Trade in the olden days specifically was conducted within their own borders and with conflicts arising in the world saw the lack on communication and willingness to trust and do business with a foreigner. However as time went on there was an there was a dependence on resources from abroad as the resources in the home country would become scarce and thus collaboration would co exist between countries and thus bi lateral trade began thus evolving into a Globalized world where a company can produce, market and distribute to anywhere in the world.
Globalization has made the world smaller, increase in trade and investments , internet, cheap phone calls, instant cash transfers have made the world interdependent than ever.
The impacts of globalization are of course mixed. Market integration has generated substantial economic growth on a global scale, resulting in more jobs, improved livelihoods and an overall reduction in poverty. At the same time, by bringing larger benefits to individuals and countries already possessing physical and human capital, globalization has accentuated disparities within and between countries. Among the effects of this are increases in urbanization and cross-border migration.
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The distinction between poverty (sometimes called absolute poverty) and disparity (also referred to as relative poverty or inequality) is a crucial one. For while there is significant evidence that economic growth leads to a general reduction in poverty, the impacts of growth on disparity are less clear cut. As often as not, growth appears to have accompanied an increase in disparity as a decrease. Taking this further, globalization is distinguished by increased focus on competitive markets. Such competitive markets tend to be characterized by considerable inequality in incomes and wealth and it is this inequality, this disparity, coupled with the rise of consumerism that, as much as poverty, drives migration.
For if the expectation of better opportunities were not available elsewhere, there would be less cause to migrate.The expansion of information technology has made analysis fast and accurate and made the distant partners close to each other which have also enhanced trade. On the other hand people debate upon the international markets which benefits Multinational cooperation's and hampers the custom and traditions of the locals. Thus as business managers they need to take into account the local rituals and customs in order to make sure there isn't any cultural split between the organization and the host country as well as look into productive and profit maximisation opportunities. It is only when these rules and customs are overstepped in order to gain corporate objective it becomes unethical.
Organizations believe in the focal motive of profit maximization. Organizations survive, compete and thrive for higher profits and better market share. In order to do so, the organization needs to consider many aspects - Organization Theory. Organization Culture, organization structure and organization design are the main three aspects that need to be taken into consideration.
FACTORS AFFECTING GLOBALIZATION
One of the first difficulties that need to be overcome whenever trying to make a globalization approach is the lack of the corporate acceptance towards a host countries culture.
Culture should be regarded "as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs".Â Culture can also be understood as communication, in the sense that all the involving features stated before are trespassed inside the social groups through both direct and subtler ways of communication. In a broader sense, Culture enriches communication itself. Culture is the reason why some levels of close communication between social groups can be reached.
There are several aspects that affect culture, then being the Legal aspects of it. The Islamic Law plays a critical role when it comes to the Middle East which touches on a lot of social issues such as crime,Â politics and economics and even down to the clothing and what not to eat. Western Multinational would need to adhere to these laws and customs in order to survive and thrive.
The Language(s) and the style of writing are also of great importance with different dialects and even lingo (slang) would provide the company with great assistance in promoting the good. For instance in Australia they make it a point to state that they do not talk English but Australian which generally deals with Australian. Even the style of writing with the Arabs reading starts from right to left. For example: - a washing detergent company had to back out his project from the Middle east as they used the same advertising method they would use in the West which dirty clothes transformed to clean ones with pictures from left to right, however the Arabs read from right to left and totally revolted against purchasing that item.
Always on Time
Marked to Standard
The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as: How stable is the political environment? Will government policy influence laws that regulate or tax your business? What is the government's position on marketing ethics? What is the government's policy on the economy? Does the government have a view on culture and religion? Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?
Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at the Interest rates, the level of inflation Employment level per capita and Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.
The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include: What is the dominant religion? What are attitudes to foreign products and services? Does language impact upon the diffusion of products onto markets? How much time do consumers have for leisure? What are the roles of men and women within society? How long are the population living? Are the older generations wealthy? Does the population have a strong/weak opinion on green issues?
SEVERAL SCENARIOS OF UNETHICAL PRACTICES
Nike is basically a household name in the word with major employees endorsing their products with more than 500 contract factories around the world located in 45 different countries. Most of the factories are located in Asian region they have an innovative and dynamic CEO Phil Knight who was quoted on saying that his idea was to move to Asia was the spread his wealth and broaden horizons to the Asian regions.
Less however is known of the story behind the success: how Nike has been a pioneer in exploiting the low wage labour of workers in other countries-so much so that Nike Chief Executive Officer Philip Knight is one of the richest people in the world with a net worth of $5.2 billion dollar worth which we will find found there is a huge disparity in income levels. For Instance to earn what Mr. Knight is worth a young Chinese woman would have to work 9 hours a day, six days a week for 100 centuries! Michael Jordan gets $20 million a year to promote Nike sneakers, more than the annual income of 30,000 Asian women who make Nike shoes.
It was actually during the 1970s, most Nike shoes were made in South Korea and Taiwan. When workers there gained new freedom to organize and wages began to rise, Nike looked for "greener pastures." It found them in Indonesia and China, where Nike started producing in the 1980s, and most recently in Vietnam.
When hiring overseas subcontractors became a fashionable cost-saving procedure, Nike was among the trend setting elite, eliminating nearly all of their U.S. work force by 1992 in favour of low-wage Asian producers. Nike's own promotional materials acknowledge that its labour costs for producing a pair of shoes are just $4.90 while the shoes retail for $150.
The majority of Nike shoes are made in Indonesia and China, countries with governments that prohibit independent unions and set the minimum wage at rock bottom. The Indonesian government admits that the minimum wage there does not provide enough to supply the basic needs of one person, let alone a family. The same story with Malaysia where the government actually knew about their people being exploited and they turned a deaf ear and promised it citizens it was for the best for the country. We can argue that it isn't them being exploited, they probably may have been paid a large sum by the corporate heads to encourage and keep them motivated.
We could ask ourselves why companies like Nike would go abroad, some people might say that it for the greater good. To be a multinational company, globalization help out poor third world countries, but little do they know that it isn't the case. Companies like Nike benefit in every way because they do not have to deal with production. They distance themselves through subcontracting, benefiting from low production costs without any direct lines of responsibility. Subcontracting also allows these sports shoe multinationals to respond quickly to changing styles and fashions, while passing on all of the uncertainty and insecurity to their subcontractors and ultimately to the workers themselves.
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With little or no notice, the multinationals can change the order and demand a different style of shoe, forcing the subcontractor to make rapid changes in their production set-up. Everything must be done very quickly, forcing the workers to work hard and fast, and to put in excessive amounts of overtime if they want to keep their jobs.
Poor conditions in the factory are not simply the result of having a particularly harsh factory owner. It is actually the multinationals, not the subcontractors that ultimately set the pace of production as well as the wages of the workers. If a subcontractor wants to stay in business, he must accept the timeline set by the multinational and accept the price the multinational is willing to pay per shoe. And when the multinationals squeeze the subcontractors, the subcontractors squeeze the workers. You would think they are investing in these 3rd world countries but they aren't.
Nestlé holds about 50% of the world's breast milk substitute market and is being boycotted for continued breaches of the 1981 WHO Code regulating the marketing of breast milk substitutes.
Nestlé encourages bottle feeding primarily by either giving away free samples of baby milk to hospitals, or neglecting to collect payments. It has been criticized for misinforming mothers and health workers in promotional literature. Nestlé implies that malnourished mothers and mothers of twins and premature babies are unable to breastfeed, despite health organizations claims that there is no evidence to support this.
Evidence of direct advertising to mothers has been found in over twenty countries such as South Africa and Thailand. Instructions and health warnings on packaging are often either absent, not prominently displayed or in an inappropriate language. All of these actions directly contravene the Code regulating the marketing of baby milk formulas.
Even in the UK, bottle-fed babies are up to ten times more likely to develop gastro intestinal infections, but in the Third World, where clean water may be absent, mothers may be illiterate and independent health care and advice may be lacking, bottle feeding can be more dangerous. This can lead to a situation where babies are left vulnerable to dysentery, malnutrition and death, and Nestle is able to retain its estimated $4 billion market share in the baby-milk industry (Republican News, 2003).
In 1989 workers at a Nestlé chocolate plant in Cacapava, Brazil went on strike. The workers complained of poor working conditions, including discrimination against women, lack of protective clothing and inadequate safety condition. Within two months of the beginning of the strike the company had sacked forty of its workers, including most of the strike organizers (Republican News, 2003).Â
SUPPORTING BRUTAL / REPRESSIVE REGIMESÂ
Nestlé has subsidiaries in Brazil, China, Colombia, Egypt, El Salvador, Guatemala, India, Indonesia, Kenya, Lebanon, Mexico, Papua New Guinea, the Philippines, Senegal, Sri Lanka and Turkey. The company also has subsidiaries in South Africa which it owned during the Apartheid year. L'Oréal adds Peru and Morocco to the list.Â
Nestlé own nearly 50% of the cosmetics company L'Oreal. L'Oreal was subject to boycott calls from animal rights groups including PeTA because of its animal testing policy. Since then L'Oreal has claimed that it no longer tests finished products on animals. This statement is obviously intended to mislead since finished products do not require further testing and it implies that the ingredients are certainly still subject to tests. Some groups called off the boycott in response to L'Oreal's claims, however there are individuals and organizations who continue the boycott and L'Oreal continues to test on animals.Â
Nestlé itself manufactures products containing meat and has been criticized by BUAV for testing its coffee's carcinogenicity on mice.
There have been numerous allegations of serious human rights violations leveled against Coke over the years. These criticisms range from racial discrimination and monopolization to health hazards and even questionable connections to Nazi Germany. However, some of the most serious and most publicized affairs deal with the company's practices in the countries of Columbia, India, and El Salvador.
Union leaders in Columbia fought for the rights of laborers at Coke's main Latin American bottler. Their campaign hit a bit of a snag, however, when the company supposedly hired mercenaries and had the union leaders murdered. On top of that, union activists were fired for attending meetings and their families were kidnapped and tortured.
In India, Coke plants are tapping into the underground aqueducts that supply farms and they're stealing the water to produce their products. If the villagers' crops manage to survive even with their water being stolen, they oftentimes get ruined by the "fertilizer" (pesticides mixed with raw sewage) that Coke sells back to the farmers. The villages suffer; the people starve. They also dump solid, toxic waste into India's fresh water supplies.
In El Salvador, child laborers are used to harvest the sugarcane that gives your Coke its oh-so-tasty taste. From 5,000 to 30,000 Salvadoran children, some as young as eight years old,
are working in El Salvador's sugarcane plantations where injuries, particularly severe cuts, are common, according to the report, 'Turning a Blind Eye: Hazardous Labor in El Salvador's Sugarcane Cultivation.' Under Salvadoran law, 18 is the minimum age for dangerous work and 14 for most other kinds. But the relevant provisions generally go unenforced in part because the children are hired as "helpers," rather than employees that would entitle them to certain protections. Not only is the law circumvented in this way, but children who are injured
in the fields often must pay for their own medical treatment despite another provision in the labor code that makes employers responsible for medical expenses for injuries incurred on the job.
THE NEED FOR ORGANIZATIONS TO BE ETHICAL AND SOCIALLY AWAREC:\Documents and Settings\ABC\Desktop\ethics.jpg
As globalization started flouring, the media always has had a congruent growth which led to many people being far more educated and has let to many protests and bad publiucity leading to the determent to many organization.
As per the allegation regarding the companies stated before
Coca Cola he University of Michigan became the 10thÂ U.S. university campus to put a hold on the sale of Coca-Cola products.Â Â The University of Michigan boycott was a result of student activists' campaign to protest this Coca Cola's business practices overseas.Â Â Other notable universities include; New York U, Rutgers U, Santa Clara U with NYU and MU being Coca-Cola's largest campus networks worth around $1.4 million in 2005.Â Â
In July 2001, Columbian union SINALTRAINAL, the United Steelworkers of America and the International Labour Rights Fund, failing to get the American Judicial system to take action against Coca-Cola in Columbia, launched an appeal for boycotts.Â Â On 22JUL2003, the world took notice and by October 2003, the University of Dublin perhaps became the first university to impose the boycott.Â Â Although Coca-Cola protested, eventually several Irish colleges adopted the ban, totalling over 250,000 students and several other Irish organizations joined the fold.Â
As the anti-Coca-Cola sentiment swept Ireland, English unions, organizations and student bodies picked up the torch.Â England's National Union of Students has called for verification of the allegations against Coca-Cola.Â Â If these allegations prove factual, they stand to be banned from every college and university in England.Â Â In May of 2005, 12 universities offered to investigate the allegations against Coca-Cola in Columbia but Coke refused because they did not want those findings to be admissible in court.Â Â By October of 2005, Canadian Universities began to balk at Coca-Cola products as well.Â Â
Coca-Cola found its products banned from the 2006 Winter Olympics.Â Â Their $10 million donation to the Turin Olympic Committee and the fact that they were a sponsor of these games did not stop the City Council of Turin from making its controversial decision.Â Â Lastly, they were not allowed to sponsor a Live 8 concert and theÂ Make Poverty History March.
Nike is suffering from the same predicament with the latest incident has at least 50 University of Wisconsin students marched on to the head faculty building demanding the school sever ties with Nike.
This came after Chancellor of the university issued Nike an ultimatum, "clean up your act, or we'll take away your license to do business with the UW".
That deadline passed April 7, and now students want action. The controversy started 2,000 miles away in Honduras. Two factories, operated by Nike subcontractors, closed abruptly in January 2009, locking out workers.
Student say these 1,600 - 1,800 workers still haven't been paid $2.2 million dollars they are legally owed in severance, wages, and benefits. Nike, meantime, pays the University of Wisconsin more than $48,000 to use the university symbol and other logos.
"I think it gives a very bad image to our university," said student Kayla Johnson. "Someone needs to stand up and say this is wrong."
Students want Chancellor Martin to cut the contract with Nike immediately.
As we can see here with the above two examples there are certain problems when the company has over stepped the mark and it is up to managers, leaders, governing bodies and even to public to be knowledgeable and act tactfully and make sure the value of the organization and the code of ethics aren't something that can be substituted for a quick buck.
WHAT MANAGERS CAN DO TO MAKE SURE THE ORGANIZATIONAL VALUE AND IMAGE ISN'T COMPRMISED
Ethical behavior used to be taken for granted in the business world but not any more. Practically every week some new ethics scandal hits the headlines, further souring Americans on the business community. That's just the way things are today, unfortunately.
Let's consider several dimensions of ethical supervision that are often overlooked. The ethical supervisor would generally
Â·Â Â Â Â Â Â Looks out for the interests of others, including customers, employees, and minority members of our society (ethnic minorities, older workers, and the physically handicapped. All levels of management need human skills in order to interact and communicate with other people successfully. Before the functions of management do play their part at corporate level, there are certain questions (D.Deephouse, 1999)
Â·Â Â Â Â Â Â Values employees as people as well as workers. Respect is given to the whole person, including his or her family responsibilities, community involvement, and religious beliefs.
Â·Â Â Â Â Â Â Doesn't tell people what they want to hear. The whole truth comes out even when it hurts.
Â·Â Â Â Â Â Â Doesn't play psychological games with others, such as blame-shifting, practicing one-upmanship, or playing favorites.
Â·Â Â Â Â Â Â Values people over pragmatism, recognizing that how things are achieved is just as important as what is achieved.
Â·Â Â Â Â Â Â Focuses on the ultimate objective or mission (ends) more than rules and regulations (means).
Â·Â Â Â Â Â Â Is committed to ideals beyond self, such as honesty, fair play, and quality work.
Managers should also follow through with the ILO standards in ensuring that certain standards are met however once the manager provides certain quality standards and goes over the set protocol for his/her employees it gains a sense of loyalty and a sense of motivation within the organization
All Organizations needs employees to function. When anyone recalls the word "Organization", it means "employer" and "employees". Employees are a key factor or a vital component in an organization. Employees are the ones that push the organization up the ladder of success. Employers set out the task that needs to be carried out, sets the objectives and requires the knowledge and skills of the employees to carry out and complete the task.
So in order to keep them motivated and not lose them they need to keep them happy that's either by paying them more or looking at other avenues instead of misusing them.
In more or less a effective managers has to understand not only everything there is to know about the company and the components of the organization that is the employees and the methods but also the environment of which the organization it operates in.
A manager one should understand and adapt quickly to the host country's culture, social aptitudes, life style, and working environment and ethics.
An organization has different management level asks for different tasks and it is up to the management to use their resources in a more effective and efficient manner and thus resulting in productivity without actually going over the boundaries and upsetting the order of things and upsetting the host countries (A.Strickland, 2003).
Managers need to work within a certain scope and ensure they work ethically and efficiently. What companies like Nike, Coca Cola and Nestle could do is go through some CSR activities in order to gain the confidence of the public and help the society.
Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia, descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes,Â social responsibilityÂ charters). In some cases, corporations have re-branded their core values in the light of business ethical considerations (e.g.Â BP's "beyond petroleum" environmental tilt)