Writing Assignment help on : Challenges faced by Multinationals
Challenges faced by Multinationals
Multinationals Corporations (MNC’s) are those organizations that operate in several countries of world and are being managed by the parent country. The profits are being generated from several host countries operations. Some of the examples of multinationals are Nestle, Sony, Honda Motors, IBM, Coca-Cola and etc. These types of organization enter into several countries in form of foreign Direct Investment by creating confidence and winning hearts of host countries government. The multinationals create asset in the host countries and also employs the local employees from such countries (Web Finance Inc 2012). The multinationals have been facing variety of moral challenges in overseas operation that has tempted to lower their standards as and when the situation has permitted them. Whenever multinationals are going to enter into new country management should have knowledge regarding social, political, economical, legal and cultural aspects. They can enter either into host countries with several modes such as franchise, joint ventures, mergers & Acquisitions and etc. The multinationals enter into several countries for increasing its market share and reaching to the global consumers. As globalization is increasing and demand for international business is growing organization needs to understand the business ethics. The conflicts occur when ethical values are not being considered by the MNC’s while operating in the host country. The business ethics plays very important role while managing the business in domestic and host countries. The knowledge of International business ethics should be there among management to have understanding about the activities such as Bribery, corporate governance, and working conditions of the host country. The business ethics plays an important role because organization should operate in host countries on such business standards. The MNC’s should respect & follow legal system of host countries to cope up with the hurdles that arises while running their business at host countries. The variety of moral challenges in terms of business ethics are explained in this paragraph. The challenges can be in form of assuring 100% employees rights, having concern about the environment and avoiding corrupted activities. Some of the real life examples of multinationals have been explained to analyze the ethical aspects. It has been observed that moral issues of MNC’s can be in form of long hours of work, unhealthy working conditions, lower payment of wages and etc. There was an issue on 2010 when Honda motors at china was paying lower amount of wages to the employees over there and moreover employees were provided unhealthy working conditions. It was illegal and management had been practicing unethical standards which forced them to temporarily shut down their units (New York Times 2010). The employees started to protest against the management of Honda motors and Japanese culture was also being protested by them. The workers went for strikes and management had to increase the workers pay above than the average wage rate. Management knew that labor cost was cheaper in china as compared to Japan so the employees wage rate was kept far below the Japanese employee wage rate. The human rights of employees should not be exploited by the Multinationals at workplace. At times it has been found that multinationals have been exploiting resources of the host country by offering bribery to the officers of legal authorities for getting licenses and etc. MNC’s have been producing lower quality products & services as compared to the parent country without following the ethical standards to earn maximum profits. The moral issues of multinational are related with how to manage global culture, follow ethical code of conduct, implement host countries government policies, engage the local employees in ethical activities and have a proper understanding of host countries culture (SpiruHaret University 2009). The multinationals have to understand business from cross cultural or multicultural aspects. To compete globally multinationals have been searching those developing countries where the cost of production is low as compared to the developed countries. These days the non- governmental organizations (NGO’s) have started to raise issues regarding such multinationals to balance ethical norms of the host countries. The MNC’s have been facing challenge while performing corporate social responsibilities because they are forced to share some parts of their profits for the welfare of host countries societies. It is well said that good ethics results in good business so multinational need to implement it while running business in the host countries. There is an example of Sony Company who entered into US market. It produced same standards of products as it was producing in JAPAN by managing several changes that occurred in the economy of both the countries with the help of ethical standards (E-notes.Com 2012). According to (Noe 2006) multinationals follow the unethical path when they pay the host countries employees less than the parent countries standards because of larger availability of talent. Multinationals such as Coca Cola, MC Donald’s had to modify their products while entering into some of Asian countries because of the cultural factors of host countries. The global challenge needs to be managed in terms of political, economical, social and legal aspects. Previously people were focused about quality and today competition is mainly based upon the cost factor which is being maintained most of the time unethically by the MNC’s. The leaders of the organizations modify the policies as per their requirements. Many times when multinationals directly cannot enter into host countries in such case they come in form joint venture and mergers so that they can easily operate there. Moreover it is very difficult to win the confidence of the host country consumers because ethnocentric factor is being attached with them. The role of business ethics with respect to multinationals are it will help in promoting global culture which will clarify the local business policies of the host countries. A proper ethical code of conduct can be implemented and set for the employees working worldwide in those multinationals (World Economic Forum 2012). The employees of the host countries should be engaged in ethical activities by providing proper training to them. These multinationals can get tied up with the local NGO’s of the host country to mark their ethical standards and also help in developing those poor societies of host countries.
Thus there are many multinationals organizations which have been operating in host countries since longer period of time. These multinationals comes in form of franchise mode, joint venture and etc. It creates asset in the host countries where it is going to start the operations. The challenges in terms of multinationals can be social, legal, political, and economical which needs to be managed by the management of multinationals. If we talk in terms of moral challenges then in such case the labor rights, human rights, ethical conduct, concern about the environment, tie ups with NGO’s etc should be managed by the multinationals. The factors such as cross cultural hiring, understanding of the availability of labor market, government policies, analyzing behavior of the consumers, following the legal authorities and etc should be managed to set proper ethical standards for cross cultural employees. The Multinationals examples such as Honda Motors, Sony, Nike and etc has been explained to show that moral challenges should be faced in overseas operations which may result in lowering the standards of such organizations. The knowledge of business ethics will help in setting the transparent standards of working for such MNC’s. The some of the moral standards of multinationals that can be followed at host countries are respect the customers globally, honor & follow the host countries government and legal system, hire the employees from diverse cultural backgrounds, and protect the local environment & its resources over there. The transparency should be maintained and illegal activities such as corruption and bribery should not be performed by the multinationals at the host countries. The employees who are being hired from the cross cultural backgrounds should also be ethical in their activities(CCSE 2008). There are several advantages for host country when the MNC’s come because it helps in developing the local economy over there, and create employment for the local labor. The multinationals meet the demands of the global consumers by supplying them the required products and services. It is a most suitable method to explore the trade from one country to the other country. Therefore multinationals have been facing moral challenges while operating in host countries which may force them to work below the standards. At times this statement tends to be true but if these multinationals follow the standards of the ethics while managing their business the problems can be managed easily.
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