Economic Concept of a Multinational Company - Essay Example

Participants: January CONTENTS Values 2 Generations 2.2 Hofstede’s theory 3 Multinational companies 3.2 Economic concept of amultinational company 3.3 Features of a Monopoly 1 Values. Values represent basic convictions that a person holds, and they cause some specific attitudes of behaviour to be personally or socially preferable to other modes of conduct for that person or group of people. Values are very important to organisation behaviour, because an organisation often has preconceived ideas of what ‘ ought’ and ‘ ought not’ to be. These ideas are not value –free; often they contain interpretations of what is right or wrong. As result, values influence objectivity and rationality; they influence attitude and behaviour (Robbins 2011). Values are a core element of culture (Hofstede, 2001, p. 10). Values can be personal, social political, religious and professional, as well as scientific and characteristic of a particular academic discipline(Becher & Trowler, 2001; Van Hout, 1996, Smart et al., 2000). According to Kleijnen et. al 2009, there are four models of organisational values: HR, OS, RG and IP. These four organisational values are moderately experienced in practice. The mean scores of the current values are closely clustered near the neutral level. There are, however, clear differences as to the desirability of the four values. Organisational values not only vary per department but also per discipline. However, in the current study it was not possible to investigate reliably the differences between disciplines or sectors because of the low numbers of departments for some of the disciplines According to Robbins (2011), there are two separate sets of values. One set is called terminal values and this includes a comfortable life, an exciting life, wisdom and pleasure. This set refers to desirable end-states. These are the goals a person would like to achieve during his or her lifetime. The other set, which is called instrumental values, refers to preferable modes of behaviour while achieving the terminal values. It includes ambitious, broad-minded, cheerful, clean, helpful and polite. Values strongly influence a person’s attitude, behaviour and perception. It is important to consider also the value ranking of executives and union members and their activities. An executive needs terminal values, for example self-respect, family security, freedom, a sense of accomplishment and happiness. In the instrumental set an executive needs honesty, responsibility, capability, ambition and independence. Union members have as terminal needs family security, freedom, happiness, self-respect and mature love. The last is important because it is a prerequisite for need equality, a world of peace, family security, self-respect and freedom. Instrumental set of values for union members are honesy, helpfulness, courage, responsibility and capability. These are the values of the corporate manager. Values differ across culture and generation and this can help explain and predict the behaviour of employees from different countries in certain situations. This is illustrated in table 1 below: Table 1: Generations Geert Hofstede(1980) defined culture as programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values (Hofstede1980). Edgar Schein’s book on organizational culture defends culture as the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic ‘taken for granted’ fashion an organizations view of its self and its environment (Schein 1994). A simple way of defining culture is that it is what keeps people together. Culture is very much about groups, and a basic need of groups is to be able to communicate, both at a superficial level and also at a deeper level of meaning. At this deeper level, words, actions and things can become imbued with special and specific meaning for the group. 2.1 Generations. A generation can be defined as a group of people who live in the same time. Different generations have different values. People who grew up during the time of World War 2 can be called Veterans. The veteran generation tend to be very loyal to their employer and respectful. They are hardworking and practical (Robbins & Millet 2011). Boomers is the name given to people who were born after WW2. They work hard and they want to enjoy their labors. Boomers consider work as a lift to their career (Robbins & Millet 2011). Generation X is a term that is used for the generation that has been made by globalization, MTV, AIDS and computers. The main value of generation X is flexibility. Family and relationship are very important. They enjoy group work. (Robbins & Millet 2011). Generation Y grew up during prosperous times. They have high expectations of their job their goal is to become reach and famous. They see themselves as being socially responsible (Robbins & Millet 2011). 2.2 Hofstede’s theory. Some would say that there are common universal human needs that motivate everyone. Hofstede (1980) believed that needs differ from country to country. In work he used four factors that influence a natural culture there for values. Power distance refers to the extent to which unequal distribution of power is accepted as right and proper (Hofstede 1980). For example, how much obedience and respect are superiors entitled to because of the position that they hold? How accessible are superiors? Uncertainty avoidance refers to the extent to which people feel threatened by ambiguous and uncertain situations. In societies which have high uncertainty avoidance, behaviors and ideas that deviate from the norm are not tolerated, belief is placed in experts and their knowledge, and it is believed that situation should be covered by formal rules and regulations (Hofstede 1980). Individualism-collectivism refers to the extent to which people define themselves as autonomous individuals or through their membership of groups. In individualist societies individual initiative and achievement are emphasized while in collectivist societies commitment and duty to the group are emphasized (Hofstede 1980). Masculinity-femininity refers to the extent to which the dominant social values are assertiveness, acquisition of money and things, and not caring for others. A masculine society is one in which these values are strongly represented and where sex roles are clearly differentiated. In a feminine society, on the other hand, nurturing is valued more than assertiveness, quality of relationships is more important than the acquisition of things, and sympathy for the disadvantaged is an important value (Hofstede 1980). Hofstede(1980) characterized all forty countries in terms of these four factors. Table 2 shows the rating of Australia, Hong Kong, Japan, the Philippines, Singapore, Sweden, the US, and Yugoslavia in terms of those factors. Hofstede ranked each country in each category, but the dichotomous treatment (high-low) in table 2 is enough to illustrate considerable variation. Among the eight countries listed, there are six different patterns of high and low (Hosftede, 1980). Thus, Hofstede argues that it may be most inappropriate to apply theories developed in and possibly relevant one particular society to another society with quite different cultural dimensions. For example, the hierarchy of needs places self-actualization above social needs and security needs, which may have some relevance for the middle class of the US. However, Hofstede (1980b) suggests that for a country like Japan, with high uncertainty avoidance and high masculinity, security needs should rank at the top, and for a country such as Sweden, with low uncertainty avoidance and low masculinity, social needs should be the highest ranked (Hofstede 1980). Power distance Uncertainty avoidance Individualism Masculinity Australia Low low High high Hong Kong High Low Low High Japan High High Low High Philippines High Low Low High Singapore High Low Low Low Sweden Low Low High Low US Low Low High High Yugoslavia high High low Low Table 2: Hofstede’s cultural dimensions (extract). Source: Hofstede 1980). According to Fischer and Smit, “Employees from different socio-cultural backgrounds will bring different expectations and value systems to their work, which may well lead to different career aspirations and work motivations. They may also differ in the way that they perceive and react to their organizational environments.” (Fischer&Smit, 2006). Values often under line and explain attitudes, behaviors and perception. Schwartz (No date) examined that the structure of human values and made extensive tests of its cross-culture validity. He proposed that value cluster ten motivational types that are organized as two major conflicts or dimensions. 3.1 Multinational Companies. After the Second World War, multinational companies developed rapidly, especially in the sixties and the beginning of the seventies. Country-driven capitalism such as in the US, Canada, Western Europe and Japan helped multinationals to emerge. Manufacturers from single countries can have the force of enormous economic power but those who follow the evolution of these companies and transactions will find that they soon spread into two or more countries. Moreover with the right of peoples and nations of their wealth and natural suppliers, the United Nations established a commission to make a certain definition of multinational companies. Paragraph one of this project includes the definition of listed multinational companies as a commercial enterprise. Furthermore it includes entities in two or more countries regardless of the legal form of these entities and fields of activities. These multinational companies operate under decision-making which allows the development of policies and a coherent common strategy. Through ownership or otherwise this allows for one or more of them to exercise influence on the activities of other entities, especially to participate in the information and responsibilities with others. Moreover multinational companies can bring some benefits to developing countries. They provide jobs and increase the wealth of local people but on the other hand there are some problems as well, such as for example the fact that the jobs available tend to be low skilled and poorly paid in some countries. 3.2 Economic concept of a multinational company. Economic concept: the economic concept of a multinational company, whether private or public is characterized by its global strategic position in the management of economic resources and private production as it operates under the conditions of a monopoly. The majority of the projects are not according to the conditions of free competition. Even though these companies they invest many resources in many countries by means of its branches located across the developing world these are always linked to the main company. A multinational company is a national project, owns and controls several branches distributed in many countries. The parent company has to have limits imposed by an independent public policy. Success will depend largely on the skilful and effective conciliation between the two requirements: The first is: The decision making should combine local initiatives and private initiatives through decentralization, and local branches should be involved in the parent companys marketing strategy so that the parent company is not only directed from the center. The spreading out of decisions and the relationship between the center and the branches splintering off are signs that a project is a multinational one/ The second is: There needs to be a translation of the law of the idea of domination and control. Control means the actual or legal relationship between the parties when decisions of one part determined and influenced on the conduct of one of the other parts. To a large extent these contradictions are taken care of by the unified character of the multinational companies in terms of economic and pluralistic nature of the legal terms. There is a dual character distinguishes the pluralistic multi-national company. This type is made up of several companies, has a characteristic of independent legal frameworks and these are formed under the laws of several national and as such they have different nationalities. However, this group of companies is not clear in the legal systems, as we dealt with the concepts of the above, where we find that the relations between these companies is based on the regulation of relations between the members of the group on the basis of the general law of companies that adapt according to circumstances. On the other hand, the distribution of group members among different entities across the world can be seen as one of the traditional problems with the law and Simi private international law applicable rules on relations between the companies belonging to different legal systems. 3.3 Features of a Monopoly: In short, the advantage of monopoly is the fact that the company controls many aspects of the productivity of its branches across the world., especially developing countries that are related to the parent company controlled in a monopoly The vast majority of the activities work to keep them under control in order to be able to manage the affairs of this branch and new investments. A practical monopoly in itself means to control the wealth and exploit resources for the benefit of the network across the world, and the monopoly of goods on the market or even in the area of services. Owners of capital lead to this equation to control the price of these goods and services. A good example of a monopoly is the emergence of a small number of limited oil companies, which by major acquisition control of the total oil economic activity at the local level and global Among these companies are, for example those in the OPEC countries. Multinational corporations play an important role in this area but there is a significant shortfall in the information and studies available on the practices of these companies in the Arab countries. It seems from the documents, that the basic income to the region began in the oil sector, through companies that do not exceed seven in number, appear to control more than 80 percent of the total global oil production. States have begun to interference in the affairs of most producing countries to determine the production quantities of oil in them and impose equally in the profits. As a result of this it can be said that these giant multinational economic entities with special characteristics. are based on strategic objectives. Financial goals and profits have driven them to challenge and cross the geographic borders of countries. The the resultsof this activity has been to raise economic and political interests of the community, and may also lead to other problems and consequences such as for example China threatening entity states. Reference list: Becher, T. & Trowler, P. 2001, Academic Tribes and Territories: Intellectual Enquiry and the Cultures of Discipline, 2nd edn. Buckingham, UK Open University Press. Brown, A 1995, Organisational Culture. Pitman: London Fischer, R & Smith, P. 2006. The Moderating Effect of Values on the Link between Organisational Justice and Work Behaviour. Applied Psychology: An International Review vol.55, iss.4, pp. 541-562 (Online EBSCOhost). Hofstede, G. 2001, Culture’s Consequences: Comparing Values, Behaviors, Institutions and Organizations across Nations, 2nd edn. Thousand Oaks, CA: Sage. Kleijnen , J., Dolmans, D., Muijtjens, A., Willems, J. & Van HH, 2009. 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