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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 enterprises.

 

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