Globalisation: The Food Industry In Philippines
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This study aims to explore how globalization has affected the food industry in the Philippines. By looking at the Nestle Company, the research paper seeks to look at Multinationals as agents of globalization and how they have affected the Philippines' food industry.
Research design/methodology: - This study employs descriptive research method. This type of research approach involves data analysis, and a particular set of questions, which do not deflect certain topics. The researcher analyzed the data presented on the impacts of Nestle in the food industry in Philippines guided by specific designed questions.
Findings: - The study found out that Multinationals act as agents of globalization. By looking into the Nestlé Company, the research found out that Multinationals act as agents of globalization affecting the food industry both negatively and positively.
Limitations: - The research employs primary and secondary data hence it would be difficult to find out whether the data is true or biased.
Recommendations: - In order to reach a generalized conclusion, more study needs to be conducted in this unexplored area of study.
Value: - Considering the rise of Multinationals, the paper will assist governments to be able to implement proper policies while dealing with Multinationals in their nation states.
Key words:-MNC (Multinational Corporations), globalization, socialization, colonization, third world countries.
Table of Contents
Table of Contents 3
Introduction, Aims and Objectives, Research Questions and Hypothesis 4
1.1 Introduction 4
1.2 Overall Aims and Objectives of the research 9
1.3 Hypotheses: 10
Chapter 2: Literature Review 11
2.1 Introduction 11
2.1.1 Theory 11
Chapter 3: Methodology 21
3.1 Introduction 21
3.1 Research Design 22
Chapter 4: Data presentation, Evidence, Analysis and discussion 26
4.1 Introduction 26
4.2 Data analysis 26
4.2.1 T-Test Analysis 27
Chapter 5: Conclusion 33
5.5 Conclusion 33
5.4 Limitations of the study 35
5.6 Recommendations 35
Time Scale and plan 36
List of References 42
Introduction, Aims and Objectives, Research Questions and Hypothesis
This research paper is designed to assess the effects of globalization on the food industry in the Philippines. It is motivated by the controversies that have surfaced on the role of these Multinational Corporations (MNCs) as agents of globalization in the Philippines. Globalization has resulted in a lot of positive and negative impacts especially in the third world countries (Robertson, 1992). In the sector of agriculture, crops that have been imported can be bought at cheaper price than domestic products. Nations states like the Philippines, which depend on agriculture as their main export and import have suffered a lot as a result of globalization. The Philippine agricultural sector only accounts for 14.8% of the gross domestic product (GDP) (Frost, 2003). For instance, crops that are imported could be bought at a much cheaper price than value. This is because globalization has created the free trade area as stated by the World Trade Organizations. Hence, nation states with higher productivity in agriculture could dump their produce to their counterparts in the third world nation state. This means that the third world nation states will be given sub standard produce (Frost, 2003). By definition, globalization implies the movement of information and people across borders of any nation state. Consequently, this transfer has control over the nation-state's political, environmental and cultural affairs (Dasgupta, 2004). Economically, globalization has been able to assist nation states to grow through the introduction of various Multinational Corporations like the Nestle. As a result, these foreign direct investments bring a lot of foreign exchange in the host nation state. This foreign exchange comes from the sell of Philippine's agricultural produce and products in the international market. This is a positive effect in the economy of the nation state.
However, in many Asian nation states like the Philippines, majority of the population are plagued with poverty. This means that these people are more willing to work and earn the lower wages that the MNCs (Multinational Corporations) would give them. As a result of globalization, many multinational corporations have set up their branches in these nation states. MNCs (Multinational Corporations) like Nestles have managed to set up their manufacturing facilities in these nation states to benefit from the cheap labor (Jensen, 2008). This has affected the food industry in the Philippines as many local food industries are able to access cheap labor for their industries. The new industries assist the poor nation states to solve their crisis of unemployment thus reducing poverty in the nation-state. In addition, this may help in increasing the living standard of the people and increasing the contribution that the lower class in the society makes in their GDP (Frost, 2003). This ensures that the local farmers are empowered from their agricultural products thus developing food industries in the Philippines. Furthermore, lower class is socialized to be able to consume the products produced by these multinational companies. This creates local market for the products from the food industries thus generating income (Robertson, 1992). Consequently, Nestle has become very significant in building a Food industry in the Philippines.
From a negative perspective, globalization has resulted in Multinational Companies like the Nestle that tend to exploit their workers. This is especially in the poor nation states like the Philippines. This is mainly because such nation-states lack proper policies and regulations to ensure that the MNCs act accordingly (Jensen, 2008). This affects the local food industry because the domestic food industries are not able to maximize on the Philippine market like their international counterparts. Most Multi nationals aim at reducing their expenditure costs while remaining competitive to the domestic market. Furthermore, most of these MNCs destroy the environment in the host countries because of lack of proper environmental policies (Athukoralge, 2007). For instance, in the fiscal year 1980, a US chemical business Union Carbide in India endured very poor working environment. The chemicals in the end resulted in explosions that killed very many people (Athukoralge, 2007). These companies seek to not only capture but also to control the resources of the host nation state. This affects the food industry because the destruction of the environment leads to the destruction of food crops and the amount of rainfall that may come in the Philippines. Consequently, this reduces the crop yields of that year.
With this background, it is imperative to note that this research will employ Nestle, to depict the impact of globalization in the food industry in Philippines. The research will look into both the harmful and positive characteristics of globalization by looking into Nestlé's affairs in the Philippines (Nestle Philippines, 2011). Presently, the Nestle is known as a very established organization globally. The company has various food and beverages amongst its list of products. Past cases will be employed to depict the impact that globalization has in the Philippines food industry.
The economy of Philippines heavily depends on agriculture for survival. The country of Philippines has a high level of education and literacy rate. The economy of the Philippines is relatively strong with moderate savings rates. It has been ranked as the 46th nation state globally economic wise. Additionally, the nation state has an export oriented agricultural sector (Nestle Philippines, 2011). Consequently, this has resulted in the generation of sufficient foreign exchange for the economy. Despite the fact that it was rich in natural resources, the economy of Philippines is agrarian and produces staple food to support the economy. However, the country had started growing economically with the entry of major corporations like Nestle. The Philippians' industrial sector was increasing at a very fast pace. Consequently, the nation state was named as one of the nations with the utmost salary earnings in the Southeastern part of Asia (Divina & Roldan, 2010). Many changes in the Philippines have been brought about because of globalization. Furthermore, globalization through MNCs has brought vast penetration of technologies and vast penetration. This has affected the food industry as more farmers are able to venture in the food industry availing more products to the consumers.
The Nestle Company began from a simple idea into a giant multinational corporation. In 1866, a pharmacist named Henri formulated a food formula for babies who could not be able to tolerate breast milk. As a result, the products became so successful that the entire Europe demanded for the product (Nestle Philippines, 2011). Because of the popularity, great companies desired to merge with it. Between 1866 and 1947, the company had changed its name severally to suit the mergers. For instance, in 1905, a company named Farine Lactee Henri Nestle and Anglo-Swiss condensed milk Co merged with Nestle to create Nestle& Anglo-Swiss Condensed Milk Co. These consolidations permit a company to improve on the efficiency of production through scale economies. In addition, these mergers result in the closing down of firms that are less efficient. This is normally seen as a very fast way for companies to expand on their product offering and in turn gain market share. Furthermore, some companies engage in mergers and acquisitions to block other companies from becoming greater players in the market. Most of the food manufacturers enter the foreign markets through foreign direct investments like in the Philippines.
The Nestle Company has been able to stay successful for a very long time. Consequently, this has created room for them to be able to expand their markets globally making them the world's greatest beverage and food industry (Schwarz, 2003). The Nestle Company has made the food industry to orient itself more to its customers rather than themselves. The advanced technology has enabled them to know the interests of the consumers and thus make products that can suit their needs. Agricultural goods like spoilt milk that could not be used has now been turned into a tradable substance because of globalization. Their headquarters' is locates in Vevey, Switzerland (Nestle Philippines, 2011). However, most of the company's industries are located in many parts of the world. Since the publication of the company's case in 1998, Nestle has, managed to employ nearly 230000 people worldwide. Currently, the number has increased to 253000 people and over 88 billion dollars of sales. This means that the company is increasing on an annual basis. Additionally, the company has managed to increase their products that they offer to their customers. Their business strategy has been mainly to encourage the growth of their products through various innovations and renovations. Consequently, the strategy has enabled the company to be able to create many other products like breakfast cereal, baby food, dairy products, chocolates, ice creams, prepared foods and beverages.
The company has also diversified to produce pet foods, food services and water that are bottled. This means that the Nestle Company has managed to set the pace for the standard of food to be consumed by the Filipinos. Eventually, food regimes have come up to check on the standard of food that is being produced in the Philippines. Currently, Nestle Philippines has been able to employ over 3200 employees and support thousands of people indirectly. Nestle has managed to establish three factories and a fourth one is coming. The company claims to provide the Filipinos with products that will bring a healthy and happier life. In addition, the Multinational Company endeavors to become good and caring to the corporate citizens and in ensuring that the welfare of the Filipinos is taken care of (Divina & Roldan, 2010).
The Nestle Company has had several accusations on its exploitation of workers in the food industry. In 2002, the rights of more then 600 workers was violated by Nestle in the Cabuyao factory (Cabuyao workers briefing, 2009). The workers desired to enforce their rights and to negotiate with the managers on their retirement benefits. This was because the Multinational had not included retirement benefits on their employment contract at Nestle. However, the Nestle management purported that it was the company's decision to decide whether or not they would give their workers the benefits (Cabuyao workers briefing, 2009). The Supreme Court of Philippines gave justice to the workers and stated that retirement benefits ought to be a subject to be discussed by both parties. Despite all this, the Multinational has not complied with the ruling. As the set pacers in the food industry, the Nestle has made other food industries like the MacDonald's to follow suit.
1.2 Overall Aims and Objectives of the research
Globalization has significantly affected food industry in most developing nation states. This is because of the liberalization of the economy and great technological advances. Through various Multinational Corporations like the Nestle, globalization has managed to occur in nation states like the Philippines. This has affected the food industry in many ways both positively and negatively. The colonial structures set by the European powers ensured that the economies of these developing nation states entirely relied on the developed nations (Jensen, 2008). This has made the economies of the third world nation states like the Philippines heavily rely on developed nations for economic prosperity.
Against this backdrop, this research desires to look into the effects of globalization in the food industry in the Philippines. By looking into the Nestlé, the research seeks to look into these corporations as agents of globalization and how they have affected the food industry in third world countries like the Philippines.
To achieve this aim, the research outlined the following objectives:
To know the strategies that Multinationals like nestle employ to gain maximum profits.
To identify if the Nestle collaborates with the mother nation state (Switzerland) to gain maximum profits in the Philippines.
To know the role of colonization in ensuring that third world nation states like the Philippines had weak economies.
To know how globalization has affected the tastes of the local people thus affecting the food industry.
Hypothesis 1: Globalization has been able to impact the food industry by affecting their tastes of the local people.
Hypothesis 2: The Nestle multinational has led to a decline in the local food industries through their effective strategies
Hypothesis3: Effective strategies have assisted the Nestlé Multinational to be able to gain maximum profits in the Philippines.
Chapter 2: Literature Review
This part of the dissertation seeks to review the literature concerned with the effects of globalization in developing nation states. It is here that the various theories that talk about globalization are discussed. Furthermore, the various literatures on the impacts of globalization and multinationals are reviewed.
To explain this research topic, many theories have been proposed. In any disciplinary research, it is imperative that a theoretical framework that discusses the problems affecting this research is employed. In addition, the theoretical framework will assist in formulating the necessary research questions for designing the research study. It refers to various collections of interrelated concepts such as a theory (Kaplan, 1964). Although various literatures have been able to cover broad diversity of theories, the theory of world systems will be employed to explain globalization and its impact on food industry in the Philippines. The theory emphasizes on the fact that the systems of the world ought to be the basic unit of analysis. The theory refers to the international labor division and this is the basis of globalization. According to the theory, the world is split into the semi periphery, the periphery and the core nation states. The core nation states center on having high skilled labor and a production that is capital intensive. The rest of the nation states have low skilled labor with a production that is labor intensive. In addition, they specialize on the extraction of minerals. This explains how the process of globalization has emerged in the world (Chase-Dunn, and Grimes. 1995). The nation states with capital and high technology have been able to move into nation states that have labor and no capital. The system changes rapidly because of globalization and individual countries can be able to lose their status as core nation state very fast because of changes. The theory was formulated by Immanuel Wallenstein in 1978 (Wallerstein, 1974). Wallenstein has been able to trace this theory to the 15 century where the feudal economy in Europe went through a major crisis but was changed into a capitalist society. This is what globalization has done to developing nation states. It has been able to transform developing nation states like the Philippines into a capitalist one (Jensen, 2008). This is by opening up the markets and allowing the establishment of foreign investments in the country.
The food business has managed to exist even before civilization took place. The advancement of this trade in the 16th and 17th centuries was mostly premised on the discovery of commodities that were geographically specific and tropical plant products (Brenner, 1982). It is agriculture that made the developed nation states become powerful as they sold their agricultural produce to international markets. Wallenstein purports that that the nation states in Europe were able to employ the advantages they had like technology to dominate other nation states' economies. They were able to spread the capitalist economy and industrialization resulting in unequal development (Jensen, 2008). Agricultural globalization was seen as a means through which they could construct their economy. In capitalist globalization, jobs and capital move from one nation state to another. This is mainly from the nations that are rich (the core) to the developing nation states (periphery). This made them created their own industries that could process food premised on what could be gotten from the local raw materials. Capitalist corporations like the Nestle in Philippines have increased exploitation by paying less money to their staff in developing nation states (Wallerstein, 1974). Globalization is referred to as capitalism but on an international level. In an economy that is globalized, the economic activities of the nation state exist. This is because of an exchange in notions, services, labor forces and technical advances. This has made people do business globally, travel and communicate with each other.
The theory can be perceived in the same way as Karl Marx saw class. This means that ownership is compared to non ownership as the means of production. The nation states classified as the core possess and control the main means of production. That is why the core nations are able to dominate the developing nation states. The periphery countries do not own much of the means of production in the world. This is irrespective of the fact that they carry out higher level of the production works. Like in any other class system in many nation states, there exist class positions in the world that lead to uneven wealth distribution. The core nation states get the greatest share of the surplus production (Wallerstein, 1974). Despite owning the raw materials and labor, the periphery nations receive the least of their production. In addition, the core nation states are able to buy raw materials and other goods from the nation states at a cheaper price. The core nation states demand the periphery nations to buy the products at a higher price.
The Nestle was able to gain access in the Philippines because the Multinational comes from the nation state in the core. The Nestle employs the cheap labor from the developing nation states and their raw materials. Wallenstein argues that in the twentieth century, the world systems theory had reached its limits geographically (Wallerstein, 1974). This is because state systems that were capitalist in nature and capitalist markets were extended to all other regions. The United States rose to become a hegemonic power. This means that it had political as well as economic powers. These newly independent nation states were able to confront the control of the core in the entire century (Borines, 2001). Some of the states that had gained independence decided to confront the core's dominance by improving the status of their economy. In the 19th century, liberalism took over as the ideology. It was designed with the hope that there will be equal share markets and individual rights. It also desired to advance the economic status of the nation states. This is what Wallenstein calls, the transition period. However, the period has been brought about divisions and unequal wealth distribution in the world. Technology is the factor that makes the core nation states to remain in their dominant position.
Wallenstein's theory has attracted a lot of criticism. The theory has focused a lot on the economy instead of the culture of the nation states. These critics can be categorized in four ways. First of all, the orthodox Marxist who argue that the world systems theory has moved away from the principles of Marxism. This has been depicted in the way the concept of social class has not been given much gravity (Wallestein, 2004). Secondly, the positivists have criticized the theory for being too prone to generalization. The world systems theory is devoid of quantitative data and has failed to put forth propositions that can be contradicted by an observation. Thirdly, the state autonomists have criticized the theory by saying that there lacks a boundary between businesses and the state. All the critics purport that the state should be regarded as the focal point of analysis. Other critics like Brenner have purported that prioritizing the world market means that the local struggles amongst the classes and structures ought to be neglected (Brenner, 1982).
2.1.2 Positive of globalization in the Philippines' food industry
Globalization refers to the increase in interdependence amongst various business firms in the economies of various nation states in the world. The change agent of this nation state is normally businesses that are owned by various multinational organizations. A Multinational Corporation is an enterprise that involves itself in the management of production in more than one nation state (Tolentino, 2000). Furthermore, Multinationals deliver various services in many other nations. Many scholars have researched on the impacts of globalization in the food industries of many developing nation states. For example, according to Dasguta (2004) globalization has resulted to a rise in products that are consumed in different nation states. Consequently, this results in the rise of many food industries that compete against each other to try and meet the demands of their customers. Eventually, globalization has resulted in increased competition amongst the food industries. This in turn has culminated to a greater level of independence to global companies for both global collaboration and economic activities. Harley (2006) argues that most companies have begun to operate globally on an economic scale. According to his studies, the revenue of the company in their nation state was regarded as the highest in their country of origin in the past. However, in this present time, the opposite of the above statement is deemed to be true.
Scholars have written on earliest form of globalization. Berberoglu, (2005) purports that since the 1400; globalization took place in the form of capitalism. During this period, the Europeans began forming colonies that could supply them with raw materials and cheap labor for their products. The economies of most developing nation states were developed in such a way that they supplied for the requirements of the integral nation states that existed in the global system that was capitalist in nature (Berberoglu, 2005). The rising trend of markets, finances, services and goods that are interconnected have resulted in the trend of globalization. This has created development in technology as afar as food industry is concerned. In addition, the rise in the stature of multinational companies in developing nation states has influenced the economical, cultural and political aspects of many nation states. In the economic dimension, globalization revolves around the accumulation of capitalism as the current trend. This is clearly depicted by the widespread labor division that exists in the world, raising numbers of industries within the MNCs and the movement of capital globally from one nation state to another (Suarez-Villa, 2012). Through colonization, these nation states were able to get countries at the periphery like the Philippines to supply all that they need for their economy to expand. This affected the food industry as it made the Philippines become dependent on the developed nation states. The Filipinos grow their own food only to be processed in the developed nation states because of lack of better technology to do the job. In turn, the Filipino farmers get little from their produce while the multinationals get a lot of money. American exploited the Filipinos by forcing them to work for them and buying their produce. This provided cheap labor and market for the American products. The Americans prioritized on accumulating the wealth, industries and the capital of the Filipinos (Borines, 2001).
Harley (2006) argues that for these Multinationals to remain competitive globally, they mostly aim at reducing their costs and prices. This works concurrently with their desire to produce goods of a high standard. Companies look to third world nation states as their centers of operation. They see their firms as a way to benefit from the third world nation states as they would gain a working force that is skilled/unskilled with very low cost. This has been achieved by setting up their operations in nation states like Philippines, Malaysia and India. Borine (2001) argues that colonization left the economy of Philippines in a very weak state. This meant that despite the fact that they were granted sovereignty by the Americans; the Philippines were still not sovereign in their economy. Borines (2001) purports that most of these developing nation states had to rely on the American markets for survival. The economy of the Philippines is highly dependent on agriculture and three quarters of the poor Filipinos depend on agriculture for their livelihood (Borines, 2001). As more and more firms become global, the numbers of competitors increase. In addition, the intensity of the competition increases too. In these nation states, the MNCs have access to untapped markets that will increase their volume of products (Billet, 1991). In addition, these firms have access to a manufacturing low cost base for their exports to the surrounding markets. These multinationals like Nestles have opened up the Philippine food industry to the international market. This has created new opportunities for the Filipino farmers to be able to trade on an international scale.
With an increasing population of over 80 million, about 60% of the Philippine population's lives live below the poverty line. The poverty level in the nation state has brought a lot of corruption or exploitation by various Multinationals. In order to reduce the costs, these companies employ exploitation methods to be able to hurt the workforce or damage the environment. Carbaugh (2010) purports that multinational corporations search for places where they can be able to access labor that is inexpensive in order to build their factories. For example, United Fruit is a multinational banana producing corporation in Honduras. The region was chosen because of pursuit of cheap raw materials and labor (Carbaugh, 2010). Normally, these companies are aware of the situations in a nation that will cause them be able to attract maximum gains. These Multinationals are not required to follow any guidelines that may be present in their countries of origin (Rachman, 2008).This means that some of them operate in developing nation states without taking heed to the local regulations concerning businesses. In addition, these companies engage in activities that increase their cost of operation. A weak legal and regulatory system will result in exploitation of labor and resources in the developing nation state.
Most developing nation states like Philippines hope that through Multinationals, globalization would transform their poor economy into an active participant in the global economy. As a result, globalization has been able to transform this nation state by increasing the employment opportunities (Rachman, 2008). This is because more foreign companies have come into the Philippines to assist in its ailing economy. This affects the food industry as it avails the necessary labor required. Globalization has resulted to other consequences. First of all, globalization makes nation states that have different value systems are able to try to win each other in the same level (Dasgupta, 2004). This means that different nation states set up structures and policies that will be able to attract more foreign investors in their nation.
Globalization has resulted in greater mobility of capital and workers in the international market. Consequently, this has led to a global market place where there has been an increase in the opportunity for employees, customers and managers of the company. For instance, the coming of Nestle Company to the Philippines brought in capital for erecting factories and offices (Local Philippine Context, 2010). Foreign workers were granted an opportunity to work in Philippines. This gives them a greater exposure internationally. However, the entry of Nestle in the Philippines has been able to create an intense level of competition with the local market. The local market is left to compete with the global giant for markets shares and revenues. The most basic requirement of individuals is food. This means that most multinationals that deal with food like the Nestle have very great power. Being the world's leader in the manufacturing of baby food, the Nestle Company has managed to open up the food industry in making baby foods (Borines, 2001). This is despite the various practices like corruption and monopoly that are deemed to be misguided. The Nestle has introduced new techniques of processing like condensation and roller drying. Consequently, this has led to a surplus of cheap milk in the Philippines. The Nestlé Company commenced exporting its milk to developing nation states in the fiscal year 1873.
2.1.3 Negative aspects of globalization
Like in other developing nations, globalization has changed the culture of most Filipinos thus bring obesity to the children and adults. In the fiscal year 2008, the National Statistics Coordination Board revealed that 26.6% of Filipino adults were obese. This has increased by 10% from 1993(ABS-CBN, 2011). 6.6% of children of age 5 to 10 years have been found to be overweight from a survey carried out in 2003. This is because of the introduction of fast and processed foods. Foods that are processed have been tampered with by adding things like additives, preservatives, heat requirements of chemicals that would destroy healthy vitamins, enzymes or fatty acids that are natural in nature. These processed foods are made from chemicals and various preservatives that may be harmful to the health of human beings. Some of Nestle foods are processed like frozen foods, yoghurt, cereals and other drinks. According to Rachman (2008), multinational make a lot of money in developing nation states through exploitation. In the findings of the research, it was discovered that Nestle gets a lot of profits from the water that they get from the rural areas in Philippines. However, they leave the local Filipinos to deal with the damages. Consequently, this leads to pollution and the lack of quietness in the rural Philippines. In addition, the research found out that the Nestle Company has interfered in various community elections (Jensen, 2008). The company does this to access the water supplies of the local community. This affects the local food industries as their water supplies are cut short at the expense of the Nestle. Furthermore, globalization has resulted in social inequalities amongst nation states. This has threatened the employment levels as well as the standards of living in these developing nations. Thirdly, globalization makes the lives of people working in other world regions become intertwined. This is because of the technological development that globalization has brought in the communication field (Billet, 1991). A significant event in one part of the world may have a great impact in another nation state.
There has been a sparse research on how globalization affects Asian nation states particularly the Philippines. First of all, most literature on globalization covers only developing nation states in Africa and Latin America. However, there is literature on Asian nation states like in the Philippines. This creates a gap in the literature on this topic and specifically in the Philippines.
Chapter 3: Methodology
In the previous chapters, the impact of globalization on the food industry has been discussed. This chapter is split into five parts. The research design and subjects, the program description all offer very general information on the topic of the research. The other three sections instruments, materials and the research procedures have been fully described. In addition, the section will explain the approaches of gathering the information relevant to our subject. We will explain the research study methods, and which method is more appropriate and why, the resources are the essential key to unlock the data, and the types of data too. The instruments employed in collecting data comprise of various methods applied to maintain the instrument's dependability and validity.
There are different ways of classifying the data during any research study. By studying various characteristics of different studies, the researcher will be assisted to determine and analyze the differences and similarities. Following the classification:
Objective of the research -the justification why the research was conducted
Progression of the research- the process through which the information were gathered and analyzed.
Rationale of the research-whether the research study rationale moves from specific to the general and vice versa.
Result of the research - the expectation of the research is the clarification to a specific issue or a general furnished to knowledge.
The researcher attempted to explain the concept of globalization in the food industry; we have specified the Nestle Philippines in order to scratch the accurate results. Thus, Nestle Philippines has been specified so that we can generalize the study (Strauss, 1987).
3.1 Research Design
As stated, this research seeks to understand globalization and its impact in the food industry in the Philippines. This comprises of a detailed investigation of the food industry in Philippines and how the Nestle Company has changed the industry in Philippines. This research will employ the exploratory study. Creswell argues that the method can be employed because there is not enough study that has been carried out on the research topic (2000). In this way, the researcher will prepare the outline so that the author can collect specific information that will not deviate from the subject. Exploratory research was employed to derive accurate results and this approach assists us on collecting the required information (Malhotra & Birks, 2007).
The research study was able to employ mixed method of research of qualitative and quantitative approach (Malhotra & Birks, 2007). The qualitative and quantitative methods have been applied in collecting data from the Nestle employees and the outside public. The study was carried out in two stages: First, the data was collected from the Nestle employees and the outside public by using non-codified open structured questions that were designed to obtain both qualitative data. Data was collected from the respondents to find out the company's operation in Philippines and first hand information concerning its impacts on the food industry in Philippines. This questionnaire was also important, as it was able to get the ideas on what the Multinational Company has employed to attract and retain its customers, and how these efforts have affected the local food industry. In addition, this helped in answering the following research questions:
How has globalization affected the food industry in the Philippines?
Has the Nestle acted as an agent of globalization in the Philippines?
In what ways have the multinational corporations such as Nestle, affected the food industry in the Philippines?
What strategies has the Nestle employed to ensure that they dominate the food industry in the Philippines?
How has this efforts employed by Nestle affected the local food industry in the Philippines?
Secondly, the researcher used codified close structured questions in the questionnaire. Here, seven closed structured questions have been employed to know the specific information from the respondents regarding their responses and perceptions towards the Nestle multinational corporation and its effect on the local food industry in Philippines. The data collected by employing open questions in the questionnaires from the respondents had employed thematic analysis. This method assisted to pull out the ideas, concepts and themes in relation with the various strategies by employing thematic analysis (Kaplan, 1964). Premised on these themes, an analysis was done supported by some of the answers of the respondents. This data assisted in knowing the awareness that the Filipinos have concerning the Nestle products and its impact on local food products.
In the first place, by employing the open questionnaire, the researcher attempted to interview the various departmental managers in the Nestle Company. He could only meet with 7 as other managers could not be able to be found. In addition, other managers have less interest to be questioned. Using emails, the questionnaires were sent to the managers. These questionnaires were not coded and the data was qualitatively assessed to pull; out the ideas and themes via thematic analysis. In the second stage, a semi-structured questionnaire was employed to collect data from consumers. During this stage, the researcher employed Survey Monkey software through which he sent the questionnaires to all of his contacts. In addition, he was able to make appeals to the consumers to spread the questionnaires to other people in the Philippines. The researcher either made personal contacts or telephoned the people he had sent mail to. Furthermore, he employed paper questionnaires to any Filipino student he made at the university.
After collection, the questionnaires were double checked to check whether there were questions that were not filled and tried to get back to the respondents to finish up the questions. After confirming the questions, the researcher coded and entered the data identifying the dependent variable (locally produced foodstuffs, food industry) and independent variables (globalization) and employed the SPSS and survey Monkey software to analyze data. The tool was employed for the quantitative elements of the analysis. In this process, initially, he put all the data in the software and made a dataset which were being analyzed using different statistical method namely, measure of central tendency (mean, and percentile), measures of dispersion (standard deviation), person's correlation coefficient to see if there is any relationship between different variables (such as brand trust and buying behavior). Hypotheses were tested using ' t' test to see if the hypotheses are supported or not. Finally, statistical significance was also tested on the findings.
Similarly, to analyze the qualitative data collected by interviewing the Nestle Philippines managers had been analyzed by thematic analysis technique where the themes were pulled out from the transcribed data and analyzed based on the themes supported by the quotation of the respondents.
3.3 Research population
The entire Philippines population was deemed as the research population in this research study. The population was subdivided into two groups, the Nestle employees and the outside public. The outside public included the local Filipinos and all other immigrants. The reason why the researcher separated the population into these two groups was in order to facilitate detailed analysis in the next chapter.
3.4 Sample, Sampling and its justification
The questionnaires were to be analyzed in two stages. In the first stage of the study, there will be sampling of ten Nestle employees through non-probability sampling procedure. Their time and availability will be considered during the process of getting results. This sampling procedure is selected for research because it provides a range of alternative techniques to select samples based on subjective judgment, and it provides an equal opportunity for each individual in the population to be selected.
Second sampling technique: Over 100 consumers of the Nestle products were selected through the snowball sampling method. However, only 90 responded to the questions asked. This method was significant as there was no database for the local Filipinos shopping in various stores. This forced the researcher to employ his personal network to be able to get the respondents. In addition, since there would be a restricted amount of participants and the test subjects. This sampling method gives the researcher the ability to boost the study's efficiency.
Chapter 4: Data presentation, Evidence, Analysis and discussion
The previous chapters examined the research methodology and selected one that could be employed in the study. This examination resulted in a descriptive approach being used in collecting data from the employees of Nestle and the outside public. Quantitative and qualitative data will permit the researcher in identifying the links between the variables and trends within data. This normally comes in form of numbers and units (Landy & Conte, 2009). To answer the research question, globalization and its impact on food industry in Philippines, this chapter presented the finding of the study.
4.2 Data analysis
This section illustrates survey and arithmetical outcomes cited in the previous chapter. Out of the 100 questionnaires like part 1, the effects of globalization on local food industry, sent, only 90 questionnaires were received. This means 10 questionnaires were not received from the respondents. Seven of the questionnaires were from the Nestle employees and the rest, which were 83, were from the outside public. These means the number of questionnaires available for analysis were 90.
4.3 Overview of findings from the Consumers
By employing structured questionnaires in Survey Monkey software through the online survey, the study was able to get 90 respondents in two weeks as shown in the pie chart above. The results demonstrated significant perception of the Filipino consumers towards the Nestlé Company marketing strategies which has been discussed in the following parts:
4.3.1 Demographic Profile of the respondents
The respondents' demographic information was obtained from part three of the questionnaire. In the demographic analysis of the respondents' characteristics from the questionnaire, the study shows that male dominated respondents of the study by 77.7%. Most of them were in the age of 18-30 (66.7%) with mean age 32 and standard deviation 6.75. All of them are educated, most of who are higher educated (87%) with Bachelor or Master level education. The data also found that respondents are both student (57%) and working people (43%). In terms of ethnicity, the majority of the respondents are Filipinos (80%) where 20% are Europe-American community. However, most of these groups are Filipinos who are partially representing the Asian values. Most of the respondents (56%) are living in the Philippines for longer time (2-4+ years) while 20.6% are less than one year. Some of the above information can be shown in the tables below.
4.2.1 T-Test Analysis
The independent t-test, also known as the two-sample t-test evaluates the means between two distinct groups on similar continuous, reliant variable. A Levene's test was carried out in the analysis of the subject under study. The SPSS t-test process permits the analysis of excellence of variances and the t-values for mutually even and uneven variance, and provides the appropriate descriptive statistics.
The research was based on three hypotheses, which are described below:
Hypothesis 1: Globalization has been able to impact the culture of the local people by affecting their tastes
Hypothesis 2: The Nestle multinational has led to a decline in the local food industries through their effective strategies
Hypothesis3: Effective strategies have assisted the Nestlé Multinational to be able to gain maximum profits in the Philippines.
The aim of this section is to analyze the impacts of globalization on the food industry in Philippines. This section of the research study is designed to assess the hypotheses that globalization indeed affects the food industry in Philippines, with reference to Nestle Multinational Corporation. The SPSS program was used to carry out a T-Test as shown below.
Hypothesis 1: Globalization has an impact on the culture of the local people by affecting their tastes
Part two of the questionnaire aimed at analyzing the impacts of globalization on the culture of the local people by affecting their tastes and preferences. The respondents were asked how the setting up of multinational corporations such as Nestle in Philippines has affected consumption and production of local foodstuffs. The 90 questionnaires were analyzed to find out the views of respondents on the effects globalization on consumption and production of food products. H1 scores on the questionnaires ranged from 1-10, with high scores representing degree of relationship with the hypothesis. For the independent t-test, the null hypothesis is that globalization has an impact on the culture of the local people by affecting their tastes.
The scores and their frequency of occurrence have been shown in the table below.
Comparison of how culture affects the taste buds of the locals
These data was put in the SPSS program and the mean score was established to be 5.5 while the comparison mean was 9. The data was put in the SPSS program as shown in the table below. The following data were obtained.
The standard deviation for scores was 2.87 while that of the comparison was 1.0346. This data was used to calculate the T-test of this research problem. The SPSS gave the T-test solution to be -0.28. The hypothesis that globalization has an impact on the culture of the local people by affecting their tastes is true because T is less than 0.05.
Hypothesis 2: The Nestle has led to a decline in the local food industries through their effective strategies
Part one of the questionnaire was aimed at establishing whether multinational corporations such as Nestle negatively or positively affect the local food industry in the Philippines. The null hypothesis for this independent t-test is that Nestle has led to a decline in the local food industries through their effective strategies. The numerical data was weighed using answering of questions in part 1 in the questionnaire, to facilitate easy compilation of the data into the SPSS program. The researcher assigned marks to each in the numerical data category according to the degree of relationship with the hypothesis. The table below shows views of the respondents on whether the operation of Nestle in Philippines leads to a decline in the local food industry. The respondents were asked whether the setting up of Multinational Corporations like the Nestle affected the food industry in Philippines. They were expected to answer yes or no.
As shown in the table above, it was observed that most respondents agreed that the setting up of Multinational Corporations like the Nestle affected the food industry in Philippines. The questionnaires also showed that out of the 76% males who whose opinion was analyzed, 77% agreed to the hypothesis and 23% disagreed. This was also the case concerning female respondents. The education level was also analyzed and its influence on the food industry in Philippines considered.
The data in the table above was entered in the data analysis program in the following format.
The correlation between the Education Level of the Filipinos and how it affects the food industry in Philippines
The mean number of respondents that agreed the setting up of Multinational Corporations like the Nestle affected the food industry in Philippines 17. The mean number of respondents who disagreed with the hypothesis of this study was 6. The standard deviation was established to be 1.0 for the Yes opinion and 1.03 for the No opinion polls. The T-test result was established to be -4.39. This means that the level of education affects the taste buds of the local people. Education enlightens the perceptions of the local people making them appreciate the Nestle products more than the local products.
Hypothesis3: Effective strategies have assisted Nestlé to be able to gain maximum profits in the Philippines
Question five of part two was designed to find out whether effective strategies have assisted Nestle to stand a competitive advantage over the local food industry and gain maximum profits. The respondents were asked whether locally produced foodstuffs were able to compete with products produced by Nestle. 53 percent of the respondents said no while 47 percentage of the respondents said yes. The respondent viewed the competition as healthy since it has facilitated production of high quality foodstuffs, unlike when Nestle could have not started operating in Philippines. The respondents views can be shown by the pie chat below.
Chapter 5: Conclusion
The evidences from the research support what has been previously established. The food and processing industry in the Philippines is the leading industry. As a result, multinationals like the Nestle have managed to transform the food industry both negatively and positively. From the findings, the food industry is worth more than two billion dollars. In the fiscal year 2007, the gross value increased 3.2 % (Berberoglu, 2005). Multinationals like the Nestle have changed the diet of the Filipinos. For instance, they have been able to conduct educational awareness campaigns to various parts of the Philippines. These campaigns have assisted in showing people what a good diet consists of as well as marketing their products (Nestle Philippines, 2011). This has led to a shift in the food industry as the needs of the consumers are now the major interest in production. After analyzing the data using quantitative and qualitative methods, the study has been able to contribute to the fact that Multinationals have a great impact in the host nation states. For instance, from the secondary sources like print books, the research found out that MNC Nestle has had both good and bad consequences in the Philippines. For example, the Nestle has resulted in numerous job opportunities for hundreds of Filipinos. In addition, the food industry has been impacted by the introduction of better technology like condenser. According to print sources, The Nestlé relies on the location and various strategies that are consumer driven to dominate the Philippine markets. These findings offer a great insight for both governments to revisit their policies concerning Multinationals in their nation states. How has globalization affected food industry in the Philippines?
The research found out that globalization has resulted in greater mobility of capital and workers in the international market. Consequently, this has led to a global market place where there has been an increase in the opportunity for employees, customers and managers of the company. This supports Jensen's (2008) argument has affected the food industry by creating more skilled labor for the industry. For instance, the coming of Nestle Company to the Philippines brought in capital for erecting factories and offices. Like in other developing nations, globalization has changed the culture of most Filipinos thus bring obesity to the children and adults. For instance, in the fiscal year 2008, the National Statistics Coordination Board revealed that 26.6% of Filipino adults were obese. This has increased by 10% from 1993(ABS-CBN, 2011). 6.6% of children of age 5 to 10 years have been found to be overweight from a survey carried out in 2003. This is because of the introduction of fast and processed foods. Foods that are processed have been tampered with by adding things like additives, preservatives, heat requirements of chemicals that would destroy healthy vitamins, enzymes or fatty acids that are natural in nature. These processed foods are made from chemicals and various preservatives that may be harmful to the health of human beings. Some of Nestle foods are processed like frozen foods, yoghurt, cereals and other drinks. This information is relevant as it assist informing the research on the ways through which Multinationals gain profits (Rachman, 2008).
5.4 Limitations of the study
Just like most researches, this study also has some limitations. While the researcher was able to critically analyze the secondary data to assess its usefulness, 1000% accuracy could not be guaranteed. Furthermore, the number of Multinationals to be studied was only one. This restricts and makes the findings bias.
5.5 Future direction for research
Due to time constraint, the study concentrated in only one multinational corporation and one developing nation state. Therefore, in future the research should be able to make analysis on more nation states and companies for accurate records. In addition, research ought to be carried out on the effects of globalization in other industries. This will ensure that the topic on the effects of globalization is thoroughly researched on and more information received.
From the research findings, the policy makers of developing nation states like Philippines ought to strengthen their industries by supporting domestic businesses. This will reduce the impact and manipulation of multinational in their nation states. As depicted from the research most MNCs dominate the markets because they lack support from their local government (Tolentino, 2000). Furthermore, the governments in developing nations like the Philippines allow foreign investors dominate their markets. This is with the aim of desiring to attract them to do business in the nation state. Hence, government officials ought to be firm with their decisions on MNCs. This will ensure that that the Multinationals comply with the rules of the nation state. Furthermore, the government ought to ensure that their farmers and producers get a fair deal for their produce. This is because as per the findings, most of the farmers get a raw deal for their produce (Berberoglu, 2005). The government should make sure that the Multinationals coming to their nation states treats their citizens with the utmost respect and they are paid adequately and promptly. This will minimize the exploitation practices that most Multinationals carry out in developing nation states like in the Philippines.
Time Scale and plan
From 25th February to 28 February
Globalization and its impact on the food industry-Nestle Philippines
The aim and objectives of the research is clearly defined along the rationale of this study
From 2nd March to 7th March
The studies of different author have been taken to understand the subject
Reflected various point of views to understand globalization and its impact on food.
From 8th March to 11th March
Implemented the appropriate research methodology in order to derive accurate results
The approach chosen for this study is explanatory research methodology.
From 12th March to 19th March
The data has been collected with the help of previous studies done by past researchers including the case of Nestle Philippines. For this research study has collected secondary data
The data collection was done with the help of case study and previous theories.
FFrom 25th March to 28th March
From the entire findings, the researcher has found other variables which impact the food industry
The expected result that the researcher has been scratch from analysis is successfully done
This questionnaire seeks to collect information on the title "Globalization and its Impact on the Food Industry in Philippines," the focus of the study being Nestlé. All the information given in this questionnaire will be treated with utmost confidentiality; therefore, it will not be given to any third party or used for any other purpose other than that stated above.
Part 1: Effects of Globalization on Local Food Industry
Has the setting up of Multinational Corporations like the Nestle affected the food industry in Philippines? (tick Yes or No in the appropriate box).
Please give reasons for your answer above â€¦â€¦â€¦â€¦â€¦â€¦................................................
If you picked yes in question one above, please state how Nestle has affected the food industry in Philippines.
Please state some of the positive impacts that have resulted from establishment of Multinational Corporations such as Nestle in Philippines (if you picked positive in question 2 above)
Please state some of the negative impacts that have resulted from establishment of Multinational Corporations such as Nestle in Philippines (if you picked negative in question 2 above)
Part 2: Effects of Globalization on State of Competition
How has setting up of Multinational Corporations such as Nestle in Philippines affected production of local foodstuffs?
Higher Consumption Lower Consumption No effect
Please explain the reason for your answer above citing an example â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.........................................................................................
How has setting up of Multinational Corporations such as Nestle in Philippines affected the consumption of local foodstuffs?
Higher Production Lower production No effect
Please explain the reason for your answer above citing an example â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.......................................................................
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