Research Korner: Dissertation Defense

Multinational Companies in the Context of Globalization

CHAPTER 1: Introduction   Multinational Companies in the Context of Globalization               The proliferation of multinational companies is attributed to the process of globalization. Globalization is an evolving, continuous and multi-faceted process covering political, economic and socio-cultural changes driven by technology (, 1983). In international relations, the United Nations established in 1945, embodies the cooperation of states towards a standard for political and economic development (2001). The establishment of venues for cooperation resulted to the conduct of political and economic activities of states and other entities in the context of international relations ( 1998). In international economics, production and trade is no longer limited to a country. International political cooperation led to agreements for the opening up of economies to accommodate the international flow of goods and investment from other economies. ( 1999) The General Agreement on Tariff and Trade 1947 is an agreement that facilitates free trade among the signatory countries under the capitalist system. (2005) Countries engaging in trade related agreements are considered as contracting parties with the freedom to stipulate the provisions of the agreement subject only to the limitations of the laws of the contracting states and international law. In international relations, businesses conducting international operations or multinational companies are accorded legal personality to contract with other companies or states.              Globalization translates in economic terms as capitalism, liberalization, and privatization. Capitalism is an economic system where most, if not all, resources are privately owned and where prices and the mode of production is determined by the free market. Liberalization refers to the process of relaxing state restrictions or regulation in certain activities. Privatization covers the transfer of the control and management of resources from the government of the private sector. (2003) Globalization means that the private sector control and direct economic activities. These activities are not only limited to the state but to other countries. Multinational companies emerged segmenting production in different parts of the world where production resources are competitive making production more profitable. This situation led to the competition of states for international investments, especially countries with underdeveloped economies that depend on foreign investment to sustain the economy. (1998)               Developing countries, that are not industrialized and overflowing with human resource, compete to provide investment opportunities to companies who want to engage or expand into other economies.  States who have resources but unable of efficiently manage their endowments become dependent on foreign investment as a source of revenue for the government and a source of finances for private businesses. This situation melts the economic restrictions and barriers in economic relations because the basis of dependence is need. While developing countries are dependent on large companies for investment, the large companies are in turn dependent on these countries for more profitable conditions for production. The private characteristic of the parties in the relationship of dependence excludes the control of the government over private transactions. The government exercise restrictions only to the extent of the limitations of laws but then again laws are changeable. (2002)   Multinational Companies in the Global Market   It is in the context of globalization that multinational companies developed and persisted and it is also in the context of capitalism, liberalization and privatization that the strategies of multinational companies are based. Multinational companies are business firms that controls and managers manufacturing processes in two or more countries. Multinational companies are multiplant firms operating in more than one state. (1996) Multinational companies are large firms operating in two or more countries through subsidiaries. Subsidiaries are companies controlled by a larger corporation. Control and ownership of the company may be shared with other companies. If the larger corporation fully owns and controls the subsidiary then the latter is a wholly owned company. (2001)   There are different categories of multinational corporations. One type is the horizontally integrated multinational corporation involved in the production activities located in more than one country for the manufacture of similar products. Another is the vertically integrated multinational corporation engaged in the production or manufacture of products in one country to be used in another production activity in another state. In the second category, the company produces or manufactures raw or processed materials in one country to be used in the production of a final product produced in another country. Still another category is the diversified multinational corporation involved in the management of production firms in different countries that are related neither horizontally nor vertically. (2003)               Multinational companies developed into competitive forces in the world economy. The focus of the operations of multinational corporations is on the coordination of the allocation of resources in its international operations in order to minimize production cost and maximize revenue. However, before companies can operate as multinational businesses, these firms also have to develop market-entry strategies to become competitive forces in a foreign economy. There are different strategies that multinational corporations may utilize to enter into a foreign market. The common strategies used in market entry are either marketing or operational. Marketing entry strategies include exporting and licensing where the company does not have to establish a physical base in the new market. Operational entry strategies include franchising, joint venture and foreign direct investment. After all these considerations, the multinational company can now concern itself with building a business structure, actual production, direct marketing as well as financial planning. Globalizing or Internationalizing a Business               The endeavor of entering and developing a foreign market is not easy because at the start of the process, the company is like starting a business and there are no sales or marketing structure in place and there is limited knowledge of the market. There is also a difference between domestic and international operations due to the difference in the operating environment and the strategic requirements for success. Although there is no actual difference between domestic and international operations in relation to marketing and operations theories, there are factors in global operations that affect management decisions. ( 1996)             Penetrating an international market involves a process with zero-base because the business does not have an existing business in the market, there is limited knowledge on the market and lack of managerial competence to operate in the new market. This situation implies that the business introduced in a foreign market is likely to experience a greater rate of change than the change in the business environment because there are many internal adjustments to be made by the business organization. The company has several options to address the situation. One option is entering into partnerships with local firms for the distribution of products. Another option is speeding up the process of changing the marketing strategy through a new product or expanding distribution or changing the marketing organization by acquiring sole distribution of products. (1996)   Globalizing a business involves the development of a multi-market network because of the influence of its previous experience in its businesses in other countries. The more international businesses that a company has, the more that operations will be done in an aggregate level. In terms of price, the company may apply a uniform price for its products with minimum influence by the domestic market or it may also vary price in the different markets especially in cases where one business is incurring increased sales and another suffering losses. International operation influences decision-making in different way than in domestic operations. (2003)   International business operations involve rapid changes in marketing strategy as the company grows or fails. Decision-making on strategies is affected by market factors as well as organizational development. Thus, in studying the strategies applied by existing multinational companies, market factors and organizational characteristics are the two major points to be considered. These two factors co-exist in the process of entering and developing an international market. In determining the strategies that contributed to the success of international businesses, the common experiences of these businesses are important to learn the evolution of marketing and organizational strategies from the initial entry until the successful introduction of the company. (2002) Justifications for Global Business Operations                         There are several justifications that support the strategy of some companies to enter the global market. First is to find cost-effective sources of raw materials that support the increasing production needs of the company. The domestic economy may not be able to provide the requirements of the company for raw materials and labor or the cost of raw materials and labor is too high making it not rational for the company to depend on the domestic economy for its raw material needs. When cost-effective sources of raw material and labor are available in other economies, companies expand into other economies to take advantage of cheaper raw materials and labor. One of the first companies to operate as multinational companies are those engaged in oil exploration such as British Petroleum and Exxon. (, 2003)               Second is to find new markets for their products. There are companies that experience decrease sales due to market saturation. Market saturation refers to the extent that a particular product is diffused or distributed into the market. The extent of distribution determines the remaining portion of the market for business expansion. Market saturation depends upon the following market factors: 1) the purchasing power of consumers; 2) competition; 3) prices; and technology. In the case of television, almost all of the households in industrialized countries such as the United States and Britain own television resulting to a very high diffusion rate. Companies manufacturing televisions are forced to compete based on innovations to attract households to purchase new television sets. Most companies selling televisions are multinational companies offering their products to new markets in developing countries. (, 2003)               Third is to rationalize the firms operating cost. Business firms with seeking to achieve cost-efficient production are attracted to expand their operations to other countries not only to lessen the cost of raw materials and labor but also to minimize cost required in production such as taxes and policy restrictions. In minimizing cost, the business firm is able to remain as cost competitive. Multinational corporations consider cost minimization in terms of its internal operations as well as the external factors that affect production. High business taxes and strict industry standards or restrictions are the most salient business environment features that repel business firms. Less tax and less stringent policy restrictions are the factors that multinational companies look for in choosing a country to expand its operations. Business firms that primarily became multinational companies to minimize operating cost are Texas Instruments, Intel and Seagate Technology. (, 2003)   Objectives of Global Business Operations               The justifications of business firms in internationalizing their operations are related to their objectives for growth and expansion. The most common manner of market entry is commenced through product distribution through local businesses or partners to gain entry in a short period. After introducing the product to the market, the business firm takes a more involved action by producing and marketing the product through a subsidiary. This is applied because it enables products to gain easy entry into the market even before the company has established its operations in the market. This also involves minimum risk since the company is given time to assess the acceptance of the market to its products. The reasons for market entry and development are to gain access to cost-effective sources of raw materials and labor, create demand or market for products and services and minimize cost.               These justifications are related to the objectives of investment decisions. First objective is to learn in lead markets (, 2001). There are business firms who incur cost in market entry primarily to learn from market conditions and secondarily to earn profit. Koc a Turkish conglomerate sought to enter Germany, considered as the leading global market for refrigerators, freezers, dishwashers and washing machines in terms of product specification and consumer sophistication. At the start of the endeavor, the company recognized that its brand is unknown in the market and great effort is needed to penetrate the market. However, the company also recognized that if its market entry strategies work it would gain great insight into the marketing situation in Germany and global market entry as well. The lead market differs in different countries. Software is the lead market in the United States, electronics and telecommunications in Japan and fashion in France and Italy.             Second objective is to pursue a competitive attack or competitive defense ( 1994). The investment decision to penetrate a market is a response to the earlier move of a competitor to enter a new market. The business firm takes the position of a follower. This is done when the company that previously entered a market is a major competitor and the entry is deemed as giving the competitor a great advantage. Apart from the great advantage that the competitor is expected to experience in terms of revenue, the company also perceives that leaving the company to operate alone in the new market will eventually lead to inequality in status to the disadvantage of the business firm. Another scenario that influences the decision to enter a new market is a defensive stance against the move of a major global competitor to enter the domestic market where the business firms are based. The business firm enters the domestic market of the competitor to force the competitor to incur increased cost in an intensified competition in the same way that it incurred cost in responding to the earlier move of the competitor.                Third objective is to take advantage of opportunities offered by a new marketing environment through incentives from domestic and foreign countries.  There are countries that encourage businesses to export by providing different kinds of support making it easier for business firms to expand into the global market. There are also countries that give incentives for foreign investments paving the way for the smooth entry of business firms into the market. (, 2000) CHAPTER 2: REVIEW OF RELATED LITERATURE   Entry Strategies in the Global Market               Entering another economy requires the transfer of financial resources, management skills and technology to another market. There are several ways of gaining market entry for multinational firms, which are exporting, franchising, licensing, joint venture and foreign direct investment. Foreign direct investment provides greatest control of production by the foreign company but requires the greatest use of resources. Franchising and joint venture involves moderate degree of control as well as a moderate infusion of resources. Licensing offers the least level of control because it also involves the least utilization of resources. The entry strategy of a multinational corporation depends upon its business objective and the availability of resources.               Exporting refers to the process of marketing and distributing products to a foreign market. This activity involves the interaction between the exporter, importer, transport provider and the government of the foreign country. The goods distributed are not produced in the foreign market so that there is no need to establish a physical structure in the new market. Costs involved covers marketing activities of the company. This market entry strategy is ideal for business firms with limited knowledge and experience on international operations. ( 2003)             Piggybacking is an exporting arrangement that involves taking advantage of the channels of distribution in the global market instead of targeting a particular market. A company that successfully used this strategy is F&P Gruppo, an Italian rice firm that owns the Gallo brand. The company entered the Poland through its subsidiary in Argentina because the Argentinean air force was sending empty air freighters to Poland that comes back with imports. Food companies took advantage of the cheaper way of exporting products.  Another manner of piggybacking is the joining of two companies to take advantage of a channel of distribution. This is applied by IBM and Minolta with the latter taking advantage of the established distribution channels of IBM and the former welcoming a firm to share the cost of distribution. (2003)               Franchising is a market entry strategy as well as a hybrid manner of organizing the business by establishing a relationship of agency with the franchisees ( 1988). Franchising involves the convergence of a parent company and several small businesses. The parent company sells to the smaller businesses the right to distribute its products or use its trade name and processes. The agency relationship established between the parent company and the franchisee is governed by a contract ( 1992). The franchise contract defines the conditions of the agency and the duration of the relationship. ( 2004).               McDonalds celebrated its 50th anniversary in April 15, 2005 and remained true to the statement "As far as I can tell, the only place you can't get a Big Mac is in outer space." ( 1990, ) The company operates as a global business through franchising. In 2004, the company reported to have established 30,000 local restaurants located in 115 countries across five continents. It is the biggest fast food retailer conquering markets worldwide. In almost every country in the world, there is a McDonalds restaurant and in a single state or region, there are several branches. The company has spread so widely that the term “mcdonaldization” ( 1998,) was coined to describe the organization and culture of the company. The term has evolved to refer to the general business strategy of expansion.               Licensing is the process of permitting a local company to use the property of the licensor in exchange for a fee. The property refers to intangible things such as patents, trademarks as well as production techniques. This arrangement involves the infusion of little resources enabling the licensor to obtain a high return on investment. However, there is a risk of revenue loss because the licensee produces and markets products and collects revenue. ( 1999)   Licensing also refers to the market entry of business firms with a distinct legally protected asset that constitutes their distinction in the market. Distinct protected assets covers brand name, technology, product design and manufacturing or service process. Licensing is not an exclusive strategy in global marketing. (  2004) Disney is a company renowned for licensing cartoon characters to manufacturing and other firms within and outside the United States. The central activity of Disney is its media productions while marketing is done by the business firms permitted to use Disney cartoon characters. In department stores cartoon characters are found in children’s clothing, shoes, bags, pens and toys  while in supermarkets Disney characters are used in shampoos, soap, diapers, milk, cereals and a wide array of other products.               Joint venture refers to the management arrangement that involves the partnership of a foreign company and a local company based on the sharing of capital, technological resources and other benefits. The foreign company benefits from the relationship by gaining entry into the market and taking advantage of the expertise of the local company on the political and economic environment while the local company benefits from enjoying the infusion of capital and technological innovations into its operations. The extent of control of the foreign and local firms in the joint venture depends upon the agreement and the legal limitations. ( 1999)                The New Corporation by its strategic joint ventures became a multinational company. Its corporate projects started out as a drive to expand its reach to other countries apart from Australia. It ventured into the UK purchasing newspapers both national and local and then it set foot in the United States to introduce his company as a potent competitor to existing companies. The most recent venture is developing its business in Asia particularly in China and Hong Kong, India, Indonesia and the Philippines which catered not only to the English speaking locals but also accommodated and aired the local events and locally produced movies and television programs. In countries where there are established broadcasting companies the strategy of The News Corporation is to gain control of the channels of distributing televised news by gaining controlling interest in  influential cable companies through joint ventures. When satellite television was introduced, it also acquired interests in satellite corporations. After being assured of the means of showing its programs, the company had the freedom to create and develop its shows. The company is known for hit movies Titanic and Independence Day and the kids channel Fox Kids. ( 2006)                         Foreign direct investment (FDI) is “a category of international investment that reflects the objective of a resident in one economy (the direct investor) obtaining a lasting interest in an enterprise resident in another economy (the direct investment enterprise)” ( 2003). Foreign direct investment implies the development of a lasting interest in the establishment of a continuing relationship of the direct investor with the enterprise including influencing the management of the firm to a certain degree (1996). Foreign direct investment allows the direct investor and the direct investment enterprise to experience certain economic benefits from the relationship. On one hand, the direct investor is able to engage in new ventures or expand into other economies by sharing capital, management expertise and technology to the direct investment enterprise (2003). On the other hand, the direct investment enterprise benefits from capital infusion, technological transfer and management skill acquisition necessary for growth. (1998) International business firms that fared well through foreign direct investment include General Motors that established a plant in the Philippines as well as Coca-cola and Pepsi with processing plants in every geographical region for cost-efficiency.   Operational and Marketing Strategies of Multinational Corporations               The success of the marketing strategy of multinational corporations depends upon the manner that the company takes advantage of the different opportunities and tools to improve its gain a place relative to its competitors and the market. Marketing efficiency means creating a market in the local economy by introducing and promoting products with the objective of extending product life cycle or introducing products that reached high levels of saturation in other markets. Strategy in global marketing considers the first mover advantage of the company. The multinational company may also take advantage of the higher price that people expect from new products. Risk as a strategy consideration refers to the benefits that the multinational company gets by spreading the operational and macroeconomic risks in different economies. Learning is a benefit achieved by the multinational company because management is able to expand its experience by operating in different economies and markets. Reputation is the benefit experienced by the company in increasing its brand equity in the global market through the influence of crossover customers. ( 1998)               Operating in the global market requires strategies based on accurate information about the marketing environment worldwide. The company can utilize marketing and operations theories but it should apply these in the context of the local environment. Operating strategies revolve around diversity. The company needs to consider and integrate three sources of information: firm-specific knowledge or information on the local market environment, country specific knowledge or information on the political and economic characteristics of the local environment, and knowledge of global environment to determine trends that affects decisions on business operations.  (, 1999)               Marketing strategy should focus on mass-marketing competence and establishing marketing channels. Mass-marketing competence is an important because this is the strategy demanded by the emerging market and it is the best way of fulfilling the objective of the business firm to develop a market for its products. Companies seeking entry into new markets initially price their products higher than local counterparts in order to maintain global price consistency and to prevent parallel importing threats. This results to their products accessible only to the elite segment of the market. In the long run the company does not obtain projected sales and it also allows local companies time to develop their products and brands. Establishing marketing channels is an important factor in market penetration because this strategy links the offer of the company to the demands of the customer. ( 2001)                         Kellogg, a cereal firm in the United States had trouble in marketing its products because it failed to consider the distinct marketing demand in India. The company wanted to increase its profit through the potential of developing a global market for its breakfast products. In 1995, Kellogg introduced its cereal products by exporting to India and selling it at its standard global price. After three years of marketing the product, the company was still unable to reach its projected sales. Kellogg has gained a measly $10 million in sales after three years. The company later found out that the low sales was attributed to the higher price of its products compared to other alternative breakfast and the market did not relate to the convenient breakfast advertising claim because people prefer to buy biscuits and tea in roadside stalls. In the next years, the company introduced varieties of biscuits in convenient packaging at an affordable price in roadside stalls. Kellogg’s is still in the Indian market and it has entered other markets through both exporting and foreign direct investment. ( 2003)               Unilever is a multinational company that succeeded in market development through mass-marketing and marketing channel competencies. When Unilever unveiled its new global brand in 2004 in South Africa, the company stressed that its objective is to stay relevant to consumers. Thus, the company launched a campaign to illicit funds for its HIV/AIDS advocacy based on the rationale that healthy and economically empowered people constitute a vibrant market. The advocacy program includes livelihood program for the community. The company also utilized mass distribution channels such as supermarkets and department stores. Unilever is present in almost every region in the world. Consumers belonging to different income groups buy its products. ( 2004)               Globalizing business firms may also consider transferring their brands to the local market or acquiring local sources of advantage. The decision is based on the objective of the company to compete either with other foreign companies or with local business firms or both. Transferring company assets into the market is done by marketing a brand in different markets or using the company name in the different physical structures. ( 2003) Coca-cola and Pepsi transfer company assets to different markets by introducing uniform brands and products worldwide.   Localization is the process of taking advantage of marketing opportunities in local markets. This is done by either taking an international brand or product and fitting these into the demands of the local market or acquiring local brands or products and integrating this into their brand and product portfolio. (, 2003)  The first strategy was used by Kellogg’s in India, when it introduced biscuits but marketed the products in smaller packages at a lower price in roadside stalls to become a significant breakfast supplier in the market. The second strategy was implemented by Coca-cola in Japan by acquiring the local brand Georgia iced tea to meet the demands of the local market. Heineken also utilized the second aspect of localization through the strategy of selling a combination of local brands and international brands, but maintaining Heineken as the flagship brand. Heineken also achieves broader positions and remain in the top or secondary positions in any market of local beer. ( 2005)   Another aspect of localization is taking advantage of distribution assets in the local market. Procter & Gamble earns $50 billion dollars a year in global sales. When the distribution channels of Eastern Europe collapsed during the transformation from communism to democracy, P&G developed local channels of distribution by funding several distributor businesses by providing vans, training and information technology capabilities. (, 2003) Palm, Inc. is a global computing company that succeeds in market entry through the acquisition of local computing companies and their products and merging these into a strong business firm so that the company takes advantage of the channels of distribution of these local companies. The firm is also engaged in innovations and product development to differentiate its products in the global market. ( 2003)   CHAPTER 3: METHODOLOGY   This study will be conducted to determine the success factors of most multinational companies and organizations in internationalizing their business operations in other countries/continents. In this study, the interview method of data gathering will be utilized, with a combined total of 50 employees from both Palm, Inc. and Heineken as participants. The research plan will proceed guided by the following conceptual framework:                                               Research Methods       The research will utilize the descriptive method in learning the strategies and techniques utilized by Palm, Inc. and Heineken in their international operations. The purpose of employing this method is to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular phenomena (, 1994). The researcher opted to use this kind of research to obtain first hand data from the respondents as basis for formulating rational and sound conclusions and recommendations for the study.   To come up with pertinent findings and provide credible recommendations, this study will utilize two sources of research: primary and secondary. Primary research data will be obtained through the questionnaire survey and in-depth interview. Secondary research data will be obtained from books, journals and studies on the same topic. Secondary data include raw data and published summaries, as well as both quantitative and qualitative data (2003). Research Design In order to come up with the most suitable research approach and plan for the study, the “onion” research process will be utilized. According to (2003), in order to come to the central issue of how to collect the data needed to answer one’s research questions, there are important layers of the onion that need to be peeled away: the first layer raises the question of the research philosophy to adopt, the second considers the subject of research approach that flows from the research philosophy, the third examines the research strategy most applicable, the fourth layer refers to the time horizon a researcher applies to his research, and the fifth layer is the data collection methods to be used.             Figure 1 shows how the researcher conceptualized the ‘onion’ research approach to be applied in this study. The first layer involves the application of the research philosophy of positivism where the researcher works in an actual observable environment (1998) and acts as an objective and independent analyst ( 2003) using a highly structured methodology (1997) to arrive at valid generalizations. Meanwhile, the second layer involves the deductive approach that has five sequential stages: deducing a hypothesis; expressing the hypothesis in operational terms; testing this operational hypothesis; examining the specific outcome of the inquiry to either confirm the theory or indicate the need for its modification; and finally, modifying the theory in the light of the findings whenever necessary (1993). Instruments to be used A self-administered questionnaire, or the type of questionnaire that is usually completed by respondents (2003), was constructed by the researcher to gather data. A survey questionnaire using the Likert Scale was prepared asking respondents to rate given statements according to their level of satisfaction.             Range                                                Interpretation                          3.50 – 4.00                                       Very Satisfied             2.50 – 3.49                                        Quite Satisfied             1.50 – 2.49                                        Quite Dissatisfied                               0.00 – 1.49                                        Very Dissatisfied             The survey-questionnaires contain open-ended questions to be used in a semi-structured interview. Interviews will take one and two hours. The questions that will be used in the interview are based on the research questions that have been reviewed, refined and approved by the project supervisor. Validation and Administration of the Instrument For validation purposes, the researcher will initially submit a sample of the set of survey questionnaires and after approval; the initial survey will be conducted to the 50 respondents.  After the questions are answered, the researcher will ask the respondents for any suggestions or any necessary corrections to ensure further improvement and validity of the instrument.  Afterwards, the researcher again will examine the content of the interview questions to find out the reliability of the instrument. The researchers then will exclude irrelevant questions and change words that would be deemed difficult by the respondents, to much simpler terms. The researcher will also tally, score and tabulate all the responses in the provided interview questions.             Apparently, there have been issues on the validation on using self-assessment as against an observer rating. The use of either one will significantly change the result of the findings. This study will opt to use both. While there are strengths of the approach, scholars have also presented future impediments and limitations of using this type of methodology.             Furthermore, the researcher will adopt the three-stage process devised by (2003). The first stage is assessing the overall suitability of data to research questions and objectives. In this stage, the researcher will pay particular attention to measurement validity (measuring / estimating whether the secondary data will result to a valid answer to the research questions and objectives) and coverage (this includes ensuring whether or not the data is wanted and can be included, as well as making sure that sufficient data remain for analyses to be undertaken once unwanted data have been excluded). The second stage is evaluating precisely the suitability of data for analyses needed to answer and meet the research questions and objectives. In this stage, the researcher will ensure the validity and reliability of the secondary data by assessing how it was previously gathered, who are its sources, and the likes. In addition, the researcher will be cautious not to commit measurement bias (which can occur due to deliberate distortion of data or changes in the way data are collected). Finally, the researcher will judge whether to use data based on an assessment of costs and benefits in comparison with alternative sources. Data Representative and Reliability             To ensure the reliability of interview results, test-retest will be conducted, or the administration of the same test to the same set of interviewees on two different occasions will be conducted.  This approach assumes that there is no substantial change in the construct being measured between the two occasions.  Thus, two tests will also be conducted: a pretest or a pilot test shall be done and a post-test.  Interviewees will be questioned twice. Furthermore, the proposed approaches, structured interview and telephone questionnaire will be interview-administered.  This part will encourage credibility and accuracy in the interviews. Ethical Considerations             In keeping with the procedures and in the interest of maintaining the integrity of the proposed research, the researcher will make every effort to ensure that the ethical guidelines in research will be strictly followed.  All data collected from the respondents will be kept in confidence. The names of the respondents and their answers will not be revealed. The appropriate measures of the data will be obtained with the selected statistical instruments, and all results of the study will be open to the respondents and the public.

Multinational Companies in the Context of Globalization

CHAPTER 1: Introduction Multinational Companies in the Context of Globalization The proliferation of multinationa...

Child Prostitution in UK

Child Prostitution in the UK   Chapter 1 INTRODUCTION   Background             United Kingdom (UK) is one among many countries which legalized prostitution, although there are aspects encompassing prostitution that are illegal. According to Home Office, prostitution is defined as the ‘exchange of sexual services for some form of payment.’ As  (2008) put it, the last 15 years has been a tumultuous time with respect to prostitution and its debate of legalization or criminalization. The growing concern focuses on men’s violence, victimization including trafficking and pornography, exploitation of women, luring young people and children in prostitution. Moreover, there are also concerns relating to the ability of UK’s long standing prostitution laws to deal adequately with the problems of the sex industry. The main problems, however, are evident on the social, economic, spiritual, mental and physical aspects of prostitution as well as punishing those who exploit, victimized or coerced women and young children who sell sex. There are British cities which experimented with tolerance zones such as Edinburgh, Glasgow and Liverpool although the national trend is geared toward zero tolerance for street prostitution. Nevertheless, the government is committed in trying to get prostitutes off the streets by means of addressing issues of drug problems and violent pimps, for instance ( 2006).               A reality is that for most women engaged in prostitution, selling sex is above all an economic activity. Women’s decisions to enter prostitution are shaped by the broader economic push and pull factors which are not limited to whether and how much money can earn through paid employment ( 2008 ). But for children, it is a completely different case. Child prostitution in the UK is a multifaceted situation. The UK government now recognizes that there is a widespread concern that children involved in prostitution have previously been inappropriately regarded as consenting adults both by the police and others involved in child prostitution work. Today, the government aims at preventing and deterring children from entering or staying in prostitution and that the government now believes that the best way forward is a multi-agency approach with the children’s welfare as the primary concern (2003). In this research, the scope causes and background of child prostitution in the UK will be investigated. Likewise, the legislative base of to ensure that children who are sexually exploited are not criminalized will be also addressed.      Aims and objectives of the project   Basically, the aim of this study is to analyse child prostitution in the UK context. In lieu with this, this study purports to: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Evaluate the reasons why children engaged in prostitution </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Investigate the impact and consequences of prostitution for children</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Explore how child prostitution is being regulated in the UK</li> </ul>   Type of issues it raises   Drugs, abuse, pornography and human trafficking are three of the issues which are commonly associated with child prostitution. Child prostitution is commonly linked with abusive practices and drugs. Child abuse has been considered the primary reason of the increasing number of child prostitutes in the streets of UK. The Children’s Society states that most people who had been prostitutes before reaching the age of 18 are in a situation which only gets worse. In their independent survey of 50 young adults, 50% claim that their first sexual experience was one of abuse and a quarter had been abused before they reached the age of 10. Over half of the participants were runaways which are mainly from local authority care homes. It was also been established that the younger the child prostitutes were, the more likely they are taking drugs. Two thirds of the participants started using drugs before becoming prostitutes (1999).   Further, computer sex kiosks in British clubs and pubs which give access to Internet pornography, or simply pornography, also exacerbate the case of child prostitution in the UK. Computer firms are consistently installing sex booths over the years. Child prostitutes often fall victim of child pornography because of sexual commercial exploitation of children and availability of technology. In the UK, taking, making, distributing, showing or possessing an indecent image of a child is considered illegal. A child, herein, is defined as the person who has not reached the age of 18. Under the Protection of Children Act, accessing an indecent image is also considered as child pornography.   Child trafficking is also associated with child prostitution as well as sexual exploitation, forced Labour, drugs transport, benefit fraud, and other crimes. Girls as young as 11 or 12 are commonly put into prostitution because of human trafficking. There are also teenagers under the age of 16 who are held captive in private flats while their pimps are seeking punters from the local area ( 2006).  (2006) also relates that children, especially female, are transported from remote places like Nairobi, Kenya into brothels in UK. In these brothers, children who are victim of trafficking involve imprisonment, beatings and systematic rape over a lengthy period.   Definition of key terms   Brothels – a place where people pay to have sexual intercourse with prostitutes Prostitution – the act of engaging in sexual intercourse or performing other sex acts in exchange for money, or of offering another person for such purposes Drug abuse – habitual use of drugs to alter one's mood, emotion, or state of consciousness Human trafficking – recruitment, transportation, transfer, harboring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation Pornography – sexually explicit material; films, magazines, writings, photographs, or other materials that are sexually explicit and intended to cause sexual arousal Child prostitute – anyone under the age of 18 whom is used by others for sexual activities in return for remuneration or any other form of consideration   Statistics of child prostitution in the UK               There is no solid child prostitution statistics in place in the UK although there is an estimated 80, 000 sex workers. According to  (2007), there are 5, 000 child prostitutes in the UK by the year 2007, making UK a hub for European commercial sexual exploitation of children nevertheless. Figures suggest that there are 1.8 million children who are being abused in the sex industry worldwide. Three-quarters of these are girls. Further, about 1.2 million children and babies are trafficked everyday worldwide. Those who are involved in sex trades among children make an annual profit of £15bn profit. As such, child prostitution and child trafficking are two of the most common forms of child slavery. Child prostitutes in UK mainly come from West Africa specifically in Nigeria and also in Easter and Central Europe. Britain and Italy are two among the most notable destinations where demand for child prostitute is high ( 2001). These child prostitutes are being paid     Approach               An investigation of the commercial sex trade in the UK involving children, the chosen approach is the interactions approach. As cited in  (1994), “the interactions approach would overcome the limitations of the black box design by offering a methodology designed to explicate the internal processes and problems, events, meanings and situations that make up the interaction between a program and its clients” In the field of evaluation research, an interactions approach could give the researchers the opportunity to collate in formations on how and why the outcomes) occurred. There are various assumptions relating to child prostitution in the UK and these assumptions could neither confirmed or legitimized by an experimental approach and so the necessity for the interactions approach (1994).

Child Prostitution in UK

Child Prostitution in the UK Chapter 1 INTRODUCTION Background United Kingdom (UK) is one among many countries w...