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The main purpose of this paper is to critically discuss one of the consequences of globalization which is because of the transnational corporations, which have also become increasingly adept at creating new ways of organizing and outsourcing production. Also, we will be considering the chapter written by Miguel Krzeniewitz's (2004), in which he have highlighted the case of Nike Corporation in which he have focused on the marketing strategy of it to refine our understanding of the dynamic nature of global commodity chains. In the first part of the paper we will discuss globalization and the role of transnational corporations in the globalization process. The second part will illustrate that how the network society and outsourcing strategy helps these transnational corporations, especially the Nike Corporation to get success in the global market.
In this first part of the essay, we will critically discuss globalization and the role of transnational corporations in the globalization process. In the last decade, globalization has not only become challenging but also, "hotly debatable" as now different aspects of globalization such as transnational corporations and financial deregulations are now understood to effect every aspect of human life in every part of this world (Dasgupta & Pieterse, 2009: p. 12; Turner, 2009: p. 2). According to Ritzer (2010: p. 2) globalization can be defined as, " A transplanetary process or set of processes involving increasing liquidity and the growing multidirectional flows of people, objects, places and information as well as the structures they encounter and create that are barriers to, or expedite, those flows..." or in simple words Legrain states that, "Globalization describes an open world" (cited in Jasso, 2008: p. 85). In his book, Herod (2009: p. 1) have used a popular internet comments to illustrate the phenomena of globalization by the 1997 death of British Princess Diana.
"What is globalization? It's when an English princess with an Egyptian boyfriend crashes in a French tunnel in a German car... driven by a Belgian... whistle being followed closely by Spanish paparazzi on Italian motorcylces with Japanese cameras, and who was treated by an American doctor using Swiss drugs..."
On one hand they are few researchers and scholars who perceive globalization as a positive deed such as, Jasso (2008: p. 85) who claims that, globaliztion have a more favourable impact on worldwide productivity, development, and prosperity and for which organizations use different strategies. But on the other hand Crystal (1999: p. 344) have raised a question that wheater globalization is a new opportunity or new threat. Because on one hand, many companies are willing to enter in the overseas market, but at the same time they are restrictions from the home or foreign government that might inhibit their global activities. The above deeds of globalization are summarize by Irina (2008: p. 508) according to him the way in which globalization is implemented distinguishes the supporters of the globalization by its critics. Moreover he says that, they are two expressions which a company adopts. The first expression is: Think globally, act locally- this expression emphasizes on the local and endogenous growth, and this is considered to be the appropriate one. Second expression is: Think locally, act globally - this expression favour all the other forms of national and international development. Jasso (2008: p. 93) suggust that, "The ethics of globalization must be understood, shared, and protected. Only then the world society can become a globally virtuous society..."
Now we will expose the transnational corporation and their role in the globalization process. Today corporations are no longer is said to be in a single industry because the wide access and use of service technologies has almost damaged the boundaries of all industries. The example of the airline industry is often used because now airlines no longer compete just against airlines. They also compete against travel agents by selling their services directly from their own channels, ground transportaion providers (like buses, taxis or rental cars) by offering their own rental car service ( or pick and drop service) to their customers, and so on (Quinn, 1992: p. 21-22). Normally, and also logically a transnational corporation operate its activities in three areas: the economic, the political, and the cultural ideological and to all this we can say the global system (Smith, 2006: p. 84). When we say that, transnational corporation have networked the globe together then it is very much important to know that it is due to the different nation's corporations which have performed in different manners and also, the foreign direct investment (FDI) which has played different roles in various nations' economic development (Herod, 2009: p. 165).
They are people who consider transnational corporations more pervasiveness, powerful institutions, global brand, and more capable from other companies (local companies) (Holt et al., 2004: p. 70). But till today, they are some political parties and NGO's who believe that, the transnational companies like Coca-Cola, McDonald's, and Nike have become visible and weak symbols of globalization's side effects, such as exploitative wages and cultural imperialism (ibid: p. 69). Today, the major transnational corporations which are also the most powerful globalizing institutions in the world, by virtue of this fact make capitalist globalization the domineering form of globalization (Smith, 2006: p. 83). But to be successful it is very important for the transnational corporations to learn how to manage
brands global characteristics, which often differentiates between winners and losers (Holt et al., 2004: p. 73).
In the second part of the essay, we will discuss how the network society (especially in terms of innovation) and outsourcing strategy helps these transnational corporations, especially the Nike Corporation to get success in the global market. Firstly we will see that how information network have make it easy for transnational corporations to work globally. Harrington claim that, in the past information technology was believed as the magical tool used to development and change the industrial corporation. But today the situation is completely different because all the small, medium, and large businesses are link up in a network among themselves depending on the availability of technology in the network society (cited in Castells, 2000: p. 184-185). The emergence of Manuel Castells theory of Network Society has boosted the whole network metaphor. This network society is based on information and therefore it is said to be a globalized society, where global information and communications technologies expand and geographical barriers are undermined (Dasgupta & Pieterse, 2009: p. 122). According to Holton (2005: p. 67) "Globalization is not only characterized by mobility and fluidity, but has also depended on new possibilities for multi-centred acitvity based on new information technology." It is seen that networks survive fast growth by developing sites of surveillance and hierarchical control (Smith, 2006: p. 6).
Whightman while favouring the network society says that, the complexity of the web of outsourcing and decentralization would have been difficult or may be impossible without
the development of computer networks (Martens & Zywietz, 2006: p. 335). Moreover Castells use network structure to ouline social phenomena, because in the last few decades, networks have developed a new form of society where individuals (also known as networked individualism) creates and maintian social ties based on their personal preferences (Turner, 2009: p. 65).
Nike Corporation is basically a knowledge based service organization of United States, which outsourced 100 percent of its production in Asia and owned no production facilities till yet (Crystal, 1999: p.45). One of the reasons of Nike's success is by creating a more effective distribution network and using flexible approach to their supply of shoes. Nike
have build a global but still comfortable transnational linkages at different level of production and distribution.
Without discussing innovation, network society seems to be incomplete because innovation is considered to be a major aspect of it. In the past, innovation (especially in technology) was considered to be the reason for the development of any industry, because according to Hirst (2009: p. 133) (technological) innovation used to raised labour productivity sufficiently to balance the failing returns to capital accumulation in routine investment. According to Pitelis & Sugden (2000: p. 38) "The ability to innovate in a growing sector is itself an ownership advantage which is a function of the past technological experience of the firm". Moreover they say that, the most innovative firms in the industry create a faster and effective ownership advantage than others present in the industry. Oshri have observed increasing interest of client organizations in terms of innovation. He belives that, innovation is the key developments that will seriouly affact
the suppliers capabilities (Oshri et al., 2008: p. 82). Most of the companies also gain competitive advantage by an innovative capacity to jump to a new performance plateau
(Hirst, 2009: p. 122).Today service industry is considered to be at boom, and that is why it is seems that through the service industries, the new technologies try to enter and then diffuse in the market and also, most of the value-added in manufacturing industries is created by knowledge-based service activities such as research and development, marketing research, and so on (Quinn, 1992).
From Schumpeterian point of view, the athletic footware in United States was slowly moving towards innovations based on product design. According to Korzeniewicz, finally, today the sports footwear market is highly segmented according to age group, model, price, and design. Nike which also deals in the same, has become both more technology intensive and more fashion sensitive. That is the reason why Nike is flexible in providing greatest value at its reaserch and development, production, and marketing. One of the reason of Nike's success is based on innovations in product design such as Air Nike and Air Jordan. Nike always had technological advances in shoe comfort and performance because of its high focus on research and development (Korzeniewicz, 2004).
Now secondly, we will look at that how transnational organizations do outsourcing and we will also discuss that how Nike manage it outsourced production. Outsourcing of goods
and services are not new. Ritzer (2010: p. 226) defined outsourcing as " Transfer of activities once performed by an entity to a business (or businesses) in exchange for
money." Furthermore he says that, now it has become a complex phenomena, which is not restricted to the econmy. In Domberger (1998) opinion, outsourcing is a process in which activities carried out internally are contracted out to external providers. Moreover he highlights specialization, market discipline, flexibility, and cost savings as the four essential benefits of outsourcing. Offshore outsourcing is a form of outsourcing, which is directly and significantly allied with globalization, and which involves transfer of work to other countries (Ritzer, 2010: p. 226).
According to Quinn (1992: p. 32-47) it is seen that, companies outsource their key elements because outsiders can perform the same job at lower cost and even with higher value-added than the buying company or he says that when their is a rapid change in styles or advancement in technologies, than it means that companies also have to meld themselve according to that thing to survive and compete in the market. When the company is not capable enough to do or think that they are better players in the market, than these companies especially the manufacturing companies benefits from significant outsourcing. Or if any corporation's activity is not their value chain or the best in the world then on the basis of "make or buy" they should consider to outsource the activity, especially when the corporation itself can not internally make that activity their competitive advantage or acheive "best in world" status.
Outsourcing all of its production abroad eversince is not a easy task for any business because they are many local and international risks and barriers attach to it such as political, economical, cultural, and technological. But Nike's successful management and controlling over its subcontractors and its patterns, and implementation of its overseas
sourcing strategy have always provided a significant competitive edge to it, with lots of new opportunities. Moreover, for Nike outsourcing turn into a competitive advantage over its competitors. The cost of labour in Asia was cheaper than anyother place and because of that the production cost was also low (Korzeniewicz, 2004).
We can summarize the essay by presenting the idea of Cantwell that, "The geographical dispersion of technological development enhances innovation in the network of the transnational corporations as a whole is founded on the belief that innovation is location-specific as well as firm-specific" (cited in Pitelis & Sugden, 2000: p. 28). Morover, we can say that globalization is a fact which can not be denied. It have an important role in the world, and e the effect of the role can be seen in any political decision, in any mobile phone, or on the shoe which we are wearing. Transnational corporations are one of the ways through which globalization is spread in the world and for that it is very important to have a proper and advance network society, so if outsourcing is required than that innovative network could be useful.