Globilisation Case
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Introduction
Globilisation is defined as the process by which the whole world becomes a single market. This means that goods and services, capital and labour are traded on a worldwide basis, and information and the results of research flow readily between countries. (Black 2002) Stuart Wall 2010, pg.
Globilisation has come about as a result of increase in international trade across national borders. Businesses across the world are benefiting as the world has now become more interactive via communications and advanced technologies in terms of buying and selling power. As businesses seek to maximize profits and become more sustainable they have ventured into the global market.
Globilisation of a company is defined by both its success and failure in penetrating an international market. One such company that has shown a remarkable success in globalizing its operations is Cameron International Corporation (CIC). CIC began its existence in 1833 in Mt Vernon as Cooper Industries. Over the years after many mergers and acquisitions CIC has become one of the leading providers of flow equipment, products and services in the gas, oil and service industry globally.
Presently headquartered in Houston, Texas, USA, CIC comprises of eleven operating divisions in over 300 locations with over 18,000 employees around the globe, virtually all of the worlds gas and oil industry. Two thirds of CIC business provided to its 30,000 international client base is conducted out of the United States of America.
According to news letter at CIC website Cameron International Corporation has reported a net income of 164.5 million for the quarter ending September 2011with a backlog of 5.8 billion.
The following is a discussion of the effects of globilisation both current and potential of Cameron International Corporation. Globilisation has several advantages and disadvantages.
The benefits to become globalized have had a positive impact on CIC. In October 2011 the company signed an agreement with Det Norske to supply subsea production system for the Jett development located in Norway. This represented 56 million in revenue for CIC.
Cameron International Corporation has also engaged in cross border mergers and acquisition, the Vescon Equipamentos Industriais Ltda located in Brazil is one such a company recently acquired. This is a Brazilian manufacturer of surface production equipment and in operation for more than 40 years.
CIC has also signed a memorandum of understanding (MOU) with Petrobras located in Brazil with the intention of enhancing research and development in Brazil. Cameron also renewed its agreement for supply of aftermarket services and support with Petrobras. This agreement is expected to generate 150 million over the next three years. CIC now has at least 1000 local employees in the Brazil facility.
By globalizing CIC has opened operations in the Trinidad West Indies region. Cameron Trinidad Limited has five employees with two subcontractors. They have been in operations since 2003 and have been servicing the oil and gas industries with valves maintenance and new valves and replacement parts for valves, located in the Point Lisas area (Point Lisas Nitrogen, PCS Nitrogen, Caribbean Nitrogen) and also oil and gas companies in the Santa Flora and Point Fortin regions like Petroleum company of Trinidad and Tobago and Atlantic LNG company.
The culture of CIC has dictated its operations in this region, employees are required to follow policies regarding code of conduct .ethics and compliance, general health, safety and environment policies that the company has implemented . CIC has also implemented a helpline where persons having any issues can call and report or be advised.
Many MNE has taken advantage of cheaper labour in countries that are developing and CIC has taken this approach adding to advantage of the company they have done so by setting up a manufacturing plant in China .
Recently CIC has been in the news in connection with the Gulf of Mexico oil spill . They been sued by BPTT for its involvement as BPTT claims that CIC built and designed a faulty Blow out Preventor (BOP) and negligently maintained it .
As Cameron acquire orders from countries outside of the USA their turning these orders from backlog (orders are placed in backlog when there is a delivery period or lead time) into revenue, is dependent on their ability to manufacture, deliver and meet the customers acceptance.
Part 2
Globilisation
Trade become more liberalized as a Governments and regional trading blocs (Eu, Nafta IMF and World Trade Organisation) have made it easier to trade by lowering and even removing trade barriers like tariffs and quotas .
As a result many Multi National Enterprise (MNE) have chosen to become globalized in their operations. One reason is the advantage of economies of scale, as businesses expand their companies, they can benefit from the cost advantage of purchasing in large quantities.
According to Stuart Wall (2010 pg 14) Globilisation has three key elements: shrinking space: the lives of all individuals are increasingly interconnected by events worldwide; shrinking time: with the rapid development in communication and information technologies , events occurring in one place have almost instantaneously (real time) impacts worldwide , eg the war in Iraq was broadcasted in national TV as it happened; and Disappearing borders :The nation state and its associated borders seem increasingly irrelevant as barriers to international events and influences. Decisions taken by regional trading bloc eg EU, Nafta and supranational bodies ie. IMF and World Trade organisation has increasingly override national policy making in economic and business affairs (Stuart Wall (2010) pg 14)
Culture
Advantages of Globilisation
To the consumer globilisation means lower prices, variety of choices, improved quality. (Brooks Ian (2011). variety of products in their home country to the countries it means improved standards of living, increase democracy.
Because MNE maybe be looking for cheaper labour and the ideal economic situation this may bring about other local problems for example employees in the less developed country may be treated poorly. A number of Multinational companies have been accused of paying poor rates in less developed countries and even forcing employees