Governing Global Business - Assignment Example

Governing Global Business Introduction The current changes and developments I the economic operations have favoured large Trans-National Corporations (TNCs) which are consequently the central players. These TNCs have developed and some of them are even richer than some states and as a result they have earned some power that they tend to regulate even government policies and to some extend help to order the agenda of organisations such as the world trade organisation (WTO). Large Trans - national corporations have been rapidly growing through mergers and acquisition and their profits have been greater than the gross domestic products of some low and medium earning countries. The TNCs are driving the individual economies of in the civil society placing a critical trend in the eco-system, they set salary levels which causes the rest of the world economies to incline their demands and so forth. Galbraith asserts that the classical economy theories were only true in the past millenniums and argues that those were the days when the society lived in poverty. The current civil society has advanced from the poor lifestyle to affluence and as a result, a completely new economic theory has developed. The businesses have developed and they are turning from local to global marketing, most of the business ventures are forced to put in place a frame work of operation that embraces accountability and global recognition otherwise they would greatly degrade their technique. Galbraith Ideology There are many small organisations that have come together to fight for fare trade that would ensure corporate responsibility. Galbraith argues that as the society becomes more affluent, the trends in economic theory should also change towards generating consumer demand artificially. Business ventures have to advertise so as to create that need in their customers and produce commercial goods and services; this has brought about neglect to the public sector (Galbraith & Galbraith 2007). Galbraith asserts that with the wealth around, many people for example Americans may tend to purchase luxurious items while their backyard was polluted and their children attended poorly managed schools. He also argues that the presence of the market alone would under supply or totally fails to provide for a lot of consumer goods to the general public while private commodities would be characteristically over provided due to the advertising process which effectively creates an artificial demand above the individual's fundamental requirements. Galbraith advocates for regulated consumption of certain products by imposing greater consumption taxes with grounds that would be a better form of taxation compared to labour and land taxes. Legislating the corporate responsibility to meet the expectations of multi-national democracy. These regulations need the intervention of bodies like European Union, national governments and other non-governmental organisations. The increasing influence of TNCs on the global market is posing a threat to some governments and small businesses and hence it should be tamed to attain global responsibility (Galbraith & Galbraith 2007). TNC Power and Globalization Most of the trans-national corporations have resulted in abuse of human rights (in terms of salaries and goods) since they have attained sudden domination and unexplained powers over the political and economic scene. The need for decentralized power and the complicated relationship of the regulation and influence that is typical for today's economy pose a challenge to the accountability and responsibility of advertisements and the safeguarding of the human rights (Galbraith & Galbraith 2007). Globalization is the major motivation factor to the emergence of the trans-national corporations and multinational business ventures as the major players in the international stage. Since these corporations have high economic capabilities, they tend to override their ability and operations to influence or manipulate political and economic policies of nations and as a result, their activities have a profound effect on the world environment, development of countries and the lifestyle of citizens. Through mergers and acquisitions, corporations have increased to cross border businesses. The increase of rapidly growing individual corporations has also played a role in the exposure of deficient government legal systems that lack the consistency on their operations as well as lack of corporation between states in holding businesses ventures answerable for human rights violation (Elliot & Cownie2007). Governments can no longer restrain players within their borders and demand compliance with the state policies and other government regulations. As a consequence, the government cannot introduce new measures to efficiently manage economic, social and cultural impact of business venture on human right within their authority. Trans-National Corporations and Human Rights Globalization and capital markets that have been profitable to the Trans-National Corporations have enabled them to attain unprecedented economic, financial and political influence. This has subsequently leading to concentration of power, production means and eventually creating oligopolistical circumstances. By this virtue the TNC's can choose what to do and where to do it, what to produce and when to stock. They also influence economic policies of both weak and powerful nations including international institutions. The powers of the TNCs do not seem to match responsibility and awareness especially in the aspect of human rights safeguarding. There is no international legislation or democratic structure that is powerful enough to regulate the activities of such corporations. Usually the TNCs present themselves as elite corporations that respect democracy and oppose capitalist, totalitarianism and poverty whereas the reality is disheartening (Elliot & Cownie2007). They are mainly profit minded and power hungry with no regard to changing the status quo. Civil and Political Rights Research has shown that Trans-National Corporations support coup d'etat or are inclined towards dictatorship rule. The support comes as investment aimed at ensuring political stability in countries that are of major to them because of resources (raw Materials, labour force) and their ability to suppress any social protests that may want to address environmental issues, cultural aspects and union associated claims. Some critics has placed claims that the TNCs are behind the military conflicts in countries like Congo and Columbia and benefit from resources such as oil, timber and ore (Elliot & Cownie2007). Labour and Employment Rights Trans-National Corporations create fewer direct work opportunities as compared to their economic activities. This is ensured by the reduction of payroll costs, through conglomerations, acquisitions and restructuring programs. These are very swift means of increasing production and capital concentration termed neo - liberal tactic. Statistics show that over the past ten years, close to five hundred largest corporations have reduced about 400,000 workers annually in spite of the substantial increase in profits. Though the number of jobs reduces globally, its increasing in developing countries and free zones. TNCs take advantage of information technology and trade liberalization in the developing economy; they subcontract from developed countries hence not foreign direct investment and the locals do not benefit from the relocations. The corporations relocate to countries that offer best conditions and especially those who have cheap labour costs (Elliot & Cownie2007). Such relocations have numerous negative effects on employment and also present no respect for the labour rights (labour exploitation and poor conditions) Economic and Social Expansion of Developing countries The strategy behind globalization as imposed by the trans-national corporations is to increase concentration exclusively. Only the nations that are industrially and financially able benefit because of their credit-worth, while the developing nations are denied the opportunity to develop in economic, environmental and social aspects. Foreign investment is only used for acquisitions and mergers, these conditions bring down the quality of services (Elliot & Cownie2007). TNCs usually exploit smaller companies by acquisition at low prices and privatization of public companies at cheaper costs also contribute to the degenerating quality of services, repressing the revenue for the countries in question and increased costs for consumer goods all these in favour of the Trans-National Corporations. Furthermore, the TNCs engage in corrupt deals that give them authority to exploit natural resources, or resolve their production. This has a negative effect on the value of human rights, economic, social and environmental development. Respecting Human Rights The universal declaration of human rights of 1948 establishes an inclusive strategy to the safeguarding of human rights from onset. In its introduction, it states that every individual, organisation or body must struggle towards achieving the universal standards contained in the declaration by upholding respect for renowned rights and freedoms. Some argue that the declaration in itself is not a binding instrument in itself; nevertheless it has been broadly endorsed by the international community in both legal and political framework (Elliot & Cownie2007). Due to the worldwide acceptance, some of provisions in the declaration are now considered binding traditional international regulation. There are provisions that exist for international standards with regards to the Trans-National Corporations and other business ventures that contribute to the definition of legislation and responsibility of the enterprise and developing the criteria that enable all players to appreciate with sensible certainty the extent and content of duties for which they may be held answerable. The responsibilities of business organisations and Nations have to be elucidated and outlined in a way that gives due consideration to the foundation and modes of their power and the most efficient means by which they can be controlled for the recognition of human rights (Galbraith & Galbraith 2007). The establishment of universal, all-inclusive international standards regarding human rights responsibilities of trans-national corporations and other organisations should not be viewed as a strategy to shift responsibility. Rather it is a behind schedule recognition of the obligation of all members of society to toil for the recognition of human rights within their area of speciality and operations. Voluntary Code of Conduct The works of human rights organisations and other social movements have lead to the documentation of the human rights violations committed by the Trans-National Corporations (TNCs) and can be publicly denounced. The outcome has been a bad picture in the eye of customers, to recover their reputation, the multinational corporations and trans-national companies are carrying out seduction campaigns with the purpose of convincing customers of their products that they have no ill motives both in the social, cultural and environmental grounds (Jeffcott & Yanz 1999). Voluntary codes of conduct and labels are at the centre of this promotional campaigns since there is no connection between the mediatisation of violations perpetrated by the trans-national corporative and the implementation or formation of voluntary codes of conduct. It's through such campaigns that large companies in the developed world have come to adopt the voluntary codes of conduct (Jeffcott & Yanz 1999). They include Nike, Levi's and Adidas, as the content of and respect of these codes are deliberate, their existence was imposed by societal pressure. The global society is no longer ruled by traditional authorities, so the TNCs should take in to consideration the customers, moral pressure, environmentalists and other social activists and reconsider their capitalist economic theories. TNCs are working to regain their prestige in the eyes of customers plus their competitiveness on market and to avoid democratic control by host countries to compel them to adhere to all the regulations (Jeffcott & Yanz 1999). According to Galbraith, the world has progressed from the era of New deal which was characterised by mechanical evolution and industrialization to the progressive era, the one that is characterized by capitalism economy. The new deal era established measures to enact reforms that saved the system from itself, the current advancements in globalization are just like those of previous era. The labour market is the worst hit with lack of employee's bargaining power and on the other hand the international economic policies show proclivities towards economic insecurity and deflation. Conclusion The corporate world is in concert with the expectations of multinational and trans-national corporative democracy. The question is to find out what can be done by host nations, groups like European Union and other global trade unions. The practises of TNCs have negative impact on every aspect of human operations as they are supported by principle of exclusion and on authority and wealth concentration. The principles of the TNCs have to be changed as they clash with democratic ideology, growth of developing nations and the wellbeing of the whole world. References Elliot J E & Cownie J (2007) Competing Philosophies in American Political Economics, Selected reading with Essays and Editorial Commentaries University of Michigan Galbraith J K & Galbraith J K (2007) The New Industrial State Princeton University Press Jeffcott B & Yanz L (1999) Voluntary Codes of Conduct Do They Strengthen or Undermine Government Regulation and Worker Organizing' Maquilla Solidarity Network, Project Paper, Workers in the Global Economy Project Read More