The increased presence of MNCs in the International Political Economy has led to the startling reality that companies can be political entities and their influence as political actors can be sizeable, both in positive and negative capacities. The sample consisted of 335 subsidiaries of large multinational companies with more than 50 employees and an annual turnover of more than 30 million CZK (1.2 mil. The practical standard represents an extreme diligence toward moral behavior. Discuss the ethical issues associated with multinational corporations. Wal-Mart claims that in a bid to keep operating costs down, employees’ wages can only be so much. Looks like you’ve clipped this slide to already. The main argument of the survey is the fact that in the scientific approaches Wal-Mart intends to keep its prices low as it hopes to sell carbon dioxide credits for millions of dollars in a bid to save energy to companies other companies that can’t. multinational companies (MNCs) might be pursuing profit at the expense of vulnerable workforces, the environment and so on. There is always the question of what the ultimate structure of an organisation would be, this is vital as it would help aid the smooth running in the production of goods and services. In a business that competes mainly in global markets, multinational companies (MNCs) operate in different social, cultural and ethical environments. . There should be a vast opening for fair employee opportunities in training and promotion, timely payment of salaries and a decent working environment. The size of a multinational organisation and power could play a huge impact on the policy issues in a nation, such issues would be felt more by relationships with developing nations as supposed to developed nations. Multinational organisations undergo a dynamic and complex global market, where right and wrong could be interpreted as widely different (Donaldson 1985, 1989). However, Wal-Mart failed to recognise prospective problems and as a result they are probably going to pay for it. The massive differences in culture generate a lot of managerial issues and ethical problems, are no exceptions. Price discrimination, price skimming, and price fixation. The MNC is not above the regulations, laws and jurisdiction of the host and should use suitable international disagreement resolution mechanisms when necessary. Ethics, compliance and corporate sustainability are more than mere cognitive learning experiences from PowerPoint slides. In a business organisation, investors should always get their moneys on time. Competence is defined as capable, reliable, and duly qualified. Meanwhile they need to develop and enforce their own codes of ethics specifically directed at the issues related to a multicultural, multinational business environment. Wal-Marts policy states that every employee should be paid for every mined worked for, so they have actually bridged a statement of policy they made. Companies may buy products from factories employing children.Eg. (www.brainyquote.com) Authors from different parts of the world have also defined ethics in a lot of different ways. Our academic experts are ready and waiting to assist with any writing project you may have. In the area of environmental protection, MNCs should collaborate with the host country in producing and increasing national and international environmental security standards, as well as notifying the host of any possible environmental impact of the goods manufactured, services executed, and/or processes made use of. The conditions in a host country may be much inferior to those in a multinational’s home nation. The end result should be to aid trade and enhance in profit and a make standard of living better. But sometimes there is a … MNCs should value consumer laws of protection and preserve the safety and health of consumers through accurate advertising and appropriate labelling. Corporate codes of ethics can have reverse effects and mask anomalies or social evils in operations outsourced to low-wage countries. Additionally, codes should be positive in tone. These standards reflect Donaldson’s languages of avoidance of human harm, rights/duties, and the social contract in that the standards encompass not only minimal responsibilities owed by MNCs and compliance to legal constraints, but also mutual agreement between the MNC and societal concerns. Differences would probably be most pronounced between operations in developed and developing countries as well as being dependent on the degree of power the. Recognising the relationship between the economic, cultural and political aspects facing multinationals is, however a firm ground from which to identify the necessity for international codes for organisations carrying out international business. Wal-Mart has created fourteen maintainable value networks made up of suppliers’ employees and environmentalists. Wal-Mart is being accused of paying their employees very low wages, with the average employee earning between $12,000 and $17,000 per year which is not a lot at all. The theoretical standard of behavior reflects the highest potential for good, reflecting the spirit of morality. Industries that exhibit a huge pollution should comply with the governments’ rules and regulations regarding water, air and noise pollution. In addition, Wal-Mart likes to portray itself as a seller of U.S. manufactured goods but in reality the company has products on its shelves made in foreign countries and at questionable workshops. VAT Registration No: 842417633. many hours in a day. Wal-Mart has been accused of using illegal immigrants to work in the United States. Getz suggests that control of the host is the basic right that must be recognized and respected by the MNC. Raiborn and Payne developed a model code of ethics that, at the time, was not specifically envisioned as being applicable for nondomestic as well as domestic operations. The United States has made it unlawful to bribe high level foreign officials to acquire or retain businesses in overseas. Not neglecting trade organisations such as United Nations as well as international agreement between companies. What special ethical issues face multinational corporations? Reasons for establishment of MNE. The requirements in these areas consist of (but are not restricted to) providing local, raw materials, equity participation, preferential treatment to local sources. Reference this. Laws governing certain businesses within an organisation in an individual country could have its variances and inconsistencies, nevertheless when other counties are internationally concerned, the intensity of inconsistency is even more diverse. Corporations must not seek to selfishly influence the policy making process at whatever cost as long as such policies are aimed at the good of all people and the environment in general. Such issues include transfer, promotions, employment of new staff, the environment and labour issues. As an organisation, Wal-Mart needs to avoid certain unlawful situations such as making employees free to talk to union representatives. ETHICAL ISSUES IN MULTINATIONAL CORPORATIONS Introduction A multinational is defined as an enterprise operating in several countries but managed from its home country. Registered Data Controller No: Z1821391. Information personal to customers should be kept sacred and not be used for personal gain. (www.usatoday.com), In January 2004, The New York Times reported on an internal Wal-Mart audit conducted in July 2000, which examined one week’s time-clock records for roughly, 25,000 employees. Apart from protecting the image of the company, it is a multinational organisation and so should live up to standard and expectation. Employees rendering over time services to the company have not enjoyed the fruit of their labour as they were not paid for their overtime services rendered. The need for a complete, consistent, and general code of conduct for MNCs, as well as smaller organisations undertaking business globally, is paramount. Cite this chapter as: Dhanarajan S. (2002) Multinational Companies and Ethical Issues. MNC should also endorse a non-discriminatory employment policy, provide sufficient training for local employees, value workers’ rights to organize for collective bargaining, discuss with with workers’ representatives on labour matters, and have an objective of stable employment. The paper "Legal and Ethical Issues Affecting Multinational Corporations in East Asia" states that emergence of East Asia as a centre for international trade establishes the region as a centre of interest for multinational corporations and the organizations’ need to understand trends. This is not an example of the work produced by our Essay Writing Service. It should be: clear and understandable to the average person; comprehensive in indicating the extent of its provisions; and enforceable by specifying the ramifications of improper actions (Raiborn and Payne, 1990). According to the Times, the audit, “pointed to extensive violations, of child-labor laws and state regulations requiring time for breaks and meals,” including 1,371 instances of minors working too late, during school hours, or for too. Wal-Mart is an organisation that should take sole responsibility of their ethical status. Special Ethical Issues Facing Multinational Corporations: Appropriate Responses. Justice reflects impartiality, sound reason, correctness, conscientiousness, and good faith. Business ethics is the study and evaluation of decision-making by … Grosse and Kojawa (1992) define culture as the result or outcome in a given situation accepted by people in terms of observing and the responses accordingly. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! Child and/or Forced Labor "MNCs may directly employ children (legally or illegally) and theyare usually employed in labor-intensive low-skill jobs. SO “in February 2004, a federal judge ruled that Wal-Mart should pay workers for overtime hours” (Hoover’s Handbook) the case was pending for a while but then Wal-Mart then maintained their policy was against such work, hence, managers who were involved in such atrocity were punished by getting fired. Is the prisoner's dilemma relevant to business ethics… Presented By: Saurabh Negi 014-I-150 MULTINATIONAL ENTERPRISE SAURABH NEGI 014-I-150 2. Clipping is a handy way to collect important slides you want to go back to later. *You can also browse our support articles here >. If you continue browsing the site, you agree to the use of cookies on this website. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Euro). Wal-Mart has done very well for itself as it has beaten a lot of other organisations in terms of its discounting retailing. Procedurally, to be useful, an ethics code needs to meet certain minimal standards of construction. It claims that the policy to a certain extent helps terminate unwanted non complaint. As can be seen through a review of Exhibit I, the values, combined with the standards of behavior, can easily and reasonably be used in the development of international standards of ethics. ethics in organizations, and conceptual aspects addressed by some field specialists, at the end of the paper we presented a study conducted to identify specific issues of ethics in multinational organizations. Wal-Mart reacted to this situation by offering discounts on health care coverage. Using Kohls and Buller’s continuum concept, the four specified and named levels of behavior are merely points of a continuous whole as shown in Figure 1. code of ethics at selected branches and representative offices of multinational companies. MNE in India. Companies (big companies included) are the very backbone of our economy, and they often get a bad rep for little or no reason. MNCs should also give licenses, in terms of realistic terms and conditions, for using properties and rights. Or is it strictly businesses that would benefit the organisation alone? The individuals get together on a regular basis brainstorming on how to push products that don’t harm the environment can purchased or made. There was a complaint filed from United Food and Commercial Workers Union filed a complaint with the National Labour Relations Board against Wal-Mart. This is an unethical practice that Wal-Mart has been accused of getting away with. Trust could be embraced when these values are maintained. These are just some things that happen or come under unethical practices. The boost of world trade in the midst of global partners and the rise of foreign direct investment mandate that everyone works in the direction of a better understanding and a regular ground of precepts upon which to base choices can help promote and advance a number of businesses and social contacts worldwide. Multinational organisations have the ability to move about a massive amount of resources globally. Wal-Mart has accused a different body for this alleged allegation as it maintains the contractors who were given the job to hire employees on behalf of the company did not do their home work properly before employing. In response to such concerns, MNCs have increasingly taken steps aimed at demonstrating their social responsibility as business organisations. and Values IAp a military ethical climate and discuss strategies to mniplfment the elements. Multinational managers need to be sensitive to these varying differences and able to choose an ethical action accordingly. While the breadth or depth of these values could differ from society to society, the core values themselves are still present. This poses significant ethical dilemmas over MNCs. Multinational Corporations (MNCs), have raised questions about the role of business in global governance. Ethical issues may be related to employment practices in many nations. Labour Union Opposition: Wal-Mart is an organisation without unions. Government Rules and regulations in regards to duties, taxes restrictive and monopolistic trade practices and unlawful activities like bribing and corruption should be adhered to. It is wise to handle all issues in an ethical manner. , cultural and ethical problems, are no exceptions such issues include transfer,,. Disagreement resolution mechanisms when necessary terms and conditions, for using properties and rights, the for... 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