a)Multinational companies are business organizations that operate in multiple nations. Coffee businesses are described as multinational companies because the countries that produce the raw ingredients, usually developing countries, often sell those goods to be produced and sold to factories and shops in mostly developed countries.
b)In fact, the top 10 coffee producers were in 2007: Brazil, Vietnam, Columbia, Indonesia, India, Ethiopia, Mexico, Guatemala, Honduras, and Cote d'Ivoire. All of these countries are developing countries. In contrast, the top coffee importers were: Japan, Italy, France, Spain, USA, Britian, Netherlands, and Germany (over 70% of imports). These are all developed countries. Right away you can see that the coffee business must work in several countries in order to make a profit. The companies must produce in a developing country and sell in a developed country. This process is mainly in order to make a profit. The company can get cheap workers and land (often leading to unfair conditions and exploitation of workers) in developing countries where there is land and less money. Then they can sell the coffee to the more wealthy populous in developed countries where coffee has become a necessity of daily life. This situation causes a 26% profit margin for companies like Nestle and the only people who aren't happy with the situation are the farmers that are getting paid 1/190 of the price. (based on Ugandan pounds in April 2004).
c)The increase in globalisation of this market is the fact that societies in developed countries have begun to rely on an item that used to be considered a luxury - coffee. Now, because of this, profit-seeking companies have begun to use to their benefit the fact that countries with ideal growing conditions for coffee beans, like those in South America, have a suffering economy and therefore are willing to mass produce for a much lower price. The governments most likely also reduce taxes due to the fact that the business from coffee companies has boosted their economy. Take Vietnam for instance, because of the coffee production, it's economic growth was 7% in 2000. When prices lower though, the economy will collapse. The coffee companies hold a lot of power over the countries they do business in, especially those that rely on the profits from their business. That puts those companies to an advantage and that encourages globalization. Not to mention, those in developed countries are willing to buy coffee which would normally be too expensive to be a daily drink in most developing countries. Therefore, they can get a bigger profit from the customers in those countries. It follows the business idea of produce cheap, sell for more.
d)Globalization has caused many changes in the coffee businesses. First of all, there has been a monopolization of large companies over the coffee production business. The main five are Kraft, Nestle, Procter & Gamble, Sara Lee and Tchibo. Nestle itself has over 57% of the global share on instant coffee. The problems about this are the fact that smaller companies have no chance of starting because there is little room for competition. In fact, there also is an inequality of power. Those companies completely control the global price of coffee and therefore can control the wages for 25 million coffee farmers worldwide. This inequality of power is the main factor caused by globalization. This is causing a breach in human rights and is forcing farmers to mass produce products that can only be sold to major companies and not used for themselves, as well as settle for low prices that the companies dictates because they have no better options.
e)The country only recieves wealth from the taxes and money of the companies but because most of the farmers are producing cash crops, there is not enough goods to sell as foodstuff, and therefore those countries continue to struggle and the people living there are in an endless cycle where all they can do is comply in order to survive. People in the developed countries are buying this coffee (in most cases without knowledge of the suffering in 3rd World Countries) as a daily necessity which only makes things worse because in order to keep up with demand, supply must also raise. And because so many countries are involved in this process, the numbers of supply and demand are huge. This just makes the issue more pronounced and contributes to globalization.
Mar 6, 2010
Jan 26, 2010
Invasion of the MNC's!
MNCs are multinational companies. This means that they are a business organization that operates in multiple nations.
Holding Companies are businesses that own controlling interest in other diverse companies.
They are alike because they both are companies that control various markets, but they are different because the holding company owns other companies, while the MNC owns different offices in many different countries. That means that while one deals with other companies, another expands it's company into different countries to grow as a company rather than as an empire.
Coca Cola has had a precarious path. The company was created by Dr. John Pemberton, who invented the syrup as a pharmacist. Then it was combined with carbonated water and made into a drink. After marketing the product as Coca Cola, it slowly progressed to popular drink, although never became truly famous until after Dr. Pemberton died. After giving the remaining shares to Asa Candler, he managed to boost sales ten fold and improve the company's publicity. As the empire continued to grow, it set up shop in nearly every state of America. Bottling coca cola was a new idea that helped increase sales. In 1919, Coca Cola was bought by Ernest Woodruff. He boosted the idea of a 'quality drink' to consumers. Huge amounts of marketing went underway as well. Several containers and devices were produced by the company in order to increase sales, such as drink coolers. The revolution of publicity was when Coca Cola was sold to spectators at the Olympic Games in 1928. Even during the wars, Coca Cola used the propaganda to publicize it's products. This made Coca Cola become more popular world wide. Through the years, several advertising campaigns and slogans were created to keep Coca Cola with the times. Over all this time, Coca Cola was able to expand into the global empire it is today due to hard work, perseverance and lots of luck.
Coca Cola's core business is selling soft drinks across the world, in a variety of flavors, types and packaging.
They have not quite diversified, they stayed within their own market, but their products have changed quite a lot and that helped their business by adapting to world tastes, and advertisements while keeping the true nature and original values of their business intact. Their products may be slightly different from the original formula but they keep the idea of a soft drink that is similar to the original alive. All of this will help lower the risks taken to make the product successful and continuous.
This gives them more customer loyalty, as their product has become so much a part of a culture, especially America's, that it really is difficult to compete with it. Not only that but the amount of economies of scale is enormous and the company functions with so many customers and outputs so much products, that it requires an empire of factories and production units.
They are listed on the New York Stock Exchange (NYSE).
There are 14 members on the Board of Directors, headed by the Chairman, Muhtar Kent.
AMR is the parent company of both American Airlines, Inc. and American Eagle Airlines, Inc., and has a number of businesses and key facilities within its corporate structure. The company is also a founding member of the global oneworld Alliance. All aspects of the airline’s worldwide activities are overseen from AMR’s Corporate Headquarters campus in Fort Worth, Texas.
It can influence the actions of nearly all the airline's worldwide activities.
Asset strippers are a form of corporate raiders that focus on a target company. They aim to control the company over time and will sell of parts of the company after gaining ownership in order to make a profit. They seem to be aiming for management rather than becoming an asset stripper.
MNC and Holding companies are the leaders of their markets and therefore control the rest of the companies. They have the ability to dominate and get ownership of their competitors and have an edge over those companies which are not MNCs or Holding companies.
Coca Cola has not had any problems expanding to a global market, the change simply let the company grow and it was apparent from the research done, that the company was able to transition into an MNC smoothly, in fact, it seemed like it was not the intention to go multinational in the beginning but became that way after getting consumers from other countries, due to the war.
The term conglomerate (in relation to companies) means combination of two or more companies engaged in entirely different businesses together into one overarching company.
Some of the conglomerates are: General Motors, General Electric, Sony, Apple, Microsoft etc. As they often have to combine with other companies in order to improve their products and reach a harder market.
Some advantages of being in a conglomerate are that you can get skills and training from a market other than your own and therefore combine the knowledge to access that other market, not to mention, you also can make a lot of money by sharing the risks with another company and combining your power as a company.
Some disadvantages are that you can sometimes lose control if the other company you are attached to is more successful than you and therefore will attempt to use you, not to mention, if the company is less successful than you and is in a deficit or the market is failing, then you will lose money because the companies are bound together.
More information is available at : http://www.thecoca-colacompany.com/heritage/ourheritage.html
Holding Companies are businesses that own controlling interest in other diverse companies.
They are alike because they both are companies that control various markets, but they are different because the holding company owns other companies, while the MNC owns different offices in many different countries. That means that while one deals with other companies, another expands it's company into different countries to grow as a company rather than as an empire.
Coca Cola has had a precarious path. The company was created by Dr. John Pemberton, who invented the syrup as a pharmacist. Then it was combined with carbonated water and made into a drink. After marketing the product as Coca Cola, it slowly progressed to popular drink, although never became truly famous until after Dr. Pemberton died. After giving the remaining shares to Asa Candler, he managed to boost sales ten fold and improve the company's publicity. As the empire continued to grow, it set up shop in nearly every state of America. Bottling coca cola was a new idea that helped increase sales. In 1919, Coca Cola was bought by Ernest Woodruff. He boosted the idea of a 'quality drink' to consumers. Huge amounts of marketing went underway as well. Several containers and devices were produced by the company in order to increase sales, such as drink coolers. The revolution of publicity was when Coca Cola was sold to spectators at the Olympic Games in 1928. Even during the wars, Coca Cola used the propaganda to publicize it's products. This made Coca Cola become more popular world wide. Through the years, several advertising campaigns and slogans were created to keep Coca Cola with the times. Over all this time, Coca Cola was able to expand into the global empire it is today due to hard work, perseverance and lots of luck.
Coca Cola's core business is selling soft drinks across the world, in a variety of flavors, types and packaging.
They have not quite diversified, they stayed within their own market, but their products have changed quite a lot and that helped their business by adapting to world tastes, and advertisements while keeping the true nature and original values of their business intact. Their products may be slightly different from the original formula but they keep the idea of a soft drink that is similar to the original alive. All of this will help lower the risks taken to make the product successful and continuous.
This gives them more customer loyalty, as their product has become so much a part of a culture, especially America's, that it really is difficult to compete with it. Not only that but the amount of economies of scale is enormous and the company functions with so many customers and outputs so much products, that it requires an empire of factories and production units.
They are listed on the New York Stock Exchange (NYSE).
There are 14 members on the Board of Directors, headed by the Chairman, Muhtar Kent.
AMR is the parent company of both American Airlines, Inc. and American Eagle Airlines, Inc., and has a number of businesses and key facilities within its corporate structure. The company is also a founding member of the global oneworld Alliance. All aspects of the airline’s worldwide activities are overseen from AMR’s Corporate Headquarters campus in Fort Worth, Texas.
It can influence the actions of nearly all the airline's worldwide activities.
Asset strippers are a form of corporate raiders that focus on a target company. They aim to control the company over time and will sell of parts of the company after gaining ownership in order to make a profit. They seem to be aiming for management rather than becoming an asset stripper.
MNC and Holding companies are the leaders of their markets and therefore control the rest of the companies. They have the ability to dominate and get ownership of their competitors and have an edge over those companies which are not MNCs or Holding companies.
Coca Cola has not had any problems expanding to a global market, the change simply let the company grow and it was apparent from the research done, that the company was able to transition into an MNC smoothly, in fact, it seemed like it was not the intention to go multinational in the beginning but became that way after getting consumers from other countries, due to the war.
The term conglomerate (in relation to companies) means combination of two or more companies engaged in entirely different businesses together into one overarching company.
Some of the conglomerates are: General Motors, General Electric, Sony, Apple, Microsoft etc. As they often have to combine with other companies in order to improve their products and reach a harder market.
Some advantages of being in a conglomerate are that you can get skills and training from a market other than your own and therefore combine the knowledge to access that other market, not to mention, you also can make a lot of money by sharing the risks with another company and combining your power as a company.
Some disadvantages are that you can sometimes lose control if the other company you are attached to is more successful than you and therefore will attempt to use you, not to mention, if the company is less successful than you and is in a deficit or the market is failing, then you will lose money because the companies are bound together.
More information is available at : http://www.thecoca-colacompany.com/heritage/ourheritage.html
Jan 4, 2010
Inflation & Employment
Previously, I described inflation in relation to a real life example of Zimbabwe, this time I am discussing inflation in general.
Governments believe that inflation is a priority for the following reasons:- it can cause inefficiencies in the market, leading to economic problems as well as business and consumer protests.
- it makes it difficult to plan ahead, as the value of your money can lower substancially unpredictibly, and lead to problems for people who want to save their money.
- it can cause problems with company productivity as they work to decrease the costs of production for their products.
- it can discourage future investments and saving, leading to less money in the banks and an increase in demand.
- there is less purchasing power for the country in international trade.
- less price stability.
The two main causes of inflation are:
- if a government prints an excess of money in order to meet the demand of the economy, it can cause the value of the currency to decrease, leading to inflation.
- Also, if there is a rise in production costs, it can cause an increase in prices of products, leading to inflation.
Inflation is Bad for Business Because:
- it raises the costs of production, meaning that if the company does not change it's prices, it will lead to a lesser and sometimes negative profit.
- it makes the companies lose capital, as well as causes worker unrest, as the rise of inflation causes the cost of living to be higher, making them demand higher wages, leading to another increase in the costs of production.
Inflation is Bad for Employees Because:
- inflation means that the costs of living will rise, but the wages will not for some time, eventually that means that they will lose a lot of money, making it harder for them to support themselves and their families.
- it can also be the case that this will increase the spending, as their money is not worth much sitting in a bank during times of inflation, which will lead to access buying and a loss of revenue, which will be a problem if coupled with the first issue.
Inflation is Bad for Customers Because:
- prices are much higher, meaning they must spend more, but the lowering value of their money, means it is best spent instead of invested or saved so they lose even mor money.
- the prices are constantly varying and can lead to inconsistancies for the buyers, who do not expect the sudden changes in pricing.
The Government Can Control Inflation By:
- higher interest rates can control inflation, by balancing the rate of the decline of money in banks, and encouraging saving over spending.
- direct wage controls can control inflation by setting limits on the growth of wages and can therefore reduce cost inflation.
Governments believe that inflation is a priority for the following reasons:- it can cause inefficiencies in the market, leading to economic problems as well as business and consumer protests.
- it makes it difficult to plan ahead, as the value of your money can lower substancially unpredictibly, and lead to problems for people who want to save their money.
- it can cause problems with company productivity as they work to decrease the costs of production for their products.
- it can discourage future investments and saving, leading to less money in the banks and an increase in demand.
- there is less purchasing power for the country in international trade.
- less price stability.
The two main causes of inflation are:
- if a government prints an excess of money in order to meet the demand of the economy, it can cause the value of the currency to decrease, leading to inflation.
- Also, if there is a rise in production costs, it can cause an increase in prices of products, leading to inflation.
Inflation is Bad for Business Because:
- it raises the costs of production, meaning that if the company does not change it's prices, it will lead to a lesser and sometimes negative profit.
- it makes the companies lose capital, as well as causes worker unrest, as the rise of inflation causes the cost of living to be higher, making them demand higher wages, leading to another increase in the costs of production.
Inflation is Bad for Employees Because:
- inflation means that the costs of living will rise, but the wages will not for some time, eventually that means that they will lose a lot of money, making it harder for them to support themselves and their families.
- it can also be the case that this will increase the spending, as their money is not worth much sitting in a bank during times of inflation, which will lead to access buying and a loss of revenue, which will be a problem if coupled with the first issue.
Inflation is Bad for Customers Because:
- prices are much higher, meaning they must spend more, but the lowering value of their money, means it is best spent instead of invested or saved so they lose even mor money.
- the prices are constantly varying and can lead to inconsistancies for the buyers, who do not expect the sudden changes in pricing.
The Government Can Control Inflation By:
- higher interest rates can control inflation, by balancing the rate of the decline of money in banks, and encouraging saving over spending.
- direct wage controls can control inflation by setting limits on the growth of wages and can therefore reduce cost inflation.
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