Chapter 13: Ethical Dilemma
There is the dilemma in the strategies and the structure of Multinational Enterprises. The pressure in cost usually integrates the people as on the other side they are pushed away making Multinational Enterprises to have local adaptation. The strategies cause a dilemma as local responsiveness attracts consumer as there production according to their demands. There are some debates that have been discussed in the paper. It is possible for firms to move their headquarters overseas in order to escape threats and improve productivity.
Home replication strategic choice duplicates the countries’ competences in foreign lands. This choice is easily adopted and implanted when there is venturing of firms outside the country. However, the strategy focuses on the home country hence there is lack of local responsiveness. The other strategy is localization whereby the local responsiveness is maximized. However, there is high level of autonomy and efforts duplication in foreign lands which leads to high costs. There is however the dilemma of whether the strategies are really ethical (Peng, 2016). Global standardization is the other strategy whereby there are advantages at low costs. The last strategic choice is transnational whereby there is it is locally responsive and cheap and it involves innovations of diffusions and engagement in global learning. However, the fact that there is uncertainty and risks of innovations, there is zero guarantees for highest quality of the same. It is also in transnational whereby there is slowing of decision making due to the presence of coordination and much knowledge. Global standardization strategy enhances local responsiveness hence important in industrial sector. This is because there is less pressures for local responsiveness while those for reduction of costs are usually paramount. However, there is inappropriateness of the strategy in industries that range between consumer products and automobiles. Adoption of transnational strategy as seen before is cheap and enhances local responsiveness.
There are several countries that have made moves to overseas because there are more advantages than disadvantages of the same. In terms of business, it clear that the host country pulls its headquarters towards it. There are five strategic rationales at corporate level. First, there is the ambiguous statement of leading symbolic value to stakeholders which state that the firm a player globally. This creates a dilemma whether the firms shifting of headquarters overseas is ethical. There may be presence of efficiency gains (Peng, 2016). It is possible for Multinational Enterprises to have more frequent and effective communication with the shareholders of the institutions if the newly formed headquarters has been located in major financial centers. The third rationale is that there might be benefits to the firms from being committed to the governing laws of the host country. There is also the possibility of benefiting from the high-quality regulatory and legal regime that they adopt to operate under. Lack of confidence concerning the stability of South Africa political state had lead to driving away Anglo American to London. The forth strategy is that movement of the corporate headquarters to new country gives an indication of being commitment the country. The movement of HSBC to London indicated its determination to becoming a global player.
In 2010, the Chief executive officer of HBSC relocated it back to Hong Kong but its headquarters are still in London. The aim for returning the headquarters to London is that it is where HBSC began and it is becoming a very significant part of the world. There is the final rationale which implies that movement of headquarters overseas facilitates the increase in bargaining power (Peng, 2016). The movement of Tetra Park to Switzerland had been facilitated by the tax disputes of owners and the Swedish government. From the experience of high taxes by the Standard chartered, HBSC and Barclays has been threatening to move their headquarters to London. This had been happening between the year 2008 and 2009. The ethical dilemma gets in whereby there had been an announcement of Fiat in 2014. Together with Chrysler had been planning to merge into the holding company of Netherland. Every government would have an urge to see a business like Fiat Chrysler Automobiles because they are of high quality and pay well. However there are many jobs lost as a result of emergence of such income generating projects. It is usually given that if there is a high number of headquarters moving overseas, other service providers who offer high quality services are likely to follow them according to Multinational Enterprises. These include bankers, accountants and lawyers. There had been proposal to give tax incentives so as to prevent high quality service providers from moving their headquarters overseas.
Chapter 14: Debates and Extensions
Initially agriculture had been placed at primary level in economic activities but after its emergence in the industrial revolution, it became a secondary issue. There had been decline of agriculture and there was centralization of industrialization in manufacturing. This however, changes after a while where services had been leading (Peng, 2016). This is where the debate of manufacturing versus service comes in. the contribution of manufacturing towards the gross profit had been approximately 11% and the rest is services in the 21st century among several countries. There is a greater history of services than manufacturing. There is another debate of market orientation versus relationship orientation. A market oriented firm is able to listen to the feedback of the customers and manages allocation of resources with an aim of meeting the expectations of the clients. With relationship orientation, there is strict monitoring. There has been debate whether the aspects are effective in markets globally. The key thing is the benefits of relationship orientation and market orientation.
The debates in this chapter enable one to acquire skills on how one should formulate debate points. It enables one to know that the points should be ideal and simple. The meaning of the points should come out automatically. From the debates, it is possible to acquire skills on the fact that the points should be supported with ideal arguments. One should also include relevant examples to strengthen the debating points. The participants in the debate is able to know that they should have adequate knowledge concerning the topics they are interested in. the debate should not be too lengthy as seen in this chapter.
Conclusion
There various incidences whereby various firms decide to move their headquarters overseas. This has been greatly associated by presence of pressures like business activities and taxes. There are various strategies that cause ethical dilemma as local responsiveness attracts consumer as there production according to their demands. These strategies moves hand in hand with structures and they drive each other as discussed above. Moving the headquarters to another country facilitates commitment to the host country whereby there is the need to follow the abiding rules and regulations. Some firms move their headquarters overseas for various reasons like seen with HBSC. Movement of headquarters for some firms would facilitate other high quality producing industries to move too. Debates concerning manufacturing and services has been discussed in the paper above and it has been seen that services are more important compared to manufacturing. Market and relationship orientation debate has also shown that they are almost of equal importance. It is possible for firms to move their headquarters overseas in order to escape threats and improve productivity.
Reference
Peng, M. W. (2016). Global business. Cengage Learning.
