Global Strategic Management - Assignment Example

Global Strategic Management Introduction Global Strategic Management Question The term “counterfeiting” refers to the practice of prodding goods of lower quality that bear a brand name without the knowledge nor authorization of the owner of the brand(Sullivan & Chermak, 2013). Usually, the manufacturers of counterfeit goods will try to differentiate the original trademark of the goods slightly such that the change is invisible to the ordinary unsuspecting consumer. Many renowned brands across various industries are susceptible to counterfeiting. A distinction can be made between counterfeiting and conventional infringement of a trademark. The latter entails using similar and confusing trademarks or service marks on a similar, not fake, product or service. Counterfeit goods are sold around the world. However, the vice is more prevalent in developing countries where it is relatively cheaper to produce a product (Sullivan & Chermak, 2013). For instance, Taiwan and China in Asia are exceptionally prone to counterfeiting. The practice is also found in developed economies, albeit to a lesser degree. Counterfeiting is not only illegal, but also unethical. It is unethical because it involves profiting from another person’s sweat, so to speak. The producers of counterfeit goods are not prepared to introduce their brands and grow them. Instead, they cut corners and try to profit from established brands behind the backs of their owners. The world over, business organizations adopt a variety of measures to address counterfeiting. These can be business, legal or technological. An example of a legal measure is an organization registering their trademarks. Today, it is common for large multinational corporations to have the various components of their manufactured in different jurisdictions then ship them to the assembly plant. Usually, this mode of operation is designed to take advantage of the advantages that various jurisdictions have to offer. For example, a manufacturer of smartphones located in Singapore may have their battery manufacturing plant situated in Finland. Under these circumstances, the smartphone manufacturer will do well to have all their trademarks registered in all the jurisdictions where parts of the smartphone are made. This is in addition to registering those trademarks in all the countries where the finished phones are sold. Some of the business measures that organizations take to combat counterfeiting include creating and maintaining an anti-counterfeiting department (Spink & Fejes, 2012). The key role of the department to initiate and implement measures to prevent the company’s products from being counterfeited. Many nations have anti-counterfeiting agencies. The organization’s anti-counterfeiting department should work very closely with the anti-counterfeiting agency given the complex and secretive nature of the “business”. Usually, the agency is in a position to provide anti-counterfeiting services the company may not be able to execute effectively. For instance, the agency can easily team up with the investigation division of the national police serves to apprehend criminals. In terms of technology, organizations are discovering the need to keep a close eye on online stores. In recent years, these stores have continued to rise in popularity courtesy of the convenience they confer on consumers. However, there are fears that many of these sites are engaged in the selling of fake products either knowingly or unknowingly(Sullivan & Chermak, 2013). Thus, more and more multinational corporations are investing heavily in preventing online counterfeiting. Question 2 Most multinational corporations have the goal to grow. More often than not, the realization of this goal entails expanding into new countries and employing staff to operate the activities of the MNCs in those countries. However, there are times when MNCs are forced to downsize and even withdraw from some countries. This question discusses some of the circumstances under this may happen. Downsizing refers to the process of making the operations of a corporation leaner in a bid to deal with changing economic circumstances (Jain, et al., 1998). Usually, layoffs are a part of the downsizing process. However, there are other less drastic downsizing measures. These include reducing overtime, putting recruitment on hold, freezing salaries, reducing salaries, and temporary shutdowns among other measures. The main reason MNCs downsize is to cope with economic challenges (Jain et al., 1998). For instance, the latest global recession affected most parts of the world. As a result, many MNCs around the world were compelled to take tough yet necessary employee decisions. The biggest challenge for most of them was how to carry out layoffs and redundancies in manner that complied with local laws. The local laws vary from one country to another and in some instances, from one region of the country to the next. This challenge was especially felt by MNCs operating in the United States. With over fifty States, each with its employment laws, compliance proved to be a daunting task. Besides economic recession, several MNCs are increasingly under pressure from their institutional investors and boards of directors to rationalize their operations. The investors and boards are demanding the management of MNCs reduce their workforce in order to cope with perennial financial challenges (Jain et al., 1998). Whereas demands of this nature are not new, the aforementioned recession of 2008-2009 only served to strengthen them. For example, at the height of the recession, several European MNCs announced large-scale layoff in a bid to cope with mounting economic hardships. These included Mercedes Benz, BMW, Renault and Michelin. One of the main reasons that may compel an MNC to leave a country is political risk. While not new, the nature of political risk for MNCs has changed over the last four decades (Jakobsen, 2011). Prior to the mid-1970s, the biggest worries for foreign investors were expropriations and waves of nationalization. Today, their worries have increased thanks to a more complex international business environment. In fact, political risk for the foreign investor is now multidimensional: there are the events that cause harm to investors, the actors that perpetrate those events and the sources of the risks. Another reason for withdrawal from a country may be high taxation levels that erode the MNCs profits. This point is especially true of developing countries where taxation levels are high (Jain et al., 1998). In these countries, it is common for MNCs to be compelled to pay taxes to both national and local governments in one form, or another. In addition, some governments have been said to be hostile to MNCs, accusing them of exploiting their host countries by employing a handful of locals paying pittance in taxes while remitting the biggest share of their profits to their mother countries. The government of Zimbabwe is one of those that has taken a firm stance against MNCs for many years. References Jain, H., Lawler, J. & Morishima, M., 1998. Multinational corporations, human resource management, and host-country nationals. The International Journal of Human Resource Management, 9(4), pp. 553-566. Jakobsen, J., 2011. Political risk for multinational companies: Empirical evidence from a new dataset, Trondheim: the Norwegian University of Science and Technology. Spink, J. & Fejes, Z. L., 2012. A review of the economic impact of counterfeiting and piracy methodologies and assessment of currently utilized estimates. 36(4), pp. 249-271. Sullivan, B. & Chermak, S., 2013. Product counterfeiting and the media: examining news sources used in the construction of product counterfeiting as a social problem. International Journal of Comparative and Applied Criminal Justice, 37(4), pp. 295-316. Read More