Should An MNC Reduce Its Ethical Standards?

Should An MNC Reduce Its Ethical Standards? Ethical Standards are different for every country. Any business that goes international has to comply with the rules and regulation of that country in context to the norms of the business laws. This is where the need of ethics comes into picture where an MNC has to decide whether to follow its own ethics while continuing its business activities or to unethically compete with other business within the country. In order to arrive to a decision what a company should do we should first know the meanings of few terminologies as discussed below. What is the definition of MNC? MNC is a company which has expanded internationally with a reason to grow. MNC is built to achieve maximum wealth for the share holders. There are three key theories which justify existence of an MNC. Comparative advantage: Each country should use its comparative advantage to specialize in its production. It should also rely on other countries to meet other needs. Imperfect markets MNC should make use of the resources in imperfect market to specialize in their products. Imperfect markets make the factors of production immobile and it is the main cause of encouragement for the countries to specialize. The Product cycle Every MNC has a home country and the product cycle suggests that it should expand to foreign countries. MNC will not have any problem it its management is tempted to achieve the goal of maximizing the wealth of share holders, not of their own. MNC and International Competence International trade is the most common method by which firms conduct international business. Other methods are licensing, franchising, joint ventures, acquisitions of foreign firms, and formation of foreign subsidiaries. Each method has its margin of profit and needs little or more capital investment. For example, licensing and franchising require little capital investment but distribute some of the profit to other parties. While, acquisitions of foreign firms and formation of foreign subsidiaries require substantial capital investments but offer the potential for large returns. Ethical Standards and International Competence An MNC should reduce its Ethical Standards to compete internationally. The main reason being every foreign country has a different ethical standards and an MNC which does not reduce its own Ethical Standard in that county, those activities and standards will be viewed in an unethical way. This is a biggest disadvantage to an MNC and it will not be able to compete in that country. As discussed earlier, the MNCs expand internationally to grow, to maintain and earn profit, maximize wealth of the share holders. If it maintains a standard code of ethics according to the foreign country, it will be able to achieve these goals. If it is stuck to its own standard code of Ethics of the Home Country, then they will fail and diminish. If an MNC reduces it Ethical standards, then this will help it in unfavorable economic conditions of a particular country. It will also help it to stay afloat when the cash flow is affected and returns are decreased. The valuation model of the MNC shows that the MNC valuation is favorably affected when its foreign cash flows increase, the currencies dominating those cash inflows increase, or the MNCs equivalent rate of return decreases. Certain political conditions, pressure from upper management affect the valuation of an MNC. Below are other factors which play part for an MNC to grow internationally. Problems due to malfunction in management Exchange Rate movements Risks of investments in foreign companies Political Risks of a country Centralized or De-centralized approach in decision making Global Competition Joint Venture restrictions and limitations Impact of Global warming, terrorism and natural calamities Uncertainties in the market Let go deep down on each of the factors and find out how to reduce ethical standards in international competence. Agency Problems The main goal of any MNC is to strengthen the wealth of Share holders. If managers start fulfilling their own interests instead of those share holders then the MNC will be in trouble. The Ethical Standard should be able to balance the growth of management and public. Exchange Rate Movements A U.S. based firm operating in Asia and/or Europe has to balance its capital according to its sales and production in foreign country. The inflow and outflow of the cash and capital is affected by Exchange Rate decrease and increase. It is also a deciding factor for investment in the foreign countries. MNC should pay attention and be up to date with FOREX. Agency costs are larger for MNC than a domestic firm. Imperfect Markets If perfect market exists, then wages, prices, and interest rates will be similar for the countries. There will not be any major competitive areas of products. But, the markets are imperfect and that tend to increase subsidiaries in the foreign countries. International Opportunities Another factor of growth for an MNC is to buy foreign firms with similar interest, area and product. Licensing will also help grow the MNC. With a smaller investment or buying a stake in established company venture, gives opportunity to grow in foreign market. Internet Now a days wide use of Internet is one of the major factors for any MNC to be recognized globally. Marketing, advertising, blogs and networking are the key usages of internet. Internet will result in more international business and MNC is touching the World Wide Web. Risks There are various risks involved in investment, buying, licensing of foreign firms. Political risks also affect equally. Exchange rate movements, currency depreciation, stock market also affect the growth of the MNC. Every business has many types of risks, but overcoming them by finding alternatives in other areas is the way to go. Joint Venture Joint venture is a bigger factor of growth for an MNC. A major production company in one country can have a joint venture with a biggest supplier of the same or alike product in another country. Both of them can utilize the supply channels and monetary requirements and can grow together. A largest wine making company in U.S. can have a joint venture with a largest brewery in China. The U.S. company can leverage the brewerys established channels and distribute wine in a big number throughout the country. It can utilize brewery of Chinese company, make wine and sell it locally. In addition, the U.S. company provides information to the brewery about the wine market of U.S. Thus, joint venture enables growth of MNC in international business and competence. Global Competition An MNC having a standardized product in the market has to compete more internationally, because the product valuation, pricing, distribution and specifications are same all over the globe. That MNC should add more to its product categories or line of products to win the competition. It can also provide attractive benefits to firms and pricing or discounts to customers. Valuation of an MNC All the factors we discussed above can affect either positively or negatively to the value of an MNC. A U.S. based MNCs value can be declined due to political risk in the foreign country even though its cash flow is intact. Similarly, An Indian firms value will be increased due to demand and supply in the foreign country and exchange rate movements. In this case, its valuation depends on four factors: Expected cash flows in Rupees: This is the outward cash flows from the company to meet the needs of the foreign markets demand. It needs to flow the cash within itself to employ more people, buy more machinery for production and more logistics Expected cash flows in Dollars that are ultimately converted into Rupees This is inward cash flows as orders, profits and investments from the foreign country This also includes selling of any part of the company to foreign buyers The rate at which it can convert into Rupees This is FOREX, currency remittances which will be fluctuating according to global market Its weighted average cost of capital This includes acquisitions, mergers, sold-bought assets and stock values Wise things can be done to increase the value of the MNC, to sustain in the international competition. One of them would be to sell of a part of the foreign venture which is riskier. Other would be to buy licensing of the foreign firm which has same or lesser risk. MNC should be reducing its ethical standards on supply chain management as well. It can distribute its small amount of product or logistics thru a cheaper medium in foreign country rather than being responsible on itself. Markets with standardized currencies, like Euros, are a good choice in regards to this. A U.S. MNC can import a smaller amount of supply from a German company with lower rates in Euros and discontinue relations with U.S. supplier. Expansion in International Business An MNC which manufactures auto parts at competitive rates and provides little lesser wages to its employees can guarantee job security to them. But, it should also think of expansion to cheap manufacturing foreign countries. Let us discuss some factors on why to expand: The MNC should select the foreign country wisely, taking local competition in that country, production of the same auto parts in that country and general wages structure of that country. It is completely smart to expand in the country if there is not much competition in manufacturing parts and employing cheap labor. This is competitive advantage. The MNC can leverage the imperfect market theory here. It cannot export the labor from its home country, but can establish a subsidiary in the foreign country and meet it needs. With a strong establishment in the home country for the parts it manufactures, the MNC can easily expand and sustain in the foreign country. This is product cycle theory. The MNC must choose the low currency country to expand as it can build a strong base in the foreign country. E.g. Dollar-Peso, Euro-Dollar, Dollar-Rs. It will be the best time to expand when the currency of the foreign country is weakened. This way it can exchange more amounts in foreign currency and invest more. This can also create an Exchange Rate movement risk. The political risk is also involved in expansion as to how stable are the political conditions of the foreign country to grow with. The MNC can hire a consultant to decide whether it should expand or not and the consultant will look into above major factors when trying to give them the answer. Time and Uncertainties It has been observed that the US currency has weakened in the past few years with comparison to Australia, Mexico, etc. An MNC expanding its business in foreign countries can be affected by the foreign investors decisions because of these uncertainties. For example, Googleâ„ ¢ is expanding its services to China, African countries, Australia, etc. It has cash outflows associated with the creation, marketing, resources and administration of each of its services. It also generated cash inflows from selling space on its websites, advertising and media related applications. Each application has its own flow in different currency. Thus, the valuation of Googleâ„ ¢ is based on its conversion of each countrys currency to the Dollars. And if the investors see that the Dollar is weakening day by day, they can change their mind to other application providers on the web. Valuation of the MNC is affected by these factors. Conclusion An MNC has to reduce its ethical standards based on the above factors in various ways. This includes its employer-employee relationships, venture relationships, political and economical relationships and various local conditions of the home as well as the foreign country. When a U.S. based MNC competes in some countries, it may encounter some business norms there that are not allowed in the United States. When competing with a Government contract, firms might provide payoffs to the government officials who will make the decision. Yet, in the United States, a firm will sometimes take a client on an expensive golf outing or provide skybox tickets to events. This is no different than a payoff. If the payoffs are bigger in some of the foreign countries, then MNC can compete by matching the payoff provided by its competitors. Thus, reducing ethical standards on major factors, the MNC can sustain in international competition.

Olympic Sport Essay

Any athlete in training will always emphasize the importance of hard work during training and keeping a balanced nutritional diet in an effort to reach his maximum peak during competition. For an Olympic athlete in training, his diet will always spell the difference between winning or losing his sport. The reality of training for an Olympic sport such as swimming is that the speed of the swimmer does not depend on the food intake of the swimmer. What makes him skim through the water much faster is his physical training and physique. Proper diet and nutrition is what will give the body the energy to complete training sessions and become more efficient while performing the trained tasks. This is why a diet analysis is highly important when training a swimmer. The diet analysis is composed of two parts according to the usaswimming. org website: Diet analysis is comprised of two parts, needs and intake. Optimal nutrition is a matter of balance (nutrients-in versus nutrients-out). In other words, a swimmer’s intake of nutrients must match his/her output of nutrients during rest and exercise. In terms of energy (aka calories), if the needs are greater than the intake, the net result is weight loss. Conversely, if the needs are less than the intake, the net result is weight gain. Therefore, an athlete must always be focused on healthy eating and conscious of having to substitute lower fat foods for whole fat foods as well as reducing any snacks that will not contribute to keeping his energy level high. The athlete will best be served by loading up on whole grains, cereals, and legumes with at least 5 servings of fruits and vegetables in a day. His protein intake should be limited to lean meats, fish, and poultry. A typical diet for swimmer would be composed of the basic food groups but on a varying scale. For instance, Carbohydrates are used as the fuel of the body and therefore a swimmer should consume about 55-60% of his daily calories from grain and cereal products. Protein in the meantime builds the swimmers muscle tissues and other chemicals needed for body function. So protein intake would be recommended at about 15-20 % calories. Fat in the meantime is the transporter of the body. Swimmers will consume only 30% of fat calories while limiting the intake will result in a desirable fat consumption range for the athlete.

The Battle Over Beta Club Essay Samples and How to Win It

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Compare And Contrast Booker T. Dubois - 1296 Words

W.E.B Du Bois and Booker T. Washington were both fighting for the betterment of blacks, but accomplished it differently. W.E.B Du Bois believed in blacks getting a classical education and obtaining equality. While, Booker T. Washington wanted blacks to focus on vocational skills and give up their rights to be a success. W.E.B Du Bois disagreed because he believed that African Americans should not limit themselves to vocational labor but preferred that they educated themselves so they would be recognized as full citizens. They had both similarities and differences when it came to achieving education and equality for blacks. The childhoods of Du Bois and Washington could not be more different. They were born in different time periods which†¦show more content†¦He was finally able to attend school when he was freed and started working for Viola Ruffner, but only for an hour a day during the winter months. Du Bois and Washington had a goal of obtaining education for all blacks, but went about it differently. Washington wanted blacks to accept discrimination just to receive an education for vocational skills. That’s where Washington and Du Bois disagreed. Du Bois wanted to educate blacks so they can gain political and civil rights. Washington expanded his political views and believed that the blacks deserved political rights, but they should not try forcing to get them. Du Bois believed Washington’s idea of blacks becoming submissive for education would only benefit the whites. Before even helping blacks receive an education, Washington made sure he had one of his own. Washington was determined to get an education when he became aware that there was a school for all races in Virginia. Later, He attended Hampton Normal Agricultural Institute by working as a janitor until receiving a scholarship. Washington believed for blacks to obtain economic success they had to be compliant to whites. Washington also believed â€Å"that to get into a school house and study in this way would be about the same as getting into paradise† (Washington 4). This demonstrates his ideas in which education was a major requirement in order to succeed. One of Mr. Washington’s achievements was the â€Å"Atlanta Compromise†; the agreement wasShow MoreRelatedBooker T Dubois Compare And Contrast Essay1110 Words   |  5 PagesCompromise vs. Conflict The stark differences between Booker T Washington and W.E.B. DuBois and their approaches to racism Do you believe that slow and steady wins the race, or that when talking about civil rights the sooner the better? Booker T. Washington and W.E.B. DuBois were two very influential people who fought for the rights of African Americans in the late 1880’s to early 1900’s. Although both men were fighting for the same thing, their views on how to approach equality and their personalRead MoreCompare And Contrast Web Du Webois And Booker T. 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