The Issues of Corruption in Multi-National Corporations - Essay Example

DILEMMAS IN CORRUPTION By Dilemmas in Corruption Corruption is one big dilemma that hounds multinational corporations across the world. Corruption has several facets that these corporations have to battle with in a bid to stand firm in their new markets. Multinational corporations have to battle with a number of dilemmas when expanding their operations and presence in overseas markets. A number of these dilemmas arise from the effect of each action or activity on the corporate image and brand reputation of the company, especially in a new environment whereby it lacks local support and backing, majorly because it s is foreign firm (Aguirre 2008, p.286). Consequently, the managers have to battle with a number of issues, especially those related to corruption. These managers have to make a difficult decision on whether to uphold the integrity and good name of the company by abiding by the rules, and expanding moderately within the new market, or disregarding all the rules of the book and adopting corrupt fallacies to fast track the company’s growth and expansion in a foreign market. Some of the issues raising dilemmas to the management of multinational corporations include corporate hospitality, facilitation payments, as well as, nepotism. A company always grapples under these factors and thus the managers have to make the difficult decisions on whether to uphold integrity and follow the laid down procedures and regulations, or bend the law by making several compromises such as corruption through nepotism, corporate hospitality, and facilitation payments. Much as these issues of corruption seem to make the work easier for the company to manage and to undertake its operations seamlessly in a foreign land, they literally tear down on their integrity, as well as, corporate image and brand image. However, the best position for the company to take is one that will bring long-term benefits for the company, safeguard its image, and build a reputable brand name for itself in the new country that is strong enough to compete with the domestic industries operating in the same product or service line as the company. This is because most domestic industries enjoy home or local support. As such, this poses a major competition barrier for foreign companies, as most locals shun them away in preference to local or domestic companies because they feel that their wealth goes away with foreign investors if they support them through making purchases at their shops and stores, or buying their services (Deva 2012, p.187). Corporate hospitability is a situation that a company falls in when it has to make a decision between two conflicting alternatives. A multinational corporation has to make a candid decision between two competition alternatives, both of which have serious or detrimental consequences to the progress and development of the company. As such, corporate hospitability becomes one of the most difficult decisions that a multinational corporation has to make while undertaking its operations in a foreign country. Such difficult decisions usually test the prowess in decision making of the executive team of management running a multinational corporation in a foreign land. This decision may be in relation to the cultural backgrounds and ethnicity differences of the communities in which these companies operate, such as religion, language barriers, or ethical practices. This may also extend to incorporate the style of conducting business, the business environment, as well as, other environmental concerns that the business has to undertake or follow before engaging or initiating (Enz 2009, p.502). Corporate hospitability among most multinational corporations arises when these companies have to make a decision that conflicts with their interests. As such, the corporation has to make a decision that pleases its home country, and follows in line with the goals and objectives of the company, while at the same time pleases the host country in which the subsidiary operates. This may range in a number of scenarios, such as licensing, ticketing, market share and control, financial analysis and reporting, corporate social responsibility, taxation and other policies relating to Foreign Direct investment (FDI). Due to the complexities of coming up with a single decision that will satisfy both parties involved in the business adequately, the company has to make a difficult choice between various competing alternatives. Selecting one option between the provided alternative leaves out the other possible alternative, thereby necessitating the company to juggle between the level of opportunity cost that it would suffer when it decides to make one choice and disregard the other (Jones 2002, p.255). The best decision for the company to make under such a circumstance, as mentioned earlier, is one that will safeguard and promote the well-being of the company, and solidify its foundation for the future growth and development in a foreign setting. A good example of such as decision is the case of Wal mart de Mexico, one of the largest branches of the giant retail store from the United States. The company, a subsidiary in Mexico, had to make difficult decision of corporate hospitability when it entered the Mexican market. This decision entailed that it follows all the rules and protocols of FDI for foreign firms in expanding and implementing their strategies in the local market. However, following these procedures would delay the strategic plan of the company set for the Mexican market (Deva 2012, p.187). As such, the alternative decision was to bribe the Mexican government officials so that they could bypass some of the rules, which they did, in order to hasten their project rollout plan. This decision brought the company great benefits and success in the Mexican market, but spoilt its international image for breach of ethical standards and practices of management operations, which in the end could ruin its business and reputable image once shareholders and customers get wind of it, and dropped their confidence and loyalty in the company. This is a perfect example of a corporate hospitability dilemma faced by a real time multinational corporation, and it expounds on the effects of each decision, good or bad for the image of the company, as well as, for its future and expected growth (Leiringer & Lowe 2008, p.412). Reference List Aguirre, D., 2008, the Human Right to Development in a Globalized World, Ashgate Publishing, Ltd., Amsterdam. Deva, S., 2012, Regulating Corporate Human Rights Violations: Humanizing Business, Routledge, London. Enz, C., 2009, Hospitality Strategic Management: Concepts and Cases, John Wiley & Sons, Hoboken, New Jersey. Jones, P., 2002, Introduction to Hospitality Operations: An Indispensable Guide to the Industry, Cengage Learning EMEA, Stanford, Connecticut. Leiringer, R. & Lowe, D., 2008, Commercial Management of Projects: Defining the Discipline, John Wiley & Sons, Hoboken, New Jersey. Read More