Internationalization may be thought of as
a "process by which firms increases their awareness of the influence of international activities on their future and establish and conduct transactions with firms from other countries
Multinational corporations MNCs operate with
offices, factories, and headquarters in more than one country
most challenging situation for MNCs is when they
are operating in so-called emerging nations, developing countries, or less-developed countries (LDCs)
Firms face two major underlying challenges or problems as they operate in a multinational environment
Corporate legitimacy and Differing philosophies
The MNC seeks to optimize globally, while
host government seeks to optimize locally
Globalization is, according to Rosabeth Moss Kanter
one of the most powerful and pervasive influences on nations, businesses, workplaces, communities, and lives...,
Management and control of global operations, Two issues are important here
Organizational structure and design and Human resource management
The current standards for SA8000 may be summarized as follows
Child labor, Forced labor, Health and safety, Freedom of association and right to collective bargaining, Discrimination, Discipline, Working hours, Compensation, Management systems
One of the primary tools TI uses to combat corruption is its now-famous
annual corruption perception index CPI
One of the greatest challenges that businesses face while operating in foreign countries is
achieving some kind of reconciliation and balance in honoring both the cultural and moral standards of their home and host countries
Four major strategies or categories of action that could help MNCs conduct global business while maintaining an ethical sensitively in their practices include
Global codes of conduct, Linking ethics with global strategy, Suspension of business activities in certain countries, Ethical impact statements and audits
The eight principles identified and described standards of conduct in the following categories:
fiduciary, property, reliability, transparency, dignity, fairness, citizenship, and responsiveness
Two of the most widely used global standards are
the UN global compact and the caux roundtable principles
Ethical impact statements are
an attempt to assess the underlying moral justifications for corporate actions and the consequent results of those actions
The two ethical systems are the
individualistic ethic of business and the collectivistic ethic of government
Government influences business through
regulation, taxation, and other forms of persuasion that we will consider in more detail in the next section
Business influences the public through
advertising, public relations, and other forms of communication
Two major issues merit consideration before w examine some of the specific policy tools or mechanisms government uses to influence business
Industrial policy and privatization
Industrial policy
every form of state intervention that affects industry as a distinct part of the economy
Privatization refers to the process of
turning over to
Two functions government might perform
Producing a service and Providing a service
Two issues are largely unresolved and so they continue to be discussed and debated
Industrial policy and Privatization
Government also influences
business, albeit indirectly, by virtue of its transfer payments
Four major reasons or justifications for regulations are typically offered
Controlling natural monopolies, Controlling negative externalities, Achieving social goals, Other reasons
Government regulations address two basic types of goals
Economic and social
Two different types of regulations
Economic regulation and Social regulation
Three effects are worthy of elaboration
Innovation may be affected, New investments in plant and equipment may be affected, Small business may be adversely affected
The basic idea behind deregulation has been to
remove certain industries from the old-line economic regulations of the past
Peter Drucker has labeled the expanded global marketplace the
transnational economy
Which of the following is not a feature of the global economy?
international laws governing fair trade
The process by which firms increase their awareness of the influence of international activities on their future and establish and conduct transactions with firms from other countries is known as
internationalization
The center of the controversy that aligns rich nations against poor nations is
what the trade rules will be, and who will write the rules
Moving jobs that have historically resided in the home country to a lower-cost host country is called
offshoring
The most challenging situation for an MNC to face is
operating is less-developed countries
To be viewed as legitimate in their host countries, MNCs must fulfill their social responsibilities, including all of the following except
technological functions
Which of the following is not a factor in a host country's perception of the legitimacy of an MNC?
profitability of the firm
The requirement for an MNC to take on local partners is referred to as
creeping expropriation
Which of the following is not one the broad issues facing MNCs in their relationships with host countries?
religious and other traditional holidays
There are three levels of sensitivity that MNCs should exhibit for the long-run national interests of less-developed countries. All of the following are levels of sensitivity except
the need to modify marketing efforts to conform to local custom
To resolve the infant formula controversy, Nestl� agreed to do all of the following except
providing purified water with the formula
Which of the following is not an SA8000 standard proposed to improve sweatshop conditions?
provision of educational opportunities for workers
U.S. based MNCs are increasingly interested in cases brought under the Alien Tort Claims Act because
they are increasingly being named as defendants in tort cases for doing business in countries with repressive governments.
All of the following are arguments in support of bribery except
it is a way of providing needy foreigners with money they need.
The Foreign Corrupt Practices Act
makes it illegal for the representative of an American corporation to offer or pay officials of foreign governments for the purpose of getting or maintaining business
Payment of a bribe implies some type of
quid pro quo
The position that advocates that an MNC should continue to follow its home country's ethical standards even while operating in another country is known as
ethical imperialism
The position that advocates that an MNC follow the host country's ethical standards is called
ethical relativism
Grease payments are all of following except
monies given to high ranking officials
The reason that the United States government passed anti-trust legislation was
due to the anti-competitive practices of some large trusts
Government's new role in its relationship with business during the New Deal era was one of
restoring prosperity and promoting economic growth
The clash of ethical systems between government and business is centered around
individualist and collectivist ethics
Which of the following is not a method that government uses to influence business?
lobbying
Arguments for industrial policy include all of the following except
stifling innovation
Arguments against industrial policy include all of the following except
The need to rescue "sunset" industries
Government influences business through all of the following nonregulatory methods except
requiring equal employment opportunities be granted to job applicants
Government payments to industries or groups with special qualifications are called
subsidies
Government attempts to persuade business to act in the public interest are called
moral suasion
Government regulations have been criticized for all the following reasons except
being ineffective
The primary reason for government regulation of business is
market failure
A market in which the economies of scale are so great that the largest firm has the lowest costs and is able to drive out competitors is called a(n)
natural monopoly
Government intervention in monopolistic industries is often brought about by
anticompetitive practices
Negative externalities are often referred to as
social costs
The newest type of social regulations is concerned primarily with
security
The dilemma of regulation is the tradeoff between
effective control and the burden placed on firms
The dilemma of deregulation is
to enhance competition within the industry without sacrificing applicable social regulations
Which of the following is not a concern expressed by executives about government involvement in business?
U.S adults said government should do more
Which of the following is not a U.S. preference on industrial policy?
one that enables industrialization