Business perspectives on globalization

Chris Chan

International economic activity is an important issue in the world today. In a Povolny lecture entitled “A Business Perspective of Globalization,” Donald R. Niemi talked about issues international companies face today. Niemi is a Lawrence University graduate, and worked at the United States State Department for over a decade. Afterwards, he took a job as manager of product source planning at a producer of large building equipment, Caterpillar Logistics Services (known more simply as CAT), where he acquired considerable knowledge about globalization and the corporate world.
Niemi, acknowledging that globalization and its affect on business is an enormous topic, decided to “focus on one small slice and share some personal experiences.” Confronting the common allegation that multinational companies “run roughshod” over certain governments, Niemi pointed out that many of these accusations depend on interpretation and viewpoint. As an example, Niemi compared the statements “United States hits Canada with lumber tariffs” and “United States puts tax on purchases on Canadian lumber.” Both statements cover the same story, but one attacks the economic actions of the U.S. while the other is much less condemnatory.
In order to more fully explain the importance of understanding different perspectives, Niemi referred to his experience in international business dealing with CAT. In 1986, about the only type of car available in one area of India was an English 1950s Morris. This car was obsolete and broke down frequently. Niemi disliked this car, and likened the experience to the contingency that the only car available in America was a 1973 Plymouth. Without computerized systems, radial tires, and pollution control, driving would be a far more hazardous and aggravating experience, as it was driving the antiquated Morris. Many Indians, however, liked the Morris because it gave a “simple, rugged ride,” and since everyone used the same type of car, there were plenty of spare parts available. Niemi describes this viewpoint as an example of a protected market.
In a protected market, there is limited product range (i.e., only one type of car), and often that means out of date features, poor quality and product support, and high prices. The Morris, an old and inferior car, held a monopoly over the Indian vehicle market. Niemi’s main point was that a ubiquitous, state-sponsored product often suffers from a lack of competition. Niemi cited another example, wherein disinterested, aloof employees staffed state-sponsored Chinese hotels. In contrast, smaller private hotels engaged friendly, helpful staff members, providing a much more welcoming environment. This is not to say that competition invariably produces superior quality. “There are far too many improperly run international companies,” said Niemi, but he repeated that protected markets are prone to problems.
Multinational corporations, said Niemi, are often accused of pressuring the government to loosen standards, disrupting workers, and destroying cultures. While denying his intent to harm workers and cultures, Niemi did admit to trying to persuade the Indian government to relax certain rules, but swiftly presented his side of the story. There was a rule that stated that every part of a product made in India had to come from a local supplier. This made no sense to CAT, since there were no companies that made particular mechanisms in India. An import license was repeatedly rejected. Eventually Niemi got to see the Indian position, relating, “I heard from a lot of people that the last time a business convinced India to bend some rules, the British East India Company took over the entire country.”
Globalization and business is a controversial issue. The goals of a business and a government may clash on many occasions. It is important for both sides to clearly state their views and goal, so consensus can be reached. International corporations can have certain affects on cultures that can cause people to respond unfavorably. Niemi said, “I knew people in Belgium who prided themselves on never setting foot in a McDonald’s. They think that food just shouldn’t be fast.