Globalization, Corporate Social Responsibility And Poverty

Q1.To what extent are the emerging market multinationals in the article balancing global efficiency with local responsiveness.

Globalization

Globalization is growing engagement between world civilizations. It is often described as one of the most important current issues, with far-reaching consequences for mankind. According to Hammond & Grosse (2003) “globalization is the homogenization of people's tastes and demand patterns around the world, due to increased access to international communication of information about products and services as well as increased access to transportation of products and people across borders”. It increases world competition in every aspect of life like culture, business, arts, science and entertainment. In a borderless world, global market requires organizational responsiveness, and in time decisions. “In the process of becoming more global, organizations are forced to re-engineer, re-design, and re-evaluate their processes, procedures, and products, as well as their workforce, services, and public relations” (Harris, 2002).

Definitions:

Friedman, 1999 in Harris (2002): Globalization is the process of universalizing politics and markets while making borders porous; it relies on the greater interdependence of economies, of political systems, of culture, and of societies.

Resnick 1989 in Medina & Duffy in (1998): As a process of integration of the factors of production from various parts of the world, which resulted in a finished product for national markets.

Globalization in emerging markets (BRIC):

According to case study there is continues increase in BRIC firms in worlds Fortune 500 rankings. BRIC term was used by Goldman Sachs, in order to describe the emerging markets of Brazil, Russia, India and China. According to article this means emerging markets are becoming new champions in a coming period.

It is really difficult of find any place in the world where you can't find made in china label. From textile to electronics, household to transport, consumer goods to industrial items you can find china everywhere. According to Fan (2006) “In the 1990s, the country's trade growth was three times faster than the global average”.

Mature multinationals vs. multinationals from emerging markets:

A large number of multinational originate from US, UK, and other European countries. They were focus in strengthen their home economies making all their decisions at headquarters put all control in their hands but try their best utilize the world resources such as using cheap labour abroad for example, British Telecom (BT) moved their call centers to India to benefit from cheap labour likewise insurance giant Norwich Union has also announced to create new ones in India. (BBC, 2008). This shows multinational approach as Inkpen & Ramaswamy (2007) highlight “thinking global but acting local”

On the other hand firms from emerging markets of China, India are becoming the true global giants. These two countries have huge middle class societies, and they use their capital for serving their own fastest growing consumer society as Economist (2008) highlights, strength of emerging markets as they are escalating the number of clients in their own markets further here TATA produce good example of its Nano car which is not only beneficial for indian families using motor bikes but also globally make a great innovation. Side by side these emerging economies are globally efficient by bringing the world closer as in Economist (2008) Mr. Yang (Lenovo chairman) explain, they are producing all the products in china, but now they company starting business in Greensboro and Poland to close their customers as well. India and china both started from consumer goods companies just like west which in return produce many large scales corporate which increase the living standard of millions of people. As Jeckins (2005) claims Indian group TATA argues markets only grow if poor also become customers.

Emerging markets are too much conscious about their cultures like Mr. Yang proud on their own culture, but once they are multinational they should keep in mind McKinsey (consultant) suggestion to unite the local and American culture, but on the other hand Economist (2008), highlights “TATA, growing global reach in its Indian origin.” These economies also succeed in producing goods at far less prices then their rivals developed ones Lenovo's effort for the PC for farmers which helps them in networking with world.

Emerging markets more emphasize in giving jobs to their people side by side hiring international cream, this will be beneficial in two ways like availability of cheap labour at home for multinationals which shows their local responsiveness in a manner of creating jobs for their own people. Emerging economies sharing ideas with other emerging markets for the best interest of their own and to prove their global efficiency as Economist (2008) highlight the example of Mexican builder, Desarrolladora Homex plans to their modern new techniques to share with other emerging markets.

Finally Economist (2008) highlights the true feature of emerging market as they are combination of initiate global economy and rational and mature strategy making at home.

Q2.Critically examines the impact of processes of globalization upon the changing nature of contemporary/emerging market multinational corporations with respect to Corporate Social Responsibility.

Corporate Social Responsibility:

Corporate social responsibility was taking into consideration primarily in late nineteenth century by U.S.A. Later major efforts for its implication was taken in 1970's by U.N. and some other international organizations and it become an international issue. In 1990's certain social groups and firms set some principles in which they voluntarily involve themselves to a particular set of norms and ethics towards their social responsibilities. However serious thinking about this concept was taken into place after the session of the World Economic Forum in January 1999, in this session According to Kalk et al (1999) “United Nations Secretary General Kofi Annan appeal for transnational corporations (TNCs) to cast universal principles in the areas of human rights, workers' rights and the environment in a voluntary manner”. After this speech corporate seriously start thinking about their social responsibilities. Likewise Demirag (2005) “The growing international public opinion that the corporations have an obligation that goes beyond the pursuit of profit to the consideration of social and environmental impact of their activities.” Corporate social responsibility is a vast topic its roots are not limited to charities, environment, customer care but it includes certain other areas such as workplace (employees), marketplace (customers, suppliers), community ethics, and human rights.

Definitions:

World Business Council for Sustainable Development, 1999 in Moir (2001) “The ethical behavior of a company towards society, management acting responsibly in its relationships with other stakeholders, who have a legitimate interest in the business.”

Journal of Consumer Marketing, 2001 in Lantos (2001)“An organization's obligation to maximize its positive impact and minimize its negative effects in being a contributing member to society, with concern for society's long-run needs and wants. CSR means being a good steward of society's economic and human resources”.

Globalization and Corporate Social Responsibility with respect to emerging market multinational corporations:

Now a day's not only corporate managers, but certain NGO's and volunteers have a major focus on their social responsibilities. Emerging markets are initiating in global economy so need to emphasis more on their social responsibility, because if they are just do business for profit purpose they cannot make society happy.

Multinational producing products for the middle class as Economist (2008) highlights TATA produce Nano car and increase the number of consumers in their own market and it increase economic activities as Economist (2008) suggests emerging market new middle class may help certain companies to grow up. But on the other hand side they are exploiting the labour as Economist (2008) highlights “multinational firms are looking for the skills that workers from emerging market can bring to a job as much as for lower cost.” If corporations involve themselves in corporate activities it can reduce poverty, and increase the economic stability as Jeckins (2005) claims “by stimulating commerce and development at the bottom line of the pyramid, MNCs could radically improve the life of billion people and help brining people a more stable, less dangerous world.” However sometimes it used as a negative concept as Jenkins (2005) quote Christian Aid which stated “CSR is a completely inadequate response to sometimes devastating impact that multinational companies have.”

A very recent concept of global corporate citizenship goes beyond all other social responsibility concepts as Schwab (2008) “global corporate citizenship means engagement at micro level on the issues of importance to the world” so in global economy multinational companies must keep in mind the about weather changing, availability of clean water, decrease the rate of corruption, natural disaster, providing shelter as Economist (2008)Mexican builder, Desarrolladora Homex developing low cost housings for people. However Schwab (2008) focus on state and international responsibility to overcome these challenges. Certain global multinational companies put their efforts to resolve some of the issues with help of governments and NGO's as Schwab (2008) highlights “nestle engage with government and NGO's to reduce water use ia broader way.”

Finally CSR is not anything which can alone do by any business, MNC, TNC or GOVT. it is impossible for anyone to unravel the issues and problems of entire globe without any external help.

Appendix

  1. BBC (2008) Should British firms move jobs to Asia? Available at: http://news.bbc.co.uk/1/hi/talking_point/3254378.stm [Accessed: 30 December, 2008]
  2. Demirag, I. (2005) Corporate social responsibility, accountability and governance. 1st edn. Sheffield: Greenleaf.
  3. Economist (2008) ‘A Bigger World'. The Economist. 338(8598) pp.3-6.
  4. Economist (2008) ‘The New Champions'. The Economist. 338(8598) pp.6-12.
  5. Fan, Y. (2006) ‘The globalization of Chinese brands'. Marketing Intelligence & Planning. 24(4) pp. 365-379.
  6. Hammond, C. & Grosse, R. 2003 ‘Rich man, poor man: resources on globalization'. Reference Services Review. 31(3) pp. 285-295.
  7. Inkpen, A. & Ramaswamy, K. (2007) ‘End of the multinational: emerging markets redraw the picture'. Journal of Business Strategy. 28(5) pp. 4-12.
  8. Jenkins. R, (2005) ‘Globalization, corporate social responsibility and poverty.' International Affairs. 81(3) pp. 525-540.
  9. Lantos, G. P. (2001) The boundaries of strategic corporate social responsibility. Journal of Consumer Marketing. 18(7) pp. 595-632
  10. Medina, J. F. & Duffy, M.F. (1998) ‘Standardization vs globalization: a new perspective of brand strategies'.Journal of product &brand management. 7(3) pp. 223-243.
  11. Moir, L. (2001) ‘What do we mean by corporate social responsibility'? Corporate Governance. 1(2) pp. 16-22.
  12. Philip R. Harris, P. R. (2002) ‘European challenge: developing global organizations'. European Business Review. 14(6) pp. 416-425.
  13. Schwab, K. (2008) ‘Global Corporate Citizenship'. Foreign Affairs 1 pp107- 118

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