Globalization and Volkswagen Essay Example | Topics and Well Written Essays - 3250 words

Globalization and Volkswagen - Essay Example Volkswagen was incorporated in the year 1937. Volkswagen group is regarded as one the globe’s foremost automobile manufactures with its headquarters situated in Wolfsburg at Germany.Volkswagen was incorporated in the year 1937. Volkswagen group is regarded as one the globe’s foremost automobile manufactures with its headquarters situated in Wolfsburg at Germany. By globalising its business activities, Volkswagen has not only spread its activities in all the five continents of the globe but also able to transfer its technology to these markets, has created local employment and by adding local contents in its products it has opened the doors for local businessmen and has offered jobs to local people, it has helped to nourish local industries in foreign markets and has achieved cost savings about 15 to 25% due to local contents. This research essay is going to analyse how Volkswagen has benefitted from the process of globalisation. Volkswagen and Globalisation Globalizatio n can be referred as an active method of liberlisation, integration of market across the extensive array of markets internationally from goods to labor and from capital to services and technology. Globalisation is footed on the principle of freedom: the freedom to have commerce with the rest of the globe and capitalise on each nation’s relative gains; the freedom to invest where returns on capital are deemed to be highest within a tolerable magnitude of risk and the freedom to establish business of country’s of one’s choice... MNCs hold strong places in all three channels of globalisation and by clarity, they vouch for all foreign direct investment ( FDI), they are very active in trade , with thirty percent of global trade taking place within the MNCs and not between the MNCs and they transfer the knowledge and the bulk of technology across borders through intrafirm business transactions , create employment in host countries , responsible for rapid growth of GDP in the host countries and can be said to be responsible for increasing the standard of living in the countries, they conduct the business. (Ervin & Smith, 2008, p.24). Thus, due to the poignant position of MNCs, globalisation can be referred as the business decisions made by the MNCs as regards to their international business activities under transforming scenarios of international competition. (Kleinert, 2004, p.3). Globalisation also refers to the liberalisation of financial flow. Financial liberalisation eventually increases economic growth, eff iciency and development by infusing new technical know and foreign investment. Economic liberalisation connotes introduction of policies like removal of credit controls, deregulation of interest rates, privatisation of banks controlled by government, elimination of credit controls, permitting foreign financial institutions in the domestic financial markets and relaxation of the bar on the entry of private sectors. In short, it can be said that liberalisation means removal all barriers from the inflow of capital outside the frontiers of a nation. (Ariccia, 2008, p.3). It is to be noted that one cannot expect that mere economic liberalisation cannot achieve inflow of capital as only about 14 nations could attract in excess of eighty-five percent of