With international market opportunities, huge competition for consumers, government initiatives and cost drivers all influencing companies to start operating over national state borders it is no surprise to see millions of companies operating globally in all sorts of different economic sectors. Emerging nations such as China and India have also allowed companies to reduce production costs and target wider developing consumers. With these opportunities and with many of the other opportunities surrounding globalisation economics now look at the economy on a global scale as opposed to a national scale which has led to conflicting perspectives on the use of the nation-state. As early as 1969 economics such as Charles Kindleberger sparked the perspective that “the nation state is just about through as an economic unit” (Kindleberger 1969: 207) The following essay will look at globalisation in terms of the economy and look at two of these businesses currently operating globally to see if the role of the individual nation-state government remains vital despite the trend towards globalisation. Firstly one must define what globalisation actually is and what type of organisations qualifies as a ‘global company’. Researchers suggest that globalisation is ‘one of the most misused and one of the most confused words around today’ (Dicken, 2007). Globalisation is a widely used term that has no simple definition; instead researchers suggest that the word has become a ‘convenient summary term’ used by many to ‘bundle together virtually all the goods and bads facing contemporary societies’ (Dicken, 2007). There is one definition that most globalists will agree upon and that’s that it is a “process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world.” In terms of the economic globalisation that essay will be concentrating on, “Globalisation is a level of economic activity that has outgrown national markets through industrial combinations and commercial groupings that cross national frontiers, and international agreements that allow businesses to operate internationally” (Hirst, 1996) Lloyds TSB is one company that can be defined as a global organisation. Lloyds TSB is an international bank that’s part of Lloyds banking group. Its head office is in London and it originated in 1745 as a personal banking service with one single office in Birmingham. In the 1960s Lloyds began to expand offices through Europe, India and South America. In the late 1990’s Lloyds acquired other international businesses and soon had hundreds of offices in over 50 different countries. MacDonald’s is a fast food restaurant. It was formed in 1948 in California and is currently the largest fast food restaurant in the world. It currently has 31,000 restaurants in 118 countries. MacDonald’s has become global as more than 75% of McDonald's restaurants worldwide are owned as a franchise.
Both companies are huge global companies that are as successful as they are as they view the world as one place and not in terms of nation-state governments. Although both companies are similar in the sense that they operate globally they are both very different organisations. Lloyds TSB began in the UK and have bought other companies and diversified to gain its global recognition. MacDonald’s however, operates in the food sector and still mainly operates directly in the USA. It gained global standing by franchising the brand and the products across the world
There are also other key differences between the companies. As well as operating in different economic sectors, Researchers suggest that although both organisations operate as transnational organisations their global operations are completely different. Lloyds TSB is a ‘global organisation’ as its overseas operations are delivery of the same service to just different consumers, whilst the same researchers would describe MacDonald’s as a ‘Multinational...
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