ETHICAL ISSUES IN MULTINATIONAL CORPORATIONS
Introduction
A multinational is defined as an enterprise operating in several countries but managed from its home country.
Ethics as a philosophy is defined as the discipline concerned with what is morally good and bad, right and wrong.
Ethical issues arise when one is unsure of what is the right course of action to be taken at a single time. This problem becomes exponentially complex when applied to a multinational organization.
Globalisation has enabled many companies to venture abroad in an attempt to grow their market presence while also boosting profitability, acquire cheaper raw materials, and gain access to low cost of labor.
Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation.
There are four categories of multinational corporations: a multinational, decentralized corporation with strong home country presence a global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available an international company that builds on the parent corporation 's technology or R&D a transnational enterprise that combines the previous three approaches.
Multinational corporations operate across many countries, and each country has its own laws and cultures and also diverse ethical practices and social norms.
Some of the most notable multinationals include
Apple
Barclays
IBM
Multinational Corporation - business enterprise with manufacturing, sales, or service subsidiaries in one or more foreign countries, also known as a transnational or international corporation. These corporations originated early in the 20th century and proliferated after World War II.
If you want to become a multinational corporation you will first need to know what is about. A multinational corporation is when you operate your business in different countries at the same time. According to the United Nations a multinational corporation is "an enterprise which owns or controls production or service facilities outside the country in which it is based". Thus, "a multinational corporation carries on business operations in two or more countries. Its headquarters are located in one country known as home country but its activities are spread over in other countries known as host countries." Staff, I. (2014, December 05). Multinational Corporation - MNC. Retrieved November 19, 2017, from https://www.investopedia.com/terms/m/multinationalcorporation.asp Subsequently being a multinational corporation has many benefits and some are very noticeable mainly
* Multinational Enterprise - A large company with substantial resources that perform various business activities through a network of subsidiaries and affiliates located in multiple countries. They carry out research and development procurement, manufacturing and marketing activities wherever in the world the firm can reap the most advantages. Typical MNE's include Barclays, Disney and Samsung etc
Multinational corporations face many challenges in their domestic and global environments. According to Ajami, Cool, Goddard, and Khambata “a multinational firm is one in which a certain percentage of the earnings, assets, sales, or personnell of a firm come from or are deployed in foreign locations” (Ajami, Cool, Goddard, & Khambata, 2006, p. 6). According to this definition US Airways Group would be classified as a mulitnational firm. On Fortune 500’s Worst List, US Airways Group is identified as a least admired company on all eight attributes identified by the research and
Multinational corporations are business entities that operate in more than one country. The typical multinational corporation or MNC normally functions with a headquarters that is based in one country, while other facilities are based in locations in other countries. In some circles, a multinational corporation is referred to as a multinational enterprise or a transnational corporation .
When a company decides that it is time for it to grow from a national into a multinational company (MNC) there are cost and benefits involved. A multinational corporation is a company that has productive assets, which they own and control in countries other than their own. An MNC is unlike an enterprise, which exports products and services, but the MNC directly invests into developing countries, where it can benefit from producing products at a lower cost, while increasing its market share. Whether this has a positive or a negative impact for the company and its host state, is dependent on the
Over the years, Multinational enterprise have matured and developed into large companies that they are now part of our everyday lives. Form the use of mobile phones to the cars, personal computers and their software and even the beverage we drink, most of these products are supplied by Multinational companies. Their existence has great impact on our lives. In the world today, Multinational enterprises are powerful companies and they own resources in excess that most host countries possess. These companies are so powerful that they turn out to be power centers that can manipulate the host countries and even international organizations and at times the affairs in its home country.
International business ethics challenges the corporate world to deal with questions of what to do in situations where ethical standards come into conflict as a result of the different cultural practices in the nation. Since, there is this dilemma that has progressively troubled the large multinational corporations, international business ethics has arisen to help address these adhesive subject matters. There are several international business ethics discussions on the question of how to act in the home country as opposed to the host country is at the central point of most international corporations. The argument in question is how companies should practice their business according
The rapid development of economy promotes the development of multinational companies, which have become a general form rather than a special form of a company. Multinational companies carry a lot of money, production technology, management expertise and sales channels to expand their business around the world. There is no doubt that multinational companies will become the subject of an act of international relations and play an increasingly large impact on international relations.
Multinational corporation’s main goals are to improve revenue and profits by keeping the costs down, and to maximize profits for its shareholders.
First of all, the definition of multinational companies and tax avoidance should be learnt. Multinational companies are those companies have international branches, shops or manufacture factories in both local and foreign countries. And the tax avoidance is a company which uses legal methods to escape paying the tax for its own profits. Obviously, the multinational companies such as Starbucks use this strategy is to enlarge the profit.
Multinational company must find the best idea and decision making between centralized and decentralized while they employ control and coordination (Zhang, M., & Edwards C. 2017). The permanent task that all multinational companies facing is the control and coordination of international subsidiaries regardless of what country they are from such as Europe, Japan, US, China and everywhere. Initially, they developed and study the market and cultures of different countries before entering the global market.
A multinational company is often defined as a corporation whose operations and investments are broaden across a number of countries. They are also referred to as transnational companies. Therefore given this definition it would be expected that if a company operates over such a large territory that it would indeed have many effects and impacts, locally and globally, and its role would also be quite significant as it can have a direct influence on an economy, the environment and general effects on society. However, changing the way they run things in order to accomidate society could break there business down and they could eventually have no impact on society so looking
A multinational corporation (MNC) is a company engaged in producing and selling goods or services in more than one country. Besides that, multinational corporation can be defined as a company or group that derives a quarter of its revenue from operations outside of its home country. It generally consists of a parent company situated in the home country and approximately five or six foreign subsidiaries, usually with a high degree of strategic interaction amongst the units. The largest MNCs are oil companies such as BP and Exxon (Esso) and car companies such as Ford, Toyota and Volkswagen. Other famous companies such as Sony, IBM and Coca-Cola are also defined as being multinational. Lots of MNCs have about 100 foreign subsidiaries strewn around the world, and all of them face a number of challenges, which they need to deal with.
In the management of multinational corporations there are a multitude of ethics issues that arise. For instance in the United States it is illegal to bribe someone, but in Romania where it is illegal but still socially acceptable bribes sometimes are required to make a deal in business; when it comes down to a matter of cultural differences there is a lot more pressure for corporations to behave in an unethical manner. Other common problems are things like a corporation asserting political influence, using products that are legal in one country but illegal in others, tax evasion, and the exploitation of workers in developing counties. Though there are many problems faced there are solutions to these problems as well.