Assess the Global Role and Local Impact of Multinational Companies.

Topics: Corporation, Social responsibility, Corporate social responsibility Pages: 6 (1949 words) Published: January 6, 2012
Assess the global role and local impact of multinational companies. A multinational company is often defined as a corporation whose operations and investments are broaden across a number of countries. They are also referred to as transnational companies. Therefore given this definition it would be expected that if a company operates over such a large territory that it would indeed have many effects and impacts, locally and globally, and its role would also be quite significant as it can have a direct influence on an economy, the environment and general effects on society. However, changing the way they run things in order to accomidate society could break there business down and they could eventually have no impact on society so looking at the situation is they impacts worth the change? ‘Theory has evolved over the years regarding social concerns, society’s expectations and corporate responsibility. Indeed, early management and economic theorists viewed the corporation as having a strong fiduciary responsibility to shareholders, but stopped short of considering any real obligation to other stakeholder groups’ (Friedman 1962; Teece 1984) (Corporate social responsibility, Accountability and Governance; Istemi Demirag). This statement I think is very true, due to the fact that, as time continues people’s opinions of what is deemed socially responsible in both corporate and everyday society varies, as it is a sensitive topic that is very opinion based. Corporate social responsibility is when companies realise that their activities have economic, social and environmental influences. However, to put it simply it can be divided into two broad categories; one-off activities and larger issues of policy and strategy. One-off activities basically cover things such as charitable donations of money and time given to charities or community projects, all of which are at the discretion of the owners of the company. Larger issues of policy and strategy is where the company needs to have a much more devoted awareness to the firms moral, social, ethical and environmental acts within its operations. This requires the company to take a look at other external influences that directly affect the business, such as pressure groups. This could be seen as a type of contingency planning as it helps a firm avoid future conflicting interests with the outside world. Acting socially responsible brings many benefits to both the company and society, if the correct approach is used. So by a firm accepting social responsibility, everyday problems can be reduced such as unemployment and pollution. Therefore you would also see a vast improvement in the quality of life, as society would be factored into the day to day decision making process of the company. A business which includes this approach is most likely to see more of a tangible outcome, as they will probably benefit from increased financial performance from activities such as reduced operating costs from recycling instead of waste disposal. The company could also enhance its brand image from a good reputation and gain the ability to attract capital and trading, so will therefore see the benefits from increased sales and customer loyalty. However, this could also be a case for firms to not accept this responsibility, as they can suffer from lack of customer interest if they haven’t found the right approach for them. This is because various businesses see corporate responsibility being relatively constricting, as in some cases it has lead to products having a lack of sales, or makes the product less profitable. This is due to the fact that introducing some of these socially responsible policies into a firm is very costly, so this can lead to an increase priced products for the customers or a smaller profit margin on the product for the company. However, during the recent economic crisis companies are less likely now more than ever to not act socially responsible as they are more focused on...
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