International Business - Globalisation and Foreign Direct Investment - Essay Example

Friedman Philosophy on Business International Business The term international business has numerous definitions that have been used by businessmen and other stakeholders in relation to giving a meaning. Nevertheless, most of these individuals have termed international business as commercial transactions that entail both public and private sectors that revolve around making profits through sales, investments among others between two or more countries and/ or regions across their political boarders (Dufey, 2008). In most cases, the private is believed to transact based on profit making while the public sector which is mainly made of government related businesses concentrate more on profit and improving the economic status of their designated countries. It is through international business where Multinational Enterprises (MNE) and / or Transnational Companies (TNC). Globalisation and FDI The term globalization is described as the continuous process of diversifying economies of numerous countries across the world. Moreover, the existence of globalisation demonstrates that global economy is present where people from a given country are at liberty to purchase goods and/or services from other countries across the world (Homann et al., 2007). Of importance to note is that globalisation especially in business is characterized by increased trade across the boundaries, the possibility of having one company with subsidiary plants across the world, the possibility of one company selling its products and services to other countries among other trends. Conversely, Foreign Direct Investment (FDI) refers to any direct investment that is brought about by an individual or company as a result of expanding their business in the given company especially on businesses that are in existence. Thus, globalisation and FDI are two crucial factors in international business. The Friedman Philosophy The Friedman philosophy of business emanated from a philosopher who was known as Milton Fried, an economist by profession. It is believed that his argument pertaining to the sole purpose of businesses as that of making profit other that concentrating on ethical issues in businesses was the most provocative one in the history of business philosophy (Heath, 2014). Apparently, Fried argued that businesses had a sole social responsibility of ensuring that its economic resources were utilized in activities that were meant to increase profits with reference to remaining within the rules of business. Furthermore, Friedman argued that both private and public entities through their top management had the responsibility of ensuring that their employees were satisfied with the operations of the business. Basically, the employers were expected to transact businesses with much consideration of the desires of the employees. Thus, business owners or top managers were expected to make as much money as possible. However, the business of making money had to abide by the basic roles of the society with inclusion of the common law and ethics. Contrary to his critics, Friedman articulates that managers are expected to maximize their profit in an ethical manner. This means that managers should not use deception and/ or fraud while operating their businesses. Ideally, Friedman supports the engagement of business in open competition. For instance, he argues that price collusion would be termed as morally wrong, but instead appreciates obedience of law and ethical customs in the society. Similarly, Friedman describes Corporate Social Responsibility in business as profit maximization for stockholders. In light with Friedman philosophy, it is clear that there has been an existing traditional philanthropy in business. As such, he appreciate this moral factor that is continually practiced by individuals such as Bill Gates, Ford among others as an issue that involves their efforts leading to profit generating businesses. However, he is disappointed by individuals or corporate who spend money that has been generated by the stockholders for their personal gain. According to him, such behaviors are only permitted to individual related entities but not corporate efforts. Proponents of Friedman philosophy continuously use the concept of public values in the capitalist world to defend the idea of businesses making profit as opposed to other issues. In their argument, they support their contribution to the society by articulating that businesses have the provision of goods and / or services and employment opportunities that are required by members of the society. In this regard, their philosophy goes hand in hand with the expected believes of contributing sufficiently or more sufficiently towards the necessities of the society, and other institutions related to the society (Dunning et al., 2008). This concept puts more emphasis in drawing a clear difference between the private and public entities. Apparently, the market or businesses entities comprise of either private or public entity. These two entities keep fluctuating in the market where the public entity is highly likely to diminish depending on the management it is under while the private entity may respond on the opposite by expanding. As a result, public values are thus denoted as the absolute freedom that is demonstrated through business. Consequently, business becomes crucial through lobbying and other practices that are related to corporate social responsibility. In a general sense, Friedman affirms that corporate social responsibility in business entities squarely depend on the wealth creation for shareholder. In this regard, corporations are not permitted to give monetary support to charity. However, individual corporate are at liberty to be charitable because businesses too have made great contribution to public value through employment opportunities and supplying the market with the necessary goods and services. Of important to note is that societies must lay down limitations for governments, but at the same time make the market bigger and more profit generating in honour of public value pertaining to the freedom of human beings (Parboteeah & Cullen, 2013). An attempt to defame Friedman Although the work of Friedman has been widely published as having greatly contributed to the overall change in business for the past few decades, it is regrettable some philosophers were opposed to his philosophy. According to Klein (2008), the philosophy of Friedman was not genuine because it was alleged to support dictatorship and torture. Moreover, she argued that the liberalization of economy as presented by Friedman could only be applicable through deception and coercion. Due to this, natural calamities such as Hurricane Katrina which occurred in the southern part of Asia, the Iraq war among other issues. Consequently, this critic continued to argue against the free market philosophy by exaggerating the issue rather than coming up with facts to counter the philosophy. In confirming the allegations, Klein began by using a quote from one of Friedman’s most influential books. Basically, the quote demonstrated the possibility of a crisis being used to come up with change in the business environment. Moreover, he argued that the major responsibility of human being was to ensure that alternatives towards the already existing policies were continually developed as they awaited for political impossibility to become politically inevitable. In response to this anti –Fried philosopher Klein prepared a moving film on the books that showed image of prisoners being tortured as opposed to Friedman’s idea. In addition, she further defamed Friedman by distorting several other quotes that were believed to emanate from his philosophy. For instance, the concept given by Friedman pertaining to the tyranny of the status quo was reversed tyranny of voters where she alleged that the concept was meant to bring forth crises in order to do away with the democratic process. Of importance to note was that this concept was used to by Friedman as an iron triangle revolving around politicians, bureaucrats, and other special group with the sole purpose of deceiving its citizens. In the general sense, Klein was determined to defame Friedman through all possible means. For instance, he was accused of having proposed of reducing inflation through sweeping the reform that existed in the market (Klein, 2008). Nevertheless, his intended idea was that economic shift through scope, suddenness and speed would play a huge role in provoking psychological reactions from the public. Through this, Klein has the opportunity to temporarily brand Friedman as a philosopher who claimed to seek for market freedom but instead took responsibility for most crimes that were continually been committed across the world. The Impact of Friedman’s philosophy It is for undoubted reason that the philosophy of Friedman has been accommodated by a substantial number of people especially those business entities across the world. Essentially, there have argued that the sole purpose of coming up with various businesses in the global market is make maximal profit which further translate to enlarging their businesses across borders and nationalities. As such, the idea of corporate social responsibility in this philosophy has a unique factor as opposed to the modern description of corporate social responsibility. According to Brink (2011), modern corporate social responsibility revolves around four elements namely: philanthropic, ethical, legal and economic responsibilities. Additionally, CSR consists of three concentric circles; inner, intermediate and outer circle. Firstly, the inner circle comprises of the economic benefits that include, providing goods and services for the market, providing employment opportunities among other economic functions. Secondly, the intermediate circle revolves around the responsibility of business entities to uphold the values that are expected by the society. Thirdly, the outer circle of CSR is based on the responsibility of businesses to assist in reducing the social changes (Hill & Jones, 2007). It is imperative to note that the Friedman philosophy of business pays more attention on profit maximization through the right channels while upholding the expected social values. Scholars affiliated to the philosophy argue that the modern corporate social responsibility is far from achieving what Friedman predicted. To begin with, most business entities concentrate more on the reaction of the society as opposed to creating more space for profit making. For instance, many businesses spend most of their time and resources trying to give back to the society through projects such as environmental conservations among other issues. While these projects serve as examples for upholding social responsibilities, they should not serve as pathways to seek sympathy into making more money for the businesses. At the same time, Friedman disapproves the idea of corporate businesses assuming the responsibility of the entire business to fund or act in philosophical manner to various societal issues without consulting the stakeholders because most of the financial share in the business culminates from the efforts of the stakeholders. Hanekamp (2007) argues that businesses in the modern world give contribution of financials without consulting the necessary members. In fact, he articulates that individuals are at liberty to give such contributions. Although most of the ideas of Friedman have been termed as controversial to date, it is clear that he philosophy played a huge role in ensuring that there was free market policy. Ideally, he was able to provide the world with intellectual concepts with regard to anti- inflation, cutting of taxes and policies that were anti-government. For instance, during the regimes of President Reagan and the then Minister Margaret Thatcher, his philosophical ideas assisted in ending the military draft that was witnessed in the 70’s. Moreover, it was through his ideas that staple conservative were created comprising of school vouchers, basis for new economic views concerning Great depression, inflation, lack of employment, and exchange rates. Needless to mention, he contributed influencing reformers across the world on pushing for more privatization of business entities and open markets. I agree with his philosophical idea of firms entitled to making profit more than been ethical. Were it not for his controversial ideologies the world would probably not be where it is today in reference to free market and maximization of profits (Beer, 2010). Reference list: Klein, N. (2008). The shock doctrine: the rise of disaster capitalism. New York: Picador. Heath, J. (2014). Morality, competition, and the firm: the market failures approach to business ethics. Oxford; New York: Oxford University Press, USA. Hill, C. & Jones, G. (2007). Strategic management: an integrated approach. Boston, Mass.: Houghton Mifflin; Enfield: Publishers Group UK. Parboteeah, P. & Cullen, J. (2013). Business Ethics. New York: Routledge. Dufey, A. (2008). International Institute for Environment and Development. London: International Institute for Environment and Development. Homann, K. et al. (2007). Globalisation and business ethics. Aldershot, England; Burlington, VT: Ashgate. Hanekamp, G. (2007). Business ethics of innovation. Berlin; New York: Springer. Brink, A. (2011). Corporate governance and business ethics. Dordrecht; New York: Springer Verlag. Dunning, J. et al. (2008). Foreign direct investment, location and competitiveness. Amsterdam; Oxford: Elsevier JAI. Beer, L. (2010). A strategic and tactical approach to global business ethics. 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