Lehmann Brothers Company

The Lehmann Brothers Company, which became bankrupt in September last year, was a multinational finance company, based in America, that specialised in the distribution of what was once considered low risk bonds. The impact of this bankruptcy has been significant due to the involvement of a wide range of investors in many countries. Investors ranged from retirees, private companies and small family investors situated in countries within Asia, America and Europe.

If you look at the tag on your shirt, chances are it was made in a country other than the one you live in now. What's more, before you buy it from the store with Indonesian shop owners, this shirt could have very well been made with Chinese cotton sewed by Thai hands, shipped across the Pacific on a French freighter crewed by Spaniards to a Victorian harbor. This international exchange of your shirt is just one example of globalization, a process that is so current in today's economy and lifestyle.

Globalization is the process of increased interconnectedness among countries, most notably in the areas of economics, politics, and culture. McDonald's outlets in Japan, Indian "Bollywood" films being played in Australia, and organizations, such as The United Nations, are all representations of globalization. Globalization is also the dismantling of trade barriers between nations. It has been taking place in the world over many years, but its growth occurred drastically in the 1990s. From 1973 to 2005, world trade increased from 11% per year to 42% in 2005.

Situations like the recent Lehmann Brothers collapse are able to occur due to the increased globalisation apparent today. This article on The Lehmann Brothers is a clear example of where the negatives of globalization become apparent (including the fact that it is an Australian newspaper looking at an American company which has affected Asian and European residents). However, despite the obvious negatives, there are also many advantages that occur from globalization. This essay will look at the negative and positive outcomes of globalization, particularly in respect to the Lehmann Brothers bankruptcy.

Globalization has proved beneficial to already developed countries, such as America, whose large companies have taken advantage of lower cost of production in developing countries. Globalization has increased free trade and allows corporation to find the lowest prices on stock and labour. This is an advantage for the large corporation; however, this often leads to big companies and big countries taking advantage over small or developing companies and nations. Although globalisation allows corporations to have greater flexibility to operate across borders, this also often leads to companies, such as Lehmann Brothers, exploiting regulatory laws and low tax rates, committing regulatory arbitrage. Further, another disadvantage of globalization is that