Q. Referring to material from the unit, critically evaluate how the passage relates to issues concerning the business activities of MNCs and the concept of ethical leadership.
Having examined Machiavelli’s passage from the ‘prince’ I believe it may be applied within the field of change management. It is important that the ‘prince’ may be used as a metaphor for an individual or an organisation. The passage focuses on the effective management of change when merging into a new global market. Drawing attention to the importance of support held by the stakeholders in regards to organisational success. Further emphasis is placed on the effects negative support can potentially have.
With organisations struggling to survive in a challenging global market, change management is at the forefront of organisational strategy. Organisations and individuals that are failing to adapt and change to the climate are the ones now struggling to survive. Throughout this essay, Machiavelli’s passage will be interpreted into relevant issues in contemporary management allowing a theoretical approach to assess the phenomenon of globalisation. To further interpret the passage this essay will draw upon corporate social responsibility (CSR), offering explanation for the growth of MNC and the effect this has had on business ethics.
During the first sentence of Machiavelli’s passage reference is made to ‘entering a new province’. With an increasing number of markets being internationalised, the world is being transformed into a global marketplace (Bishp et al. 2009). By ‘entering a new province’ MNC are contributing to what is now known as globalisation. By pursuing globalisation organisations may move into new markets often pushing for higher profits and greater market share. Founded in 1919 Tesco began as a group of market stalls and opened its first store in Middlesex, 1929 (wiki). Having established itself as the market leader in the U.K grocery industry it began to expand into Europe beginning with Poland in 1992. The company now has over 5,300 stores operating in 14 countries within Asia, Europe, America and the U.K. This is a perfect example of how a company can, as Machiavelli put it ‘speedily’ gain possession over a global market.
This raises the question, how do corporations come to grow so big, and with estimations showing that their rate of growth is to continue, why are MNC so eager to expand into these new markets?
Since the early 90’s, control on foreign investment has been slowly removed due to countries becoming increasingly worried about missing out on the potential profitability of foreign trade. This is done by removing potential barriers to trade within a countries market through actions such as the removal of foreign investment tax. Economists welcome this free flow of capital over borders as it allows capital to seek the highest rates of return (Loungani & Razin, 2001). This free flow of capital also offers many other advantages as noted by Feldstein (2000). In turn a free market has geographically mapped out a clear path for MNC to follow leading them around the globe starting with the developed wealthier towns and cities, lead by the developing countries, having a profound effects on our lives (Popkin, 2006).
Developing countries often see attracting foreign direct investment (FDI) as their opportunity to lead their country out of poverty and into development, and so when investment is achieved it is often a dream come true. With the prospect of bringing employment, countries often offer financial concessions to the MNC. Not only does this employment have a direct effect on the country but also an indirect impact on the local economy. With an increase in domestic income, greater expenditure creates stimulus from greater foreign investors, drawing greater numbers of MNC to the country (Baafi, 2009). Workers may also gain from technology transfer as the MNC import their technology...
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