Reference no: EM131497872

Question: OUR CHANGING WORLD: GLOBALIZATION OF THE WORLD'S BUSINESS15 Of the 100 largest economies in the world, 53 percent are multinational corporations, the other 43 percent are nations. The world's largest company in terms of sales is Exxon Mobil Corp., and its annual revenues exceed the gross domestic product of 200 of the world's 220 nations. Wal-Mart is the world's largest private employer, with 1.5 million employees in 3,500 stores around the world. It is also the world's largest retailer and plans to open nearly one store a day for the next year. Much has been reported in the general media and especially in business and economic publications about globalization and the effect it is having on businesses, competition, governments, workers, societies, and cultures. There are several books devoted to the subject, one of which is Global, Inc.

The authors describe the book as "An Atlas of the Multinational Corporation" and an effort "to conceptualize and to see globalization in a historical perspective." For businesses, governments, and employees, this book and material like it are helpful in obtaining data that show the challenges and potentials of globalization. Getting as much data as possible about globalization can help a business deal with the changes that will undoubtedly result. WHY GLOBALIZATION NOW? Globalization is not a new concept on the landscape. World trade was going on even before the first caravans brought silk from China to Europe, and in the sixteenth century European explorers set out to find a better route to Asia for the profits to be made in the spice trade. Globalization lumbered along for 500 years or so until the last 30 years, when it really picked up speed. Globalization has experienced exponential growth due in part to phenomenal improvements in communications and transportation, more efficient global banking systems, surpluses in capital in the United States, Japan, and Europe, and worldwide lowering of trade barriers.

FACTS AND FIGURES As evidence of the rapid changes in globalization, there were about 2,400 multinational companies (MNCs) in 1869. By 1969, 100 years later, the number had tripled to 7,258. Approximately 30 years later the number of multinationals had grown by a factor of nearly nine to above 63,000. Today the 1,000 largest account for 80 percent of the world's industrial production. The nature of the MNC has also changed. In 1962, almost 60 percent of the 500 largest corporations were based in the United States. Today, only 37 percent of MNCs are U.S.-based. Japan accounts for about 21 percent, and Europe has 25 percent. Perhaps more important, MNCs are emerging in developing countries, all reaching out for a piece of the pie. MNCs help create markets by employing workers worldwide; 90 million people in all countries and 20 million in developing countries are employed by MNCs. They pay more than $1.5 trillion in wages and more than $1.2 trillion in taxes to governments.

1. Why is it important for a business to understand globalization?

2. Do you think globalization is something that a business of any size can ignore? Support your position.