Globalization has several disadvantages, as far as the expansion of mutilations and other big corporation into developing countries is concerned. Globalization continually increases the movement of goods, technologies, people, and labor from one region to another. Alongside this movement is the movement of businesses, as ir expands and seeks to explore the new markets. A good example of this is the expansion of Coke into New Guinea, which is a good example of the how expansion of multinational influences developing countries. In most cases, people and governments in the developing countries are normally intrigued by the perceived or expected economic benefits, new technologies and others. This makes them fail to realize the disadvantages associated with the moving multinational into developing countries. This paper will explore the cons of a big corporation such as Coke moving into undeveloped countries such as New Guinea.
The most common con is the negative influence the multinational companies can have on the local culture. The most multinational companies originate from the west and carry a significant westernization force that acts as an incentive to pull locals towards the adoption of western principles. According to Forster, this leads to creation of a single uniform culture around the world. Monoculturing the world is a good thing, since the world has different geographical regions with different aspects, and culture is the only instrument that helps human to adopt to different environments. An example of the distraction of culture is visible in acts of Huli-speaking women, in Papua New Guinea, filling coke cans with rice and water, sealing the cans and carrying them when they visit other women. In their destination, they throw the cans into fire to cook the rice and eat it. This serves as the quickest way to give a decent meal far from home. The practice was once vibrant in the Island, but widespread with the replacement of the bamboo by aluminum pot. In this regard, women have appropriately used the soft drink cans in a familiar social context. The can has further been incorporated in other cultural activities that preexisted before the arrival of the coke. This incorporation further encourages the reception of new consumer goods. This is an indication that products brought by the multinationals become the sociality tools of choice, creatively replacing the previous and easily available tools.
The spread of multinational companies such as coke, and beverage and food giants further interfere with the local diets. According to Forster (2008), there are some new forms of diets characterized by cheap sources of fats, slats and sugars. Forster (2008) further notes that “cheap foreign foods, with dubious nutritional value rival, if note displace, domestic nutritious foods.” As the consumption of the foreign food increases, it becomes increasingly accessible even in the remotest parts of Papua New Guinea. The same way nutritious food becomes replaced by cheap foreign food, local brands also suffer. When consumers start trooping towards the goods provided by a popular multinational company, and stand adopting the brand to their lifestyles, the brand becomes the part of their culture. This is similar to the adoption of the coke can for cooking rise inplace of the traditional bamboo. Once the new brand becomes domesticated to old domestic brands, they (domestic brands) die a slow painful death. This kind of occurrence is visible in any place, especially developing countries when multination companies move in. A few local brands manage to survive though, with numerous struggles.
Another notable effect of Coke in Papua New Guinea is the effect of its corporate and consumer citizenship strategies. The company has managed to become an authority in the area that the government does not exercise strong control. Coke is not along many multinational companies and international organizations act as the governmental authority in areas they operate. Multinationals like coke form a kind of strong government that is global and profit-oriented, rather than local and service-oriented. As Foster (2008) notes, strong government exists in commodities. In Papua New Guinea, Coke easily becomes a form of government especially in alongside the legal political government.
Consumer citizenship is the best way for Coke to achieve this form of strong government. Consumer citizenship can be considered the flip side to corporate citizenship. Under consumer citizenship, the consumers lobby cooperation rather than governments. The lead to a new model of political consumerism is increasingly becoming important, since corporations such as Coke have taken the responsibility of providing services and goods. Consumer politics gives the consumers an ability to speak against the ills of companies. This way they can attack exploitative companies and commodities that harm consumers, while making huge profits. The receptiveness of Coke to some of these attacks and ability to engage the consumers makes it appealing to consumers who are likely to compare the reciprocation of the company to that of their government.
Cooperate citizenship and cooperate social responsibility also serve as a unique role in enabling the cooperation in asserting the government. Just like consumer’s citizenship, corporate social responsibility is meant to show the consumers that the corporation cares about their needs. Together with corporate citizenship, CSR aims at improving the public image of the company. A good reputation helps to improve the brand value. Negative reputation is costly. To avoid it, the company pays close attention to things, such as the environment and labor relations.
A strong brand is yet another instrument the company used to entrench itself as an authority in the hearts of the people of Papua New Guinea. Coke’s strong brand easily generates customer royalty. Customer royalty can be realized through provision of high value and affordable commodities, which is exact what Coke does. A strong brand by a multinational operation is certainly a thing that local brand in different parts of the word would not like to encounter. Multinational company has a strong financial muscle compared to local industries. They have more money as far as capitalization is concerned. Due to this, multinational company can operate for a very long time without realizing any substantial profits with the knowledge that once they gain a market percentage and develop customer royalty, they will be able to make sustainable profits for a very long time. Due to this, multinational company can offer commodities at relatively low prices compared to local industries in order to take away the part of the market enjoyed by the local franchises.
Unfortunately, local industries cannot afford lowering their prices, since they need the profits to remain in operation. Gradually, the local industries cede markets to the multinationals, and they are unable to operate profitably because of the reduced sales. The closure of these local industries has negative impact on the economy, since many people lose their jobs. Despite the number of people, the multinational companies may experience the loss of jobs, as local franchise shut down is very costly to the economy, since it reduces the spending ability of the laid of employees. Coke entrenches itself this way in many new markets in developing countries. Another approach the coke uses to strengthen its brand and consumer’s royalty is sponsorship of sports and other social events. Coke sponsors two of the world’s most popular sporting events: soccer’s International Federation of Football Association (FIFA), World Cup tournament and Olympic Games. In addition to these, the corporation sponsors numerous localized sporting events in different countries including Papua New Guinea. For instance, Coke sponsors dancing shows and annual cultural events, such as Goroka in Papua New Guinea. By associating itself with this kind of events, the soft drink giant compliments the traditional ways of living. According to Foster (2008), coke employed and used “formidable legal and financial resources to restrict how logos, images and brand names can be used. “ These efforts earned the cooperation “trust and the goodwill of the consumers whom it subjects to monopoly over means of producing meaning.” The company further uses advertisements that are easily recognizable by consumers. Such advertisements are meant to connect consumers around the world. Coke asserts its advertisement and activities in familiar context, such as sports and cultural events.
In the closing chapter of his book, Foster discusses pouring rights which are yet another avenue the company used to assert itself as an authority. The company used its ability to finance schools to acquire vending rights in these schools. This was yet another way of advancing its objectives. Many principles in poor school districts welcomed the move unaware of the greedy economic interests of the company. Here again, coke took on the responsibility of the government, to provide funding for schools, but its form of tax was the permission to vend in the schools. There is certainly a power in the way soft drinks’ giants like Coke and Pepsi conduct their sales promotion, both locally and globally.
In conclusion, the spread of coke to Papua New Guinea has a strong negative influence on the local cultures, meaning, nutrition and economics. The company has also an increasing strong influence on governance, especially in places that are not properly served by the countries’ government. The corporation establishes itself as a form of government through consumer citizenship, corporate citizenship, corporate social responsibility, and strong brand and brand promotion activities.