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The Changing Dynamics of Global Business Case Study

The changing dynamics of global business from developed to developing countries

Most developing countries have few locally-owned manufacturing companies. However, such countries are endowed with natural resources, which are favorable for manufacturing firms (Michaelson 241). Various multinational companies, which are mostly from developed countries, have moved to the developing countries to exploit the natural resources that have been underutilized for years. Such natural resources include land, forests, and minerals among others, which are yet to be exploited due to the inadequacy of funds coupled with the deficiency in technical expertise in the developing countries. Large multinational companies also take advantage of the cheap labor available in developing countries (Daniels, Radebaugh, and Sullivan 71). As a measure of poverty reduction, most developing countries have allowed investors from the developed world to invest in their countries. However, in doing business in third world countries, such companies tend to ignore local rules, thus leading to numerous ethical conflicts. For example, they have been accused of ignoring their corporate social responsibilities of protecting the interests of the communities in the areas where they operate in by causing environmental pollution, which in turn contributes to climatic changes. Efforts by legal experts to formulate a standard ethical framework to govern international trade have not been successful due to the diversity of cultural norms in the global market.

The impact of changes on ethical standards

Ethics undergo evolution as countries continue to develop and interact with each other, thus causing the erosion of some cultures and principles. Due to the growing need to reduce poverty, most developing countries have adopted lenient ethical standards that encourage foreign investment in countries. Culture is a key determinant of the ethical framework of a nation. Therefore, a change in culture implies the alteration of the ethical code in place at a specific period. For example, corruption was initially a common phenomenon, and it was readily accepted in businesses, but as ethics continue to evolve, bribery has been termed as an undesirable and unethical business practice. For example, in Japan and Korea, the number of gifts issued to customers and other stakeholders were initially not regulated, but today, limits are set on the number of donations that can be given depending on the relationship that exists between the giver and the beneficiary. In the US, laws regulating business operations and other issues such as discrimination have been altered by Congress to fit the ethical needs of the global market (Northouse 129). The evolution of ethics has been triggered by the desire by almost every firm to obtain a portion of the global market.

The process of creating ethical standards to prevent bribery and promote social responsibility in emerging markets

The practice of corruption is an unethical issue that affects most developing countries whereby company executives obtain gifts from individuals or firms in return for an illegitimate favor. In the early days, bribery was acceptable in businesses, but as ethics continue to evolve and certain cultures gradually become eroded, it is currently viewed as malpractice (Northouse 78). In some countries, governments have put in place strict laws barring corruption on grounds that such practices only increase the cost of doing business (Daniels, Radebaugh, and Sullivan 76).

In African, Asian, and Arab countries giving gifts of any kind to customers or other persons who have some interest in the business amounts to outright bribery irrespective of the value of such gift. Therefore, foreign firms operating in these countries must adhere to those standards when formulating their codes of ethics. The American firms operating in foreign countries are bound by the Foreign Corrupt Practices Act that prohibits acts of corruption during operations (Northouse 115). However, achieving zero corruption cases in the global market is an insurmountable challenge, since the cultural practice of giving gifts is still in the minds of the corporate managers. Developing countries engage foreign companies in contracts that bar the companies from engaging in activities likely to cause harm to their citizens (Michaelson 251). Most companies employ the concept of social responsibility in a bid to ensure the well-being of the communities where they operate. They achieve this goal by promoting various themes such as the environment-friendly and green initiatives.

The prevailing standards when moral business standards conflict across borders

The issue of the supremacy of ethics between local ethical code and the foreigners’ code has sparked debate among scholars and policymakers as they present varying views over the issue (Northouse 162). Most international companies have pressurized the developing countries to shelf some legislations that they consider as stringent in exchange for investment in their countries. However, most scholars argue that businesses must abide by the countries’ laws and cultural norms, thus indicating that the local code is supreme to the investors’ code. Most companies have suffered losses while some have even closed down due to failure to observe the cultural norms of the countries that they operate in, thus leading to boycotts from consumers (Michaelson 249). Major conflicts involving multinational companies in foreign countries revolve around environmental pollution, failure to observe the concept of corporate social responsibility, employee mistreatments, and corruption all of which fall under unethical business practices (Northouse 122). Multinational corporations ought to respect local ethical standards.

Creating ethical and moral personal and organizational standards as a leader in a multinational corporation

Recognizing the aspect of cultural diversity and its effect on standardized ethics is critical in formulating an ethical code, which is acceptable in the international market. As a leader, it is necessary to understand the legislations enacted by different countries and their definition of what comprises ethical behavior (Daniels, Radebaugh, and Sullivan 79). Therefore, my code of ethics would be country-specific. The code would be guided by each country’s legislation and cultural norms of the specific community that the company engages with during its operations. I would encourage community participation by inviting the customers’ reviews through social media and conducting qualitative research on customer satisfaction. Employees would be given comment cards designed to obtain vital information regarding their loyalty to the company. Guided by such reviews, I would draft ethical codes for each branch that considers the interests of all the stakeholders. Also, I would prioritize the interest of the community when formulating the ethical code. The ethical code would achieve this goal by partnering with the local communities to sponsor beneficial projects to the people living in the country of operation. Such projects would include sponsoring tree-planting projects to preserve the environment, adopting nature-friendly methods of production, and producing quality products for customers. The code would ensure that the interests of all stakeholders are considered and the operations are customer-centered. This move would avert the occurrence of unethical practices during the day-to-day operations of the business and ensure that all stakeholders are satisfied with the company’s operations.

Works Cited

Daniels, John, Lee Radebaugh, and Daniel Sullivan. International Business: Environments & Operations, New York: Prentice Hall, 2012. Print.

Michaelson, Christopher. “Revisiting the global business ethics question.” Business Ethics Quarterly 20.2 (2010): 237-251. Print.

Northouse, Peter. Leadership: Theory and practice, Thousand Oaks: Sage, 2015. Print.

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