nations organs and specialized agencies.

6. The UN Secretariat - The Secretariat comprises the Secretary-General and tens of thousands

of international UN staff members who carry out the day-to-day work of the UN as mandated by
the General Assembly and the Organization's other principal organs.  The Secretary-General
is chief administrative officer of the Organization, appointed by the General Assembly on the
recommendation of the Security Council for a five-year, renewable term. UN staff members are
recruited internationally and locally, and work in duty stations and on peacekeeping missions all
around the world.  But serving the cause of peace in a violent world is a dangerous occupation.
Since the founding of the United Nations, hundreds of brave men and women  have given their
lives in its service.
(Ref: https://bit.ly/30MlMwF)

What is Global Governance

Global governance brings together diverse actors to coordinate collective action at the
level of the planet. The goal of global governance, roughly defined, is to provide global public
goods, particularly peace and security, justice and mediation systems for conflict, functioning
markets and unified standards for trade and industry. One crucial global public good is
catastrophic risk management – putting appropriate mechanisms in place to maximally reduce
the likelihood and impact of any event that could cause the death of 1 billion people across the
planet, or damage of equivalent magnitude. See here for a list of global catastrophic risks.
The leading institution in charge of global governance today is the United Nations.
Pls click https://bit.ly/3jGoVqh

Measurement:

1. At the end of this lesson a ten (10) point quiz will be given to the students before the
class ends.

References:

https://bit.ly/30MlMwF
https://bit.ly/30MlMwF)
https://bit.ly/3jGoVqh