"Two hundred giant corporations, most of them larger than many national economies, now control well over a quarter of the world's economic activity. " Anderson & John Cavanagh (2000). Transnational corporations (TNC's) are wielding more power and influence than ever before, they have got so large that some have more financial clout, and employ more people than entire nations. This essay will expose how one of the most well-known Western TNC's (Coca-Cola), has resided in the less developed country (LDC) (India) causing severe drought, then how they were subsequently band from India through legal action.
Then discuss if TNC's really are the main beneficiaries of globalisation through the use of case studies and the media. Obviously, there are other beneficiaries of globalisation that have done extremely well: these be entrepreneurs, newly industrialised countries (NIC's) in the East, and in some cases the consumer. However, this essay's primary focus is Coca Cola and how they operate with regard to their enormous profits; social responsibility and whether or not this continued exploitation can be sustained. This particular case study exposes how Coca Cola resided in the Indian state of Kerala. "Three years ago .
. . the . . . [this] little patch of land yielded 50 sacks of rice and 1,500 coconuts a year. It provided work for dozens of labourers. Then Coca-Cola arrived and built a 40-acre bottling plant next door. " The result, irrigation wells ran dry and the yield from the harvest dramatically diminished to 200 coconuts and just 5 sacks of rice a year. Vallely & Clarke (Coke Adds Life? , 2003) Coca Cola from the mass bringing together of people, capital and countries that globalisation is so renowned for has been able to exploit the people of Palakkad and its natural resources reaping huge profits in the process.
One of the main reasons that this scenario is able to happen: in LDC's the economies are weak, and the TNC's use this to their advantage when negotiating a deal. TNC's are also sometimes seen as the only saviour for LDC's, they have the financial clout, corporate power and know-how to provide jobs and sanitation for thousands. The reality is, however, that the profits generated by the rich TNC's is not being distributed to the worlds poorest, and that basic sanitation, food requirements and shelter are in dire need.
Also, Coca Cola, rather than helping the local people of Palakkad they disputed the allegations forcing the local council to take action. . . Then . . . Earlier this year the Perumatty panchayat (local council) revoked . . . the factory's . . . [Coca Cola's] licence to operate. It did so despite losing almost half of its annual income - some 700,000 rupees (about i?? 9,000) - from the decision. Coca-Cola's lawyers appealed to the next level of government, which suspended the revocation and allowed the factory to continue operating [temporally].
Vallely & Clarke (Coke Adds Life? , 2003) Coca Cola of course denied all these allegations and said that the water shortage was due to a decline in rain fall. However, a meteorologist suggested that the amount of rain had actually increased. Whichever angle you look at this, Coca Cola has acted immorally: if they 'believed' that the amount of rain fallen had dropped, why did they take it all for themselves? Moreover, if the meteorologists report was correct then Coca Cola must have taken a substantial amount of water from the site.
Touching on the social aspect of this, the water supply was depleted until the water that was left contained such a high degree of salt; it was almost unfit for human sanitation and consumption, let alone irrigation. The case eventually held that the Soft-drinks giant Coca-Cola be banned from using ground water from the Indian State of Palakkad. BBC NEWS (Coca Cola Ban Unfortunate, 2003) With all this in mind, the over consumption of natural resources, disregard for local communities and high-profile lawsuits going against the local people. Saying that TNC's are the main beneficiary of globalisation seems a perfectly justifiable statement.
However, reading from authors such as Naomi Klein (2002) and Alan Shipman (2002), both expressing very different views. They both agreed on one thing: that perhaps it is the shareholders of these TNC's, always pushing for higher returns and dividends, and constantly looking to cut back on costs. It could be argued that this has forced TNC's such as Coca Cola to act immorally, exploiting Third World conditions, as mentioned in the case study above. Then, if this were the case it would be the shareholders who were the main beneficiary of globalisation from their large dividends and them being able to appoint and remove directors at will.
The shareholders will not receive such bad press either, if none at all. Nevertheless the exploitation whether it due to pressure from shareholders, or the massive competition and drive for low wages that the free market creates cannot be sustained. There are many things that we can do to try and break the mould of TNC's such as Coca Cola reaping huge benefits through continued exploitation: enhancing free trade in supermarkets, a supranational body or parliament to govern TNC's actions and movements, and have the power to the hold the World Trade Organisation (WTO), International Monetary Fund (IMF) and the World Bank (WB) to account.
Also, the drafting of international legislation to prevent TNC's relocating so easily leaving hundreds without work. With these improvements in place the case may be that globalisation will still be making winners and losers. The case may also be that TNC's will still be the main beneficiaries of globalisation, but we may be able make the worlds largest firms and the consumer more ethical and moral. Raising awareness amongst consumers about the social issues and exploitation that is going on in LDC's in the East, and to raise the issues of previous third-world exploitation to TNC's looking to locate in weaker societies.
All these aspects need to be addressed to the consumer, TNC's and the governments of the countries that are being exploited. Furthermore, the decisions that are binding on the local communities in LDC's must also be coming not just from the TNC's, but from the government and the local people themselves. Once these issues have been addressed and are being implemented on a world-basis the current exploitation may at last come to and end. Thus, ultimately closing the gap between who is and who are not benefiting from globalisation in today's capitalist free market society.