Responsibility, Ethics and Legitimacy of Corporations - Assignment Example

International Business Contents Contents 2 Introduction 3 Question 3 Question 2 5 Question 3 7 Question 4 9 Question 5 10 Conclusion 12 References 13 Introduction Organization has to incorporate a lot of strategies while operating in the overseas market. China has expertise in manufacturing but other countries can also develop such an expertise and overtake the operations in China. The organization implements strategic risk management tools in order to enter into the overseas market. Effective market analysis is required in order to enter and sustain growth in a new market. Question 1 China has been able to maintain its development towards growth in the global manufacturing industry. China has been able to sustain its competitive advantages in terms of labour force supply, commercial dynamics, state policies and sustainable investment infrastructure. According to the monetary policy theory it is clear that a country’s growth depends on the industrial development. China has been able to maintain its superpower position in the manufacturing sector over the years. The Chinese economy over the past 30 years has shown a rapid growth. The Chinese economy even overtook that the Japanese economy with a GDP growth of US $ 5.7 trillion. The manufacturing industry has been the largest contributor towards the economic growth of China. The manufacturing industry through solid foundation and past history records has noticed a sustainable internal growth. The figure demonstrates the market share China has towards the global manufacturing industry. The second country who is competing well with China in terms of China is United States. The Chinese manufacturing industry faces a lot of challenges mainly because of the low added value the Chinese products has, shrinking export markets and price rise. The manufacturing industry of China is mainly all about manufacturing, processing and assemble (Garnaut and Song, 2006, pp. 115-116). The country still depends on the other developed countries such as Japan, US and Europe who are rich in terms of resources. China’s dependency on the other developed countries and immensely on the export markets has affected the manufacturing industry in China during the global financial crisis in 2008. The industry is more labour intensive rather than technology intensive. They are more into parts manufacturing than that of whole body manufacturing. This has greatly affected China and it can sustain its superpower position only for a couple of years if it does not focus on enhancing its competitive advantages. The reason behind its sustaining only for the next 5years is that heavy investment is required in technological innovation as well as market expansion. On the other hand the Chinese government has emphasized large corporate tax burden on the manufacturers which is stopped any further development in the manufacturing sector. The next player who can overtake the Chinese manufacturing operations is United States. This is simply because it is a developed country, and the infrastructure and technology would support further growth of the manufacturing sector (Smook, 2005, pp.56-57). Though this country may not have cheap labour force for the industry like that of China but it has the other expertise that will make it superior in the coming 5years if China do not follow a planned investment process. US on the other hand have the required technology through which they can effectively enter into the overseas market and it need not have to be dependent on any other country for the supply of resources. China needs to maintain sustainability through its competitiveness and strategic investments in areas required for long term growth of the manufacturing industry rather than focusing on short term vision. The Chinese government would be the pay the key role in the industry development and sufficient flexibility in the corporate taxation policy. Question 2 The company I would chose to work with would be Asus from Taiwan. The company is shifting from an emerging economy to a Western market. As a candidate the reason behind opting for this company is the high opportunity I see towards my future growth in this company. The company has vast expansion plans this indicated that it is focusing on more of growth opportunities for its employees as well as the organization. The company’s perspective is to capture the market share and expand its operations. It is given a platform for the individual to utilize and enhance their. This is mainly because a candidate can learn much more from an organization that is the growth stage rather than that organization which has reached its maturity stage. This company would teach me how an enterprise takes up the various challenges before entering into a new market and develops its strategies to enter into a completely new and developed market. Asus witnessed a turmoil at its initial stage but changed the strategies constantly to remain in pace with the changes in environmental conditions. The company even has developed a reasonable good consumer base and its annual report reveals the fact that the high innovative environment makes its employees constantly work harder to reach the goal. With its expansion into the Western market indicates that the company is in its growth stage and developing innovative ideas for sustained growth. This means that the organization would even enable me with the opportunity to develop my skills and implement my innovative ideas into the system. The management skills are often applied depending on the situation. The pyramid of the management skills is as follows – The management skill that I possess that would make me a desirable candidate is effective planning, organizing, motivation, involvement, time management and leadership skills. I believe that when given a responsibility for any particular project I would plan and organize the task that is needed for completion of the project (Hannaway and Hunt, 1995, pp.101-102). The get it done attitude is very essential that should be possessed by every individual in order to seek growth in the organizational system. Second is the motivation spirit that should be present in every individual to remain constantly motivated towards the work they are performing on the other hand when there is a team to be managed the individual should possess the skill to motivate the other team members too. There is a high degree of involvement that I have towards whatever task I undertake and have ownership towards my achievement as well as my failures. I believe that a person can only be successful in his/her career if he/she learns from their mistakes and do not repeat them again (Whetten, 2005, pp.92-93). The time management skill is more of a necessity in today’s competitive world, and I have this skill of effectively managing my time and prioritizing my tasks and then allocating the time needed for the completion of specific tasks. The last skill that is in born is me is the leadership skill. It is easy to carry out tasks individually but it is difficult to do the same task with different individuals having different ideas. I can effectively manage a team and coordinate all my fellow team members towards a common goal or mission. I feel these skills possessed by me make me a desirable candidate for the company. Question 3 Strategic risk management is all about effectively handling the various risks that the firms encounter while expanding its operations into the overseas market. There are various methods of strategically managing the risks. There are four methods of handling the potential risks – avoidance, reduction, sharing, and retention. The avoidance method of strategic risk management the firms eliminate the possible risks from their business operations, or simply do not get involved into any condition that involves risk. In the reduction strategic risk management method the firm tries to handle the potential risk through optimization and mitigation of the identified risk. Another way of managing such risk is by sharing the identified risks with some other company. It involves sharing the risk with an external agency or firm such as an insurance company. Finally the last method is the retention method, in which a firm accepts all possible risks and then allocates a certain budget for the risk control and re-built its entire business operations in order to tackle such risks (Damodaran, 2008, pp.167-169). Risk management strategies differ from individual to individual and even from company to company. For instance Apple Inc which is the world’s leader in terms of innovation, the firm has to encounter various risks for their innovative product line. The most common risk for this company is social or economic risk. The company takes care of the risk by following the retention method. The firm accepts the fact that their innovative ideas can face a lot of challenges in different markets and is fully prepared to handle such risk. It even allocates a certain budget to handle such socio economic risk. The company has seen a success down the years because of their effective handling of risk. The company constantly identifies the risk, assesses it and then implements strategies of handling the potential risk. Allocation of separate budget for the risk helps the company to carry out their normal business operation even when there is high degree of risk. Apple faces a lot of risk when marketing its high end product into the overseas market due to economic conditions, and its separate monetary fund for handling the potential risk helps the company sustain its growth in the market. Another effective strategic risk management is observed in Barclay. The company has clear strategic risk management objectives and has well established strategy to handle the risk identified. The company identifies the potential risk of the group at first, and the risk is controlled by the reduction method of strategic risk management. Barclay optimizes the risk decision by closely linking them with their business operations, and establishes challenge structure and independent review (Andersen, 2006, pp.151-152). The firm even ensures that there are certain financial deliverables even at the time of adverse crisis in the firm. The company develops a risk management infrastructure tool to control such risk. The firm periodically assesses the risk and considers it to be normal in the business operations and does constant modification of mitigating measures. Such risk taking method helps the firm to strategically operate its business in the overseas market. Question 4 After years of R&D efforts being the CEO of the firm I feel that France will be the appropriate location for setting up the factory. The company is now entering into a competitive market for personal computers and my target audience is the European Union. I feel that the external conditions are favourable for setting up the factory in the desired location. I have carried out my research through PESTEL analysis where I observed that all the six external factors that can affect a business seems favourable for my business. The trade barrier is low in the country with stable political condition. The stability in the political condition ensures that the country would not face any changes in terms of rules and regulatory measures in the coming years. Hence the stable political condition ensures sustained development of my business. The second analysis that I have carried out is on the economic condition of the country. The country experiences a low inflation rate, a moderate taxation policy and low unemployment rate. The economic conditions ensure that the business operations would not initiate a lot of investment and that there is availability of skilled workforce that is required for manufacturing these technology based product. The social conditions seems favourable and even the technological condition of the country is well established with a lot of firm opening up their factories in France and formation of a competitive market. The favourable economic condition ensures that the legal condition of the country is suitable for any firm to expand their business operations in the country. Lastly the environmental conditions are advantageous enough to support my business operations. The high taxation policy, strong entry barriers and unstable political conditions makes Poland and Turkey not a very suitable option for the factory that I want to set up. As it is I would be entering into a very competitive market so it is very necessary for me to carry out my manufacturing operations in the most cost effective way possible so that the price of the product is competitive enough to penetrate into the market. If the business operations can be carried out in favourable conditions I feel that it will help to keep a competitive price for my product so that I can apply market penetration strategy to capture the maximum of the market share. The country I have chosen would give me the best geographic location so that I can deliver my products across the European countries. France would enable me with an easy reach to the targeted market segment. Even the location is that the most cost effective logistic strategy can be implemented across to the system so that the products gets timely delivered in order to meet the consumer demand. The favourable geographic location makes France a more convenient option compared to that of Poland and Turkey in order to set up a factory. Even there is a greater access to skilled cheap labour, technical advancements and favourable socio economic conditions in France than compared to the other two countries. These are the reasons that I feel has made me decide on the fact that France is the best option for my company for setting up a factory in order to enter and establish the brand’s position in the European countries. Question 5 Business ethics and CSR practice lays the foundation of a company’s reputation. An MNC that has been accused of such unethical business practice and CSR activity is Nike. Nike is an MNC that is mainly into production of apparel, footwear and equipments. The company has been continuously criticized by public and media of following unethical business practice. The company follows dismal conditions in its production process. The company has been criticized of continuously exploiting the cheap labour. The workers in the factory of Nike are subjected to extreme working conditions, hazardous exploitation, insufficient benefits and living benefits, and arbitrary discipline. Child labour is very common in the work process of Nike, and even the workers are subjected to continuous harassment and abuses. There is a social in the business practice of Nike, and the workers are subjected to extreme poverty situation even after spending long working hours in the factories of this company. Nike hires those workers who are not well educated because of this they are not even able to speak up for their rights. The CSR activity of the company is very less and the company is strongly criticized for the environmental damage that is caused by their business operations. The manufacturers do not take care of the various safety precautions that are necessary for a firm in order to carry out social responsibility. The company often ignores the rule and regulations that are essential in order to safeguard the environment and the society (Rendtorff, 2009, pp.134-135). The company is criticized by the media for taking advantage of weak regulations towards safety, cheap labour, environment and health so as to maximize their profit percentage. The MNC exploited the basic human rights and the company even disrespected the workers by abusing them, making them work for long hours, and then not even giving the required wages for their so much hard work. The company is highly recommended to align their working conditions with the US labour regulations so that they can transform their unethical business practice into an ethical one. The company can even reconstruct a special CSR committee who would ensure that company plans effective strategies in order to perform their social responsibility. The company should start up some campaigns to highlight themselves as a socially responsible corporate entity amidst the public. Nike should not only focus on maximizing its profit returns but also take active participation in some charitable trust so that they are able to pose their responsibility towards the society (Schwartz,2011, pp.75-76). The company should modify its business operations in a way that it reduces the environmental damage that is caused by its operations. Nike should even reduce the stress on the workers by enhancing the flexibility in the working conditions. The company should give desirable benefits to the workers so that they do not feel exploited, and hence the company should not be criticized of exploiting the cheap labour. If positive business ethics is followed the company would have more of a loyal and motivated workforce. Long working hours does not increase production efficiency but satisfied workers are more productive. These are the strategies that this MNC should consider to encounter any such criticism in the near future. Conclusion There are various factors that govern the operations of international business. Companies need to analyze the external conditions well enough so that they are able to set up their business in an appropriate location. Business ethics and CSR activities are a part of the success for any company. There are different approaches of managing risk and it depends on the company which method it adopts for strategically controlling the risks. Appropriate management skills are required by individual in order to develop their future in any organization. References Andersen, T.J. 2006. Perspectives on Strategic Risk Management. USA: Copenhagen Business School Press DK. Damodaran, A. 2008. Strategic Risk Taking: A Framework for Risk Management. New Delhi: Pearson Education India. Garnaut, R., and Song, L. 2006. The Turning Point in Chinas Economic Development. Australia: ANU E Press. Hannaway, C., and Hunt, G. 1995. The Management Skills. UK: Gower Publishing, Ltd. Rendtorff, J. D. 2009. Responsibility, Ethics and Legitimacy of Corporations. UK: Copenhagen Business School Press DK. Schwartz, M. S. 2011. Corporate Social Responsibility: An Ethical Approach. Canada: Broadview Press. Smook, L. 2005. The Competitiveness of the Chinese Textile Apparel Manufacturing Industry. USA: Swanstone Wynot. Whetten, D. A. 2005. Developing Management Skills. New Delhi: Pearson Education India. Read More