Globalization

For part 1 and 2 please respond with 100-200 words. Use websites that are based in the United States as references.

Part 1(A)

According to our text, globalization is the process of international trade by way of goods, services, and capital that allows for financial flow from country to country, expanding our world’s economy (Lawrence & Weber, 2017). This system is in stark contrast and has replaced the Cold War system where countries were characterized by division; globalization integrates countries. The World Trade Organization (WTO) was established in 1995, and its major objective was to eliminate barriers that prevented trade between nations and establish rules for such trade. Despite the size of any business, whether they are a one-person operation or an international name that the majority recognizes, their business is somehow affected by globalization. The effects of globalization have been beneficial but have also come at a cost. One of the benefits is an increase in economic productivity; when a country is focused on producing what it is naturally best at, a more efficient form of production can come about when that is the focus. If a country is trying to reinvent the wheel to produce something they are unfamiliar with, they create a scenario that would increase the cost to create a product that another country has perfected. The example given in the AVP was if a country has plenty of sheep and had perfected wool production, why would they try to produce steel when another country already perfected the process. The countries could trade products for a fee, of course. By doing this, consumer prices remain at a lower cost. Another benefit of developing countries is that globalization allows for access to foreign investment, which creates support for development by creating more jobs and bringing in more technology to the developing country (Lawrence & Weber, 2017). When countries are working together to expand economic growth, the unknown level becomes less, cultural barriers are removed, and more understanding is likely to occur, ultimately reducing military conflicts. Still, while there are many benefits to globalization, they do come at a cost. One of the costs would be a lack of job security. For example, the auto industry here in the U.S. was severely impacted by moving the manufacturing plants to countries that the automakers could produce their products with fewer costs for labor and potentially fewer governmental regulations. In turn, the countries that do not have governmental regulations in place for strong environmental standards could negatively affect their local ecosystems. Previously, in the U.S., most jobs outsourced to other countries were blue-collar or labor jobs. Still, more recently, clerical and more white-collar jobs, such as call centers and the back offices of many banks, have been moved to other countries (Lawrence & Weber, 2017). The foreign availability of jobs can also drive down wages for companies that do not outsource because they are trying to keep their overall costs down to compete with the foreign companies that offer similar products or services. The highest cost of globalization is that it also lessens the cultural lines between countries; there is an erosion of cultural, linguistics, and even religious diversity (Lawrence & Weber, 2017, p.79). What makes us all unique starts to fade away, and across the globe, we become more of the same. Globalization has caused harm in some countries, Bangladesh being one particular example. Bangladesh is a developing country that provides garments for textile companies. The workers there have been making less in a month than a U.S. worker makes in a day. The absence of human rights and building code standards has had effects on the individual workers, and in 2013 a building collapsed, killing 1,100 workers. The lack of labor laws has caused lured child labor and has negatively impacted education systems because families need everyone to earn an income since wages are so low (Society, 2019).

Resources:

Lawrence, A., & Weber, J. (2017). BUSINESS AND SOCIETY: STAKEHOLDERS, ETHICS, PUBLIC POLICY. (15th, Ed.) New York: McGraw-Hill Education.

Society, N. G. (2019, December 23). Effects of Economic Globalization. National Geographic Society. http://www.nationalgeographic.org/article/effects-economic-globalization/9th-grade/

Part 1(B)

Globalization is a process as well as a system that increases movement of various goods, services, and capital throughout national borders, as well as effects almost all businesses no matter size or location. The various benefits of globalization are the opportunity to exercise the theory of comparative advantage. Utilizing comparative advantage are trading goods, or services from various countries that can benefit each other. Good examples are taking China’s electronic manufacturing capabilities, like newer computers and phones; then proceeds to successfully trade the United States for the opportunities to provide movie industry capabilities to make expert quality movies. (Lawrence & Weber, 2017, pp. 76-78). This type of trade will enhance both countries by boosting the economy and providing consumers with the goods and services they desire; in addition, reducing prices for the consumer by pushing down production costs.

The costs of globalization have various perspectives. Goods can be taxed by local governments, thus causing imported taxation. Other costs are job insecurity; while workers are laid off in the home country, foreign workers are employed with less pay. One country loses employment opportunities while the other country may gain economic stability. When homemade goods and services are being replaced by imports the domestic economy suffers. Ultimately wages may be affected by international competition to keep the companies costs down. The costs of conducting business abroad are a delicate balance that companies may need to reconsider. Like all businesses there are risks and benefits and adding globalization may help or take away from business growth and prosperity.

References

Lawrence, A. T., & Weber, J. (2017). Business and Society. New York: McGraw-Hill Education.

Part 2(A)

Chick-fil-A, Jersey Mikes, and Subway are all fast-food chains that are considered franchises. The best way I can define a franchise is many owners but one brand. For example, let us use Subway, most subways have independent contractors/owners, but the Subway brand remains the same. There are three types of franchises, trade name franchising, pure franchising, and product distribution franchising.

The most familiar franchise is pure franchising. This type of franchise includes hotels, restaurants, and rental cars. According to Entrepreneur, “Century 21 Real Estate ranks number 1 on the world’s leading franchise business” (Media, 2021).

One of the benefits of owning a franchise is the foundation and leg work are prepared for you. Also, it is a way to become an owner and create more jobs. “One of the biggest benefits of buying a franchise is gaining access to a business system that has a proven record of success” (Cornwall & Scarborough, 2019). Unfortunately, becoming a franchise owner also comes with risks. Starting a franchised can be expensive and the fees and royalties can be costly too. Although the groundwork is done for you, it is totally up to the franchisee to make the system work.

Lastly, insurance rates and other fees could increase with the number of employees and the liabilities can be equally shared.

References

Cornwall, J. R., & Scarborough, N. S. (2019). Essentials of Entrepreneurship and Small Business Management. New York: Pearson.

Media, E. (2021, June 15). 2021 Fastest-Growing Franchises (Worldwide) Ranking. Retrieved from Entrepreneur: https://www.entrepreneur.com/franchises/fastestgrowing/2021

Part 2(B)

Franchising is made up of 2 main parts, the franchisor, or the parent company, and the franchisee, or the entrepreneur/investor who buys rights from the franchisor. The parent company is ultimately the owner of all locations with the company name and is the entity that allows entrepreneurs to sell its products. The franchisees buy these rights and pay fees and royalties to the parent company for the right to use its business model or sell its products.

The 3 types of franchise are trade-name franchises, product distribution franchises, and pure franchises. Trade-name franchises include franchisees that buy the right to use the parent company’s name, reputation, business model, and other benefits. An example of this type of franchise would be Ace Hardware. In my area, Rocco Falcone owns “Rocky’s” Ace Hardware where Ace products are sold just as well as products from other companies such as Milwaukee, STIHL, and General Electric. Rocco also owns the Sunshine Ace Hardware stores in Florida at which he follows the same business model. Other Ace franchisee names include Larsen, Katz, and Bruce’s along with hundreds of others across Ace’s over 5,000 stores. Product distribution is the type of franchise a car dealership would be under. This is where an entrepreneur pays for the right to sell the products of a specific company. For example, using the car dealership idea, near me we have Balise dealerships. Balise being the franchisee has purchased the right to sell vehicles from General Motors, Ford, Toyota, Hyundai, Honda, Mazda, Nissan, and their sub companies such as Lexus, Kia, and Infiniti; all at different locations of course. But at these dealerships, Balise only sells the products that the location is licensed to sell; as in the Balise with licenses to sell General Motors products only sell Chevy, GMC, and Buick products, not including resold cars that they get on trade-in. Lastly, a pure franchise is when the parent company controls the whole format and operation of all locations and the franchisee who buys the rights to the location is just responsible for making sure the right people get hired and things run smoothly. McDonalds is a pure franchise as you can visit one in Iowa and it will, for the most part, look and operate the same as one in Scotland.

There are many benefits to buying into a franchise as a new entrepreneur. The first of which being the proven success of franchises as it is much easier to buy into an already operational and reputable company than it is to start from scratch as we saw in chapter 1. Also, the franchisee gets a lot of support from the parent company with regards to training, business models and planning, and financially. Lastly, advertising is easier as the company name is likely known across the nation or even the world and typically the company does its own ads. People will know the company and its reputation no matter what franchisee runs the location; for better or for worse.

There are also drawbacks to jumping into a franchise. Fees and royalties that have to be paid to the parent company as part of the agreement take away a good bit of profit. The entrepreneur has less operational, pricing, and product sale freedoms as they have to use the resources of the parent company and would need special approval to go outside of those limitations. Lastly, contracts mean potential for termination from your own store, changes in terms upon contract renewal, and the franchisor will almost always have first right of refusal if the franchisee sells his/her location and that is almost always a lower sale cost than if one were to sell to another entrepreneur.

The 2 main legal matters of franchises include the franchise disclosure documents and joint liability. The FDD is a fraud prevention means as franchise and Fraud were, at one point, nearly synonymous. It just makes things a lot more transparent to entrepreneurs and investors, so they are less likely to get screwed out of all of their money. Joint liability just implies that, despite most likely having nothing to do with the matter, the parent company is held equally as liable for the Franchisee’s decisions as the franchisee is.

Reference

Scarborough, N. M., & Cornwall, J. R. (2019). Essentials of Entrepreneurship and Small Business Management. New York, NY: Pearson. Retrieved from https://platform.virdocs.com/r/s/0/doc/424786/sp/18024843/mi/60114831?cfi=%2F4%2F2%5BP700101478200000000000000000095F%5D%2F28%5BP700101478200000000000000000099E%5D%2F4.

Part 3

All you have to do is come up with the business plan Part B (Industry Analysis & Description of venture plan. The two attachments go with this and are a guide all you must do is add on to it.

Part 4

“At the 2014 Consumer Electronics Show in Las Vegas, Intel’s CEO Brian Krzanich announced that from then on, all microprocessors made by the company would be certified as conflict-free. This meant they would contain no conflict minerals—tantalum, tungsten, tin, or gold sourced from mines that financed horrific civil conflict in the Democratic Republic of the Congo (DRC) and nearby countries. “The solution isn’t easy,” the Intel CEO noted. “But nothing worthwhile ever is.”

Of the four conflict minerals, the one most important to Intel and other electronics companies is tantalum. Columbite-tantalite, commonly known as “coltan,” is a black metallic ore. When refined, it produces tantalum, which is used to regulate electricity in portable consumer electronics, such as smartphones, laptops, play stations, and digital cameras. The largest share of coltan comes from Africa; other sources include Australia, Brazil, and Canada.

In the late 2000s, a common goal to ban conflict minerals emerged among members of an oddly matched group—the electronics industry, the United Nations, governments, and human rights organizations. Their efforts led, ultimately, to a set of international guidelines, national laws, and voluntary initiatives whose goal was to keep the electronics industry and its customers from inadvertently supporting killing, sexual assault, and labor abuses.

The Democratic Republic of the Congo is a nation of 71 million people in central Africa, covering a vast region the size of Western Europe. Since the late 1990s, the DRC has been the site of a brutal regional conflict, in which armed militias, including some from neighboring states, have fought for control. Despite the presence of United Nations troops, as many as 5 million people have died—the most in any conflict since World War II. Warring groups have used sexual assault as a weapon to control the population; an estimated 200,000 Congolese women and girls have been raped, often in front of their husbands and families.

The United Nations and several NGOs reported that militias had systematically looted coltan and other minerals from eastern Congo, using the profits to fund their operations. According to the human rights group Global Witness:

In the course of plundering these minerals, rebel groups and the Congolese army have used forced labor (often in extremely harsh and dangerous conditions), carried out systematic extortion, and imposed illegal “taxes” on the civilian population. They have also used violence and intimidation against civilians who attempt to resist working for them or handing over the minerals they produce.”

“Said a representative of The Enough Project, another human rights group, “In eastern Congo, you see child miners [with] no health or safety standards. Minerals are dug by hand, traded in sacks, smuggled across borders.”

Once mined—whether in the Congo or elsewhere—raw coltan made its way through a complex, multistep global supply chain. Local traders sold to regional traders, who shipped the ore to processing companies such as H.C. Starck (Germany), Cabot Corporation (United States), and Ningxia (China). Their smelters produced refined tantalum powder, which was then sold to parts makers such as Kemet (United States), Epcos (Germany), and Flextronics (Singapore). They sold, in turn, to original equipment manufacturers such as Dell (United States), Sony (Japan), and Nokia (Finland).

By the time coltan reached the end of this convoluted supply chain, determining its source was nearly impossible. Steve Jobs, then the CEO of Apple, commented in an e-mail in 2010, “We require all of our suppliers to certify in writing that they use conflict-free materials. But honestly there is no way for them to be sure. Until someone invents a way to chemically trace minerals from the source mine, it’s a very difficult problem.”

As public awareness of atrocities in the Congo grew, governments began to take action. The Organization for Economic Cooperation and Development, an alliance of mostly European nations, issued guidance for companies that wished to responsibly source minerals. In 2010, the U.S. Congress passed the Wall Street Reform and Consumer Protection Act (also known as the Dodd-Frank Act, and further discussed in Chapters 7 and 13). This law included a provision, Section 1502, which required companies to disclose whether tantalum, tin, tungsten, and gold used in their products had come from the DRC or adjoining countries. Companies were required to file their first Section 1502 reports in 2014 (although some business groups had sued to overturn the requirement, saying it was too burdensome).

Companies also acted. For its part, Intel sent teams to more than 86 smelters and refiners in 21 countries, educating their partners about conflict minerals and collecting information about the origin of raw materials they processed. The company collaborated with other companies in the Electronics Industry Citizenship Coalition (EICC) to develop a Conflict-Free Smelter Assessment Program, a voluntary system in which an independent third-party auditor evaluated smelters and refiners and designated them as conflict-free. Minerals would be “bagged and tagged” and then tracked through each step of the supply chain.

Intel was particularly concerned that it excludes from its products only conflict minerals, not those coming from legitimate mines in conflict areas. To this end, it worked with government agencies and civil society organizations, including the U.S. State Department and RESOLVE, an NGO working to map the conflict mineral supply chain, to form the Public-Private Alliance for Responsible Minerals Trade. This multisector initiative worked to support responsible mines and to develop effective chain-of-custody programs in the Congo. In a statement published on its website, Intel said it “believes that an effective solution to the complex issue of conflict minerals will require coordinated efforts by governments, industry, and NGOs.”

Sources: “Intel’s Efforts to Achieve a Conflict-Free Supply Chain,” White Paper, 2014, www.intel.com; “Intel Unveils Conflict-Free Processors: Will the Industry Follow Suit?” The Guardian, January 13, 2014; “Companies Detail Use of ‘Conflict’ Metals,” The Wall Street Journal, June 4, 2014; “Where Apple Gets the Tantalum for Your iPhone,” Newsweek, February 4, 2015; Peter Eichstaedt, Consuming the Congo (Chicago: Lawrence Hill, 2011); Michael Nest, Coltan (Cambridge, UK: Polity Press, 2011); The Enough Project, “Conflict Minerals,” www.enoughproject.org; “Tracing a Path Forward: A Study of the Challenges of the Supply Chain for Target Markets Used in Electronics,” RESOLVE, April 2010, http://eicc.info/documents/RESOLVEReport4.10.10.pdf; and Global Witness, Faced with a Gun, What Can You Do? July 2009, www.globalwitness.org.”

Questions

  1. 1.)How do conflict minerals, and in particular, conflict coltan get their name? What groups benefited from the trade in conflict minerals? What groups were hurt by it?
  2. 2.)In what ways did Intel collaborate with other sectors (governments and civil society) in its efforts to eliminate conflict minerals from its products? What strengths and weaknesses did each sector bring to the task?

Part 4 must be 2 pages APA format. And references must be based in the United States and websites.