- Identify and discuss the reasons why multinational enterpr...
Identify and discuss the reasons why multinational enterprise activity arises? Why are multinational enterprise sometimes criticised for their activities in the developing countries? Are these criticisms justified? Illustrate your essay with specific examples.
In order to sufficiently identify and discuss the reasons why
multinational enterprise activity arises, a robust definition of
the phrase 'multinational enterprise activity' is required. See
definition as detailed below.
Definition - In simple terms, a multinational enterprise can be
defined simply as a firm which has productive capacity in a number
of countries e.g. the Royal Dutch / Shell Group of Companies,
British Petroleum (BP), and Cadbury are classical examples of
multinational enterprises. Also, the accompanying word 'activity'
will in this report context encompass action, movement and/or
goings-on. It is however, worth noting that there exist, some level
of distinction between 'multinational' and 'conglomerate'
enterprise. The latter is defined as an organisation that operates
productive capacity in a number of different areas of businesses in
different countries. Drawing from the above definition, the next
section of this report would focus on discussing the reasons why
multinational enterprise activity arises.
Depending on the context in which it is used, criticism can be
either objective or subjective - making a choice on which root to
follow should be the sole prerogative of the person or individual
involved. However, drawing from the above distinction the focus of
this section of the report will be to address the issue of whether
criticisms of multinational enterprises are justified or not. This
section of the report will address the issue in two folds: from the
economist' view point, and the OECD guidelines for multinational.
The economist is a social scientist that deals with the production
and distribution, and consumption of goods and services and their
management. While OECD stands for Organisation for Economic
Cooperation and Development; the OECD is an international agency,
which supports programs designed to facilitate trade and
development. Thus, from the economic (social scientist) standpoint
I should like to feel that some of the criticisms being levelled
against multinational enterprises are debatable. This is because,
the onus of managing a nations wealth (factors of production) lies
with the government of the day in every nation i.e. the citizenry
should trust the judgment of their leaders. Consequently, a corrupt
government should have a fair share of criticisms levelled against
resident multinational enterprises. But from the OECD Guide lines'
perspective a few of the criticism levelled on multinational
enterprises in developing countries are justified. The guidelines
for multinational enterprises in developing countries are
recommendations addressed by 36 (OECD and non-OECD) governments to
multinational enterprises operating in and from their countries.
They provide voluntary principles and standards for responsible
business conduct in areas such as product safety, environment,
labour management, supply chain responsibilities, disclosure of
major risks and competition. The recommendation express the shared
volumes of the nations that are the source of most of the world's
direct investment flows and home to most multinational