Question

What are the major issues of Globalization and why are they important in looking at International Business today?

Answer 1

Global trade expansion creates unfair exchanges between bigger and smaller economies. They argue that MNCs and industrialized economies capture significantly more value because they have a greater financial leverage and can dictate advantageous terms of exchange that end up victimizing developing nations. Critics also raise concerns about environmental damage, decreased food safety, unethical sweatshop labor practices, increased consumerism and weakened traditional cultural values.

Historically, the most significant challenges faced by MNCs, ethical business practices in areas such as labor, product safety, environmental stewardship, corruption and compliance with regulations have played a dramatic role in the success or failure of global players. Nike's brand image was hugely damaged, for example, by reports that it used sweatshops and low-wage workers in developing countries. Bribing public officials (e.g., paying them off with gifts or money) is relatively common in some nations, particularly those without a strong rule of law, by those seeking favorable business terms. Although there are national and international laws to crack down on corruption and bribery, some businesspeople and organizations are being pressured to go along with practices accepted locally. An important consideration for all MNCs is to maintain the highest ethical standards while operating in any nation.

Another significant hurdle is the ability to incorporate new regions efficiently and effectively into the value chain and corporate structure. In many cases, international expansion requires huge capital investments, along with developing a specific Strategic Business Unit (SBU) to manage these accounts and operations. Despite this fixed organizational investment, finding a way to capture value is an important global corporate initiative.