a. In today\'s business environment, many multinational corporations (MNCs) use
ID: 444753 • Letter: A
Question
a. In today's business environment, many multinational corporations (MNCs) use supplies made outside their home country. Some of those suppliers perform in such a way that is considered illegal/unethical according to laws and social contracts of the MNC's home country.
Are multinational corporations responsible for how their suppliers conduct business? Please provide an elaborate argument for your response?
b. The laws of international business are relatively undeveloped. That might become a challenge when companies from developed countries operate in developing or underdeveloped regions. Based on the topics we have discussed in this course so far:
How should American corporations operate outside the U.S.? Is it sufficient to follow local laws of the host country? Why or why not? Please elaborate your argument?
Explanation / Answer
Solution :
One significant feature of Globalization is the increase in outsourcing due to the financial incentives obtained from outsourcing to developing countries . MNC's have a moral duty to ensure their business partners respect employees by ensuring that human rights are not violated in workplaces .
Multinational corporations are morally responsible for the way their suppliers and subcontractors treat their workers . The applicable moral standard is similar to the legal doctrine of " respondeat superior" according to which a principle is vicariously liable or responsible for the acts of its agent conducted in the course of agency relationship. MNC's must do whatever is required to become aware of what conditions are like in the factories of their suppliers and sub-contractors , and thereby be able to assure themselves and others that their business partners dont mistreat their workers to provide a cheap source of supply .
MNC's have a duty to ensure that the dignity of workers is respected in the factory of subcontractors . MNC managers have a moral duty to ensure that those with whom they conduct business are properly respected. MNC's have a duty to ensure that their offshore factories and those of their suppliers and subcontractors are in full compliance with local laws.
b) The laws of international business are relatively underdeveloped . When American corporations operate outside the US , they must ensure they follow the local laws of the host country as well as the laws pertaining to home country . This is to ensure that the MNC doesn't violate any law and it is maintaining a very high standard of corporate social responsibility . If the MNC is just following laws of host country where the laws are underdeveloped then it could lead to a situation where workers are exploited and have little legal protection . This could spoil the reputation of the home country for importing goods from a country where labor laws are poor and workers are exploited .
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