Ethical Challenges for MNC Essay

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Market Challenges

Like any other business, multinationals face a myriad of challenges that hamper ideal growth and development of such organizations. The increasingly competitive landscape has made these multinational companies (MNCs) strive hard to survive in the market. Regulatory, cultural differences and the uncertain market outlook elucidates these challenges in MNCs. Organizational theorists have established a number of challenges that affect these firms, some which are different from those of domestic firms. Cross-cultural differences have emanated as a major hurdle concerning MNCs. Market liberalization and globalization have fueled a number of risks, some which are unique to MNCs (Cullen & Parboteeah, 2009).

The dynamic and turbulent business environment has presented several challenges, some that were never experienced before. The developing nations have upgraded their productive capabilities as they can now offer technologically sophisticated products and services. In this case, they have increased competition unlike in the previous years. In the recent years, developing countries have ceased to be mere cheap sources of labor. Emerging nations have provided an extensive pool of resources that offer excellent opportunities to stimulate growth and development. The relative illiquidity of financial markets has forced MNCs to become more cautious when making investment decisions. In such cases, MNCs are faced with quite a number of risks unlike in the past (Cullen & Parboteeah, 2009).

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Cross-cultural differences negatively affect the business. Different cultures spread all over the world have various ideologies on a number of issues, ranging from religion, social issues such as leadership, and respect, just to mention a number.

Associated Risks

MNCs will always face various risks that may stall their operations in foreign markets. Market liberalization in overseas countries has presented new challenges to the management of MNCs.

Political risks

Politics presents challenges that occur in various shapes. Nationalization and regulatory programs enacted by national governments may at times hamper the development of MNCs. Such policy actions may result in adverse effects on the objectives of the MNCs. The presence of civil wars due political tensions may affect laws and policies touching on the operations of MNCs. For example, governments may enact laws that prevent capital movement. War-torn nations like Syria, DRC Congo, and Somalia are currently considered as unsuitable business destinations for MNCs. In the end, businesses find it hard to operate because their staff may feel threatened, or their premises will be attacked (Cullen & Parboteeah, 2009).

Financial risks

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