Global Business Basics -- The Price Of Globalization

Dec. 21, 2004
To be accepted around the world, a company must be a good corporate citizen.

As the U.S. economy begins slowing down, doing business overseas becomes even more important. But not everyone sees the benefits of world trade. Disaffected people in many nations see the price of globalization as too high. Violent protests over the influence of multinationals have become routine ever since the 1999 World Trade Organization meeting in Seattle. How can your company deal with opponents of globalization? Rule No.1: Opposition to globalization is inevitable. Have you ever become angry when a beloved, independently owned local shop closed due to competition from a new corporately owned competitor? If so, you have some understanding of the emotions involved. Globalization opponents object to foreign competitors overwhelming local firms, forcing change in the way surviving companies do business, and buying out or eliminating locally made products. Your company may provide "better, faster, cheaper" products or services. . . but it will never be loved by people who remember how things used to be. Only when a new generation has grown up with your company can the situation be reversed. Rule No. 2: Don't underestimate the opposition. Your multinational may be led by executives in three-piece suits, but that doesn't mean their plans can't be thwarted by uneducated villagers who live in bamboo huts. Nor is the anti-globalization movement limited to the developing world. In 1999 a French sheep farmer named Jos Bov became a worldwide folk hero for destroying a McDonald's restaurant. Bov is now an anti-globalization gadfly, lending his voice to protests in many parts of the world. He was recently in Brazil, helping farmers destroy a test field of genetically modified plants owned by Monsanto. In his controversial book Jihad vs McWorld: How Globalism and Tribalism Are Reshaping the World (1995, New York Times Books), political science professor Benjamin R. Barber observed that the forces opposing globalization often use the tools of global industry in their struggle. Today indigenous peoples may have their own Web sites to voice their grievances. And many religious and ethnic groups hire lobbyists and fund advocacy organizations. Rule No. 3: When doing business outside your home country, try not to be overly identified with your national government. After years of exporting the American Dream, both McDonald's and Coca-Cola have become synonymous with the word "American." As a result, they are targets for both anti-globalization and anti-American protesters, especially in Europe. Coca-Cola's new chairman, Australian Douglas Daft, is giving regional managers more autonomy. Not only will this allow local managers to make their operations more responsive to local needs, it should make them less identified in local eyes with the company's Atlanta headquarters. Rule No. 4: Publicize every beneficial effort you have on the local economy. Japanese carmakers experienced protests when Detroit autoworkers were laid off in the 1970s. "Buy American" campaigns were launched by U.S. labor unions. But the Japanese carmakers opened up auto plants in the South and Midwest U.S., and did a good job publicizing their cars as "Made in America." Rule No. 5: As much as possible, distance your company from volatile local issues. (This includes distancing yourself from the local government, if the authorities are unpopular.) When a foreign locale is in a state of rebellion, repressive governments may demand the use of an international corporation's assets in restoring order. Unfortunately, when the local population sees government troops using a corporation's property, they are likely to view both the company and the government as enemies. In March 2001 ExxonMobil announced that it was shutting down its profitable natural gas fields in the troubled Indonesian region of Aceh. Even though many Aceh natives worked for ExxonMobil, local opposition has made it too dangerous to continue operations. In this conservative Muslim region, some religious leaders were unhappy by the impious behavior of off-duty ExxonMobil employees. Furthermore, Aceh has been under martial law since 1989, and the Indonesian government maintains troops there to maintain order. An undetermined number of Acehnese have been killed by these troops. Many Acehnese claim that the Indonesian troops used ExxonMobil's bulldozers to dig mass graves to hide evidence of their brutality. On the other side of the world, in Nigeria, British Petroleum (BP) found itself in a similar situation. The oil-producing regions of Nigeria are often restive, and the central government is determined not to let oil revenues be interrupted. BP-owned helicopters reportedly transported some government troops. Consequently, the local population blamed BP for the abuses of Nigerian troops. Ultimately, no corporation can control the public opinion that fuels opposition to globalization. But a multinational that pays serious attention to being a good corporate citizen is better prepared to weather the inevitable bad press. Terri Morrison and Wayne A. Conaway are the coauthors of Kiss, Bow or Shake Hands: How to Do Business in Sixty Countries, Dun & Bradstreet's Guide to Doing Business Around the World (revised 2000); The International Traveler's Guide to Doing Business in Latin America; The International Traveler's Guide to Doing Business in the European Union; and The World Holiday and Time Zone Guide 2001. For further information on seminars, online database and books, phone (610) 725-1040, fax: 800-529-8167, or e-mail [email protected].

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