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Ethical Dilemmas Faced By Multinational Corporations

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    In these present days, the world is full of development due to globalization. Globalization can be defined as the system of interaction among the countries around the world and serve as one of the purpose in developing the global economy. “Globalization refers to all those processes by which the peoples of the world are incorporated into a single world society, global society’ (Martin Lowbrow, 1990). There are also some famous quotation about globalization. (Please refer to appendix 1 . 0(a) for more information about famous quotation of globalization).

    Not only that globalization also undistributed to the increased in international trade, foreign direct investment, wider data flow and international cultural exchange in other words globalization has minimized the barriers of entry into the global market. Due to the contribution of the globalization the employment in the host countries has been increasing for example the job opportunities in China has been increased when Nooks(the hand phone company from Finland) enter into China ‘s market and this has created over 25,000 jobs for the citizens resides there.

    So with this it has helps to settled the unemployment problems which t is the main factor of poverty. However, there are also some critics about globalization arises (Please refer to appendix 1 . 0(b) for more information about Critics On Globalization). So due to development of globalization it also contributes to the existence of Multinational Companies keep whereby the companies who engage in global business are known as Multinational Companies which in this case global interdependence also happened whereby countries depend on each other through exporting and importing.

    Due to this also there are several issues that urges the Multinational Companies to focused like ethical behavior, economic development in host countries, environmental and social responsibility but despite of that there are some Multinational Companies involved in ethically questionable practices thus it also causes conflicts which the reason is it against the ethical values of all kind of nations in the international community. The ethical dilemma that arises is human rights, environmental, employee rights, and obligations of moral and corruption.

    Thus in this case if a Multinational Company do anything that is unethical then the image of the company is arranged. 2. 0 Type Of Ethical Dilemmas and Issues In this non-stop growing business world, although economics became the main focus point of business decision making but this decisions also brings massive of consequences to the citizens around the world either host countries or home countries but as for the companies who engage in global business which also known as multinational companies the greatest impact is host countries.

    The most common international ethics that arises is the ethical problems faced by companies who do business across the seas in there word overseas for example culture different from each other whereby some culture in certain countries may disagree with what the multinational companies does to the specific countries. According to Denies L. Hummel and Warren Heaps “Doing business on a global basis requires a good understanding of different cultures.

    What works in your country might not work well in another, and could even be interpreted as an insult! And in your role as an international human resources professional, it’s important to raise the awareness of cultural issues within your organization to ensure Culture is Important in International Business by Warren Heaps and Denies L. Hummel Of International HER Forum, 8 June 2009). In accordance with that, there are a few types of ethical dilemmas issues faced by multinational companies that became well known globally.

    The issues start with: (a) Employment/Labor Rights In global business, labor rights was one of the most important issues that arises which it is a must for multinational companies to come across with it. The most common issues that always being focus is the existence of sweatshops or also known as sweat factory which it is all about workers irked in any type of very poor environment such as dangerous and unacceptable difficult for example work for very long hours with very low pay which violate the minimum wage law.

    Not only that, child labor laws maybe violated as well and the workplace might have highly hazardous situations including abuse of employee always happened. This situation are similar with the England’s workhouse slavery era between 17th up till 1 9th century where due to poverty even a child as young as 6 years old willing to worked like a slave. Other than that, it also exist sexual discrimination whereby women in undeveloped countries like GO countries such as Uganda, Uzbekistan, Zanzibar, Liberia, Honduras, Lebanon and others having much lower pay as compare to men in the same jobs.

    However in some cases there seems to be a contrast to it where sweatshops are not so negative which for example in India ;s brick manufacturer hired children to stay competitive and not only that due to the high price of raw materials employers have no choice but to cut cost on the labor by hiring children. Unfortunately, media always put on the blame on multinational companies who does this children exploitation ND causing them do not have the opportunity to go to school but actually the reality is in certain undeveloped countries they have poor education system and schooling environment.

    In accordance with that, in some cases children are working at home with their parents to support the household as well and that is why the companies hired the children is to enable them to support their household. But then multinational companies cannot used this reasons to say claimed that they are practicing good ethics in this case because hiring children is still against the labor rights law. So that is why most of the multinational companies nowadays are very careful and did not practice sweatshops because this is to make sure they do not break the labor rights law. Please refer to appendix 2. 0(a) for more information on Employment/ Labor Rights Current Issues) (b) Environmental Pollution Multinational companies are often accused of ignoring environmental regulations because certain of their manufacturing plant activities are said to be polluted the air and environment As a matter of fact, degradation of environmental are regards as one of the most critical and the frequent increasing problems faced by the citizens and multinational companies are regard as the causes and also the gist to solve the problems.

    In the cases of developed countries, usually the governmental bodies, media, and environmental groups are the one to urge the multinational companies to act responsibly whereby governments have taken all of the possible measures to implement and enforced the laws to reduce or vanquish the possible threats to the environment which governments holds the power to punish violators of environment regulations and rewarding those companies who practices environmental friendly activities for example Europe ‘s government are rewarding those companies who practices echo-friendly with incentives like tax relief and others.

    However the environmental issues is seems to be more worst in undeveloped countries because in these countries the governments does not enforced the environmental law to solve the massive increasing environmental problems. This is due to multinational companies has power in terms of assets that exceed the gross domestic product(GAP) of the country which in some cases the companies pay the government for environmental mage.

    However nowadays most multinational companies in either developed or undeveloped are starting to follow strictly the environmental regulations due to the media are focusing more on multinational companies behavior especially on environmental pollution and degradation issue. (Please refer to appendix 2. 0(b) for more information on Environmental Pollution (problems/solving) Current Issues) (c) Corruption and Bribery The most well-known global ethical dilemmas issue that always faced by multinational companies is corruption and bribery’.

    Corruption happened hen someone received a bribe and do something that they are prohibited from doing it. As for bribery it regard as payments or gifts to some people to get the information on government action or to gained maximum business advantages. Both of corruption and bribery are increasing massively everyday which it is hard to vanquish it fully. The amount of corruption are said to be more higher in poorer countries like some undeveloped countries.

    Due to this, corruption leads to poverty of the country because waste of public funds and only high profile jobs get funded. It is argued that multinational impasses involve in bribery by increasing the contract price. So, many developing countries suffered because of the high price and the worst is many multinational companies tend to use poor quality products or materials to cover the bribe and this lead to existence of inferior products.

    Not only that bribery can also lead to problems in political and democratic nature. However, nowadays both government and multinational companies are taking each and every steps to control and vanquish bribery. (Please refer to appendix 2. 0(c) for more information on Corruption and Bribery Current Issues). 3. 0 Dealing With The Ethical Dilemmas In order to deal with the ethical dilemmas effectively, multinational companies practices either of these two effective ways they are ethical relativism and ethical universalism.

    Ethical relativism means that doing business in a country by following strictly to its culture or ethics for example if bribery is a culture or ethics of doing business in a specific host country then in order to survive the multinational companies have to follow the local culture or ethics for example if a company wants to do business in a Muslim entry then the business they do must be hall. As for ethical universalism means that the same ethical standards are the same and it is applied to all countries that the multinational companies is doing business with it.

    However both ways have their own advantages and disadvantages as well which in ethical relativism it may help the multinational companies to survive in the market of the host country without any barriers but the disadvantages will be it might be going against the law of human rights like labor rights and others if child labor as the culture of the host country’ where lots of critics on many image will arise. In contrast to that, ethical universalism has more advantage because it is regard as higher moral responsibility because multinational companies are said to be more strictly in following human rights and it is more ethical.

    As for disadvantages will in certain case it might lead to cultural imperialism which the multinational companies feels that certain country s culture is immoral and inferior thus some conflict might arises. However not only that, there is another effective ways that the multinational companies do that is create a corporate social responsibility mage whereby it is regard as responsibility towards the society not only focus on profits.

    In accordance with that, company must care for the welfare of the society in which they will do various charity works to help the needy in the host country and in the same time create a good image for the company. Due to this, the company that practices corporate social responsibility will provide guide to its employee in dealing with ethical dilemmas and make sure that each and every of their actions did not affect other negatively such as environmental pollution and others. So that is why code of conduct are implemented. ( Please refer to appendix 3. For more information on Code of Conduct For International Business). Conclusion It is indeed globalization has helped to engage in business globally which it is full of challenge and difficulty due to the difference in culture and ethics however Multinational Companies might Come across ethical dilemmas not only in host countries but in its own home country as well. The only thing is it might be a slightly different so the most important is how the company deals with it effectively. Thus, understanding ethical and unethical behavior is essential.

    There are many useful ways that can lead the multinational companies to minimized ethical dilemmas. The most essential will be involving all employees in terms of contribution or concern towards ethics efforts and also communication among employees, overseas counterpart and stakeholders as well whereby trust is gained. Lastly as for the other way will be Multinational Companies can also cooperate with non-profit organization such as Social Accountability International, EUNICE, and MONGO in order to help in making good decision whereby this can solve not all but a part Of ethical dilemmas.

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