Effect of Globalized Chain Brands on Local Businesses and Cities

Everyone is familiar with the famous golden arches of McDonalds, the green Starbucks logos, and the never-ending Walmart commercials that are played over and over on tv. These brands are a part of the everyday lives of many consumers worldwide as growing businesses. But what makes these businesses so special? Absolutely nothing, because although the menus and products change based off of location, they are exactly the same in look and feel all over the world. Some fail to realize these globalized brands can affect the cities you live in and the mom and pop diners that are owned locally by friends and family in many ways. Some view the globalization of big businesses as a positive thing by bringing more business to an area. However, big businesses destroy local businesses by stealing the attention of consumers with the newest products, bringing detrimental effects to the local businesses and cities where they remain, and by having the resources to make risky business decisions that local business can not afford to reckon with.

Benjamin Newman and John Kane in their article, “Backlash against the “Big Box”: Local Small Business and Public Opinion toward Business Corporations,” state, “Political discourse often distinguishes “big” from “small” business, with the former cast as the insidious monolith of the present era and the latter as the virtuous incarnation of the average citizen’s participation in the American dream. Throughout the nation, this abstract juxtaposition of big and small business takes concrete form in the emerging dominance of large-scale corporate retail chain stores over locally owned small retail businesses.” (Newman et al).  Due to the amount of large chain companies and the amount of advertising that they can produce as a large-scale company, local businesses struggle. Because chain companies are based off of making the next most trendy products, local businesses often become forgotten. It is not only until one of these many globalized brands takes a political stand that does not suit all consumers, that an alternative or substitute such as a local business is pursued for these goods. According to Newman and Kane, “Drawing upon two national surveys combined with Census data, …citizens’ attitudes toward large corporate retailers, and business corporations more generally, are strongly linked to the vitality of small local retail business.” (Newman et al). Therefore, without the controversies of global companies, local businesses would be completely forgotten and have no way to thrive in the economy.

Globalized businesses thrive by spreading to cities all over the world, big and small, allowing big businesses to grow larger while also causing detrimental effects to local businesses and the cities that they are located in. A great example of this is how the town and citizens of Chicago, Illinois are suffering the effects from a recently constructed Walmart. Steven Barrison discusses this in his article, “Study Proves It: Walmart Super-Stores Kill off Local Small Businesses,” where he states, “Within two years of Walmart’s opening its doors, 82 local stores went out of business.” This was after Walmart had promised to “propel our struggling communities straight to prosperity.” (Barrison) Because of these effects caused in west Chicago, Washington was refusing to allow a Walmart into their city. These effects of globalization were predicted long before now. Leo Sun discusses this in his article, “Impact of Globalization on Small Businesses,” when he states, “In “The Communist Manifesto”, Karl Marx famously warned that small local businesses will inevitably be wiped out by large multinational companies in a form of imperialist capitalism. According to him, the destruction of local businesses leads to the loss of local culture, and the rise of a singular anonymous corporate culture which only varies slightly from country to country.” (Sun). This prediction is quite parallel to businesses and how they are able to function in the economy now. After all, a Gucci store in America looks virtually the same on the other side of the world.

Globalization of brands allows for big businesses to expand and become an even bigger globalized brand than before. Leo Sun talks about this in his article when he refers to globalized businesses as “big fish in the sea” and locally owned businesses as “smaller fish.” (Sun).  He does this by saying, “Once you start up a new business, you plunge into an ocean populated by a few smaller fish, which compete with you for food, and lots of bigger ones, eager to eat you alive. (Sun). Sun uses this analogy to show how big businesses and smaller businesses interact. Big business brands use resources from globalization that allow for big business moves that local businesses would never be able to contend with. This is also mentioned in Sun’s article when he states, “The big fish in the sea tend to be well-connected, multinational beasts taking full advantage of the perks of globalization – such as outsourcing, uneven exchange rates, and low-margin high-volume sales models – making them nearly impossible to compete against.” (Sun). This is why in order for local brands to survive in the economy they must either band together and form connections with one another or create such a unique product that it would be hard for big businesses to replicate.

Globalized brands such as McDonalds and Starbucks create sameness in cities all over the world, giving little diversity to cities, ultimately taking away their cultural stamp. This is done by global businesses mocking the buildings and atmospheres of their businesses worldwide. According to Simon Bryant, in his essay “Global Brands Contend with Appreciation for the Local,” Bryant states that because of the spread of globalized brands, that local businesses become more popular and generate more business. (Bryant).  He believes that because Walmart and McDonalds are popularly known worldwide, that more mom-and-pop type businesses attract consumers, because of the diversity that is created from city to city, not only in the products, but in overall cultural feel. (Bryant).  But is this really true? Although, local businesses do create diversity, globalized brands do steal the attention of consumers as recognized brands, ultimately destroying any chance of local businesses surviving in the economy.  This could be due to many different things. One example of this could be tourists being able to visit one of their favorite chain restaurants or coffee shops while on vacation, as opposed to a local business to capture their favorite things about home while they venture through new cities. Another example could be that because these globalized brands are so big structurally, they could easily draw the attention of consumers, whereas local businesses may not generate the funding for these kind of business projects.

Local businesses are generally owned by family and friends in the cities where they are present. So how fair is it to allow globalized businesses to come in to these cities and destroy the years and years of passed down family restaurants at the hands of a McDonalds or a Walmart that is financially thriving above and beyond? The answer- it is not fair at all. This is why consumers, need to be aware of the businesses they are supporting and how that directly affects their town and community. Consumers should understand where their money is going when it is used to support businesses, and where the money that is being spent could be the most beneficial. Nickel talks about this in his article, “Shopping Local vs. Shopping Locally,” when he mentions a study done on a section of Midcoast Maine where the economics of shopping locally as opposed to shopping at chain brand stores was reviewed. Nickel states, “for every dollar spent at a locally-owned establishment, nearly 45% of that revenue stayed in the local community with another 9% being spent elsewhere in the state. These expenditures included employee wages/benefits, inventory, supplies, and services from other local businesses, profits accrued to the local owners, state and local taxes, and charitable contributions.” (Nickel). This study shows just how much more shopping at a local business could benefit mostly the town where the business is, as well as partially helping the state. Nickel also states, “for every dollar spent at a chain store, only 14% of the revenue stayed in the local community, mostly in the form of payroll. The balance of that money flows to out-of-state suppliers, or back to the parent corporation. Based on these numbers, three times as much money stays in your community when shopping at a locally-owned business vs. shopping at a chain store.” (Nickel). This study allows for consumers to really be able to understand the benefits of shopping locally, because shopping at chain store brands only benefits out of state suppliers and employees of the companies as opposed to shopping locally where not only the cities receive a high percentage of the revenue, but all revenue remains in state.

Even though shopping locally can be the best thing for not only the city you live in, but for the state you live in, this is not always an option. Local businesses usually do not generate enough revenue to be able to continue on with their business, unless they can afford to create a really unique product and fund risky business decisions without relying on profits of the business. So how can consumers help this cause?  In order to make it so that more local businesses can stay afloat in the economy, consumers need to rely as much as possible on the products being sold by these local businesses, so it creates a way for new local businesses to be able to come into the market ultimately allowing for the production of more diverse goods. With the uprising of more diverse goods, consumers would be even less dependent on the products of globalized brands which creates even better revenue going back into the cities and increase of jobs because of all the local business uprisings, and an overall better city. So next time, before shopping, think about shopping locally as opposed to shopping globally.

Over all, local businesses are drowning in the economy at the hands of globalized businesses. This is because of many different things that globalized businesses do such as steal the attention of consumers through the newest and best products, causing effects on cities that can hardly be reversed, and making business decisions that that local businesses can not afford. This is very unfortunate due to the number of beneficial advances that comes from a local business, as opposed to the globalized businesses that hardly live up to the promises that these businesses make to the cities that they inhabit. It is now up to consumers to take what they know about globalized businesses and make the decision to benefit their state and the cities they live in by shopping locally. After all, it is better to know where your products are from and who is producing them.

Works Cited

Place an Order Today

See how BusinessTeacher can help you with your studies