Common Threats to Multinational Companies

Common Threats to Multinational Companies and Powerful Citizens BY runners Corruption, violence, fueling terrorist organizations, unstable regimes, ransom, and security concerns are common issues faced not Just by multinational corporations but also the citizens of many developing nations. Some people blame poverty as a reason, some people blame political instability and some people point the finger at the hunger for power for some of these issues that many third world nations are facing. How can people cope with such situations?

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How can the executives of companies and leaders of countries eliminate or find alternative solutions for such robbers? Take Aquatic for example. The company had to pay a ransom too rebel group in order to protect its investments and its employees in Columbia. After 9/1 1, the rebel group was classified as a terrorist organization and Aquatic ended up paying a $25 million penalty for fueling terrorist organizations. This paper will explore my thoughts on the situation and will provide some solutions or work-around methods for issues describe above.

Some of the solutions might be noteworthy but some readers might label others as unethical solutions. If I was the CEO off litigation company, after making sure that the business will benefit, my first priority would be to check on the stability both economic and cultural of the country we are about to set up shop in. For the sake of this paper, I will use India as the country that I am going to set up my plants and people to run operations. I would look into the economic makeup of the country and specifically the region and area my offices are located in.

There are many things happening in India which a multinational corporation needs to keep in mind. First we will explore these “termites” and then talk about ways of extermination. I refer to these social issues as “termites” because these issues do the same Job as termites do – makes holes in the organization and then the foundation collapses after they have been plagued by such issues. First let us tackle the issue of corruption. Corruption according to the Merriam-Webster dictionary is the impairment of integrity, virtue, or moral principle.

Corruption slows down the economic development of the company and the country that the business is established in. Corruption increases the cost of business because the company has to pay illicit payments in order to make sure things flow smoothly. For example in India, the government officials at each level work on corruption. If something needs to be done, a few hundred rupees (couple of US dollars) is all it takes to get approvals, signatures and permits. Bribes can reduce costs by cutting the red tape but these bribes can also go against you if a competitor bribes the official to ignore your file.

The officials lean towards bribes because their annual income or salaries are not high enough to cover their expenses, so in return they resort to bribes or extra income. As I mentioned earlier, corruption can flow from the highest level of the government to the lowest level. Corruption can also lead to a faulty operation or increase risk factors for people working in the company. For example, the factory can get permit to start operating if the amount of bribe is appropriate. All safety tests can be skipped and production can start.

I also believe accept these bribes usually put their money in accounts overseas due to the fear of getting caught in their own country. Another issue that a multinational company should keep in mind is the direct or indirect funding of terrorist activities. How can a company or even an individual anywhere in the world be completely sure that they re not, in any way, shape or form, funding a terrorist organization? What I am trying to say is that how can I be sure that the money that I put in the cup that a panhandler pointed towards me is going to be used for the right reasons.

In India, the beggar’s network is a large underground organization not Just an individual trying to make money so they can survive. Behind every beggar, there is a network of criminals who collect the money and pass it onto a larger organization. Eventually, the money ends up in some overseas country where the crime-lord or the boss collects the money and funds not Just his own hobbies but also many terrorist organizations and activities. In the case of Aquatic, the rebels were asking for money in return they would make sure that all employees of Aquatic were safe and none of them were killed.

In third world countries, especially India, this is a very common practice. It is known as “Haft”. In simple terms it meaner weekly money but the reasoning behind it is that the local businessmen have to pay their local area gangsters a weekly cut of their income in return for safety and security from these hoodlums. This money can then be used for tobacco, drugs or be used in carrying out terrorist activities. The intent of the businessman was to pay the money in return for protection. Another major concern for a multinational company is the security concerns of the employees and the personnel related with the company.

My other points have touched a little on the issues of safety but it is a very serious issue. Columbia and the Aquatic case is Just one example. So many other companies have had security concerns while operating in developing countries. Recently there was a major issue about conflict diamonds. Conflict diamonds are diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally agonized governments, and are used to fund military action in opposition to those governments.

These diamonds were being sold to major diamond dealers around the world but they all had a story of the horrific atrocities in Sierra Leone and the suffering of the people of Angola. Many other multinational companies have been linked to fueling terrorist activities. Complexion in Indonesia, Total in Burma, Talisman in Sudan and Uncial in Burma, Just to name a few, have been the target of such investigations. Were these companies fueling terrorist organizations and spreading violence or were they simply trying to protect their people and their investments?

In order to combat the issue of corruption, the battle needs to start at the organization itself. Out of the three problems described above, this is the easiest problem that can be resolved by a corporation. I am not saying that the company will play a major role in ending the problem within the country but the company and its human resources department can set up strict enforceable laws against anyone using corruption or bribing an official in order to cut through the red tape.

This will not only let the government know that we are an ethical company but they will know that we follow rules and stay away from unethical practices. Basically this will draw a line and make a statement that it is hard to get “under the table” money from anyone Even though you are not ending corruption, you are taking a major step toward eliminating it or at least getting people to think about the downfall that follows corruption. The second and third issue are a little tougher to tackle, but not impossible.

The funding of terrorist activities and safety of employees can be controlled but it will take some research and some negotiations. For example, I receive a threat from a rebel group and they demand a ransom or they will attack employees of my company. The first thing I would do is to ask the group to let me know their demands. I would study the reasoning behind their demand and try to figure out what is it that they are looking for. Most of the time, money is Just a cover- up for something that they are really looking for.

In most cases, these rebel groups also want a share in the success and they are looking for a long term solution. Many times an organization pays these groups to threaten companies so a contract can be rewarded to them or to someone associated with the group. What I am trying to say s that maybe the farmers group may want a contract from the corporation to supply chickens for their plants. In order to get the contract, they might get these rebel groups to use force in order to get that accomplished. A lot of these groups have another motive in mind rather than money.

There is another method of circumventing the issue but as I mentioned earlier, some people might find it unethical. If the corporation is not able to diffuse the matter and the government refuses to interfere, then the multinational corporation can setup another small arm of the corporation. That arm can pay the ransom or the security amount but would port zero revenue. If the government was to crackdown on the company for fueling terrorist activities, then the smaller arm would be penalized and since the revenue is zero the penalty amount would not be too harsh.

This is Just the twisted way out of the mess. Another method of dealing with the security of employees is that the corporation can talk to the government of the country and setup security measures in place. I mean what government would not want to support you and help you with security specially if you are bringing thousands of Jobs to their region and giving the economy a major boost. For example, the Indian government’s security department would go the extra mile in order to secure my interests if I was instrumental in boosting the region and the country economy.

Organizations such as the United Nations and World Trade Organization should come up with some enforceable policies regarding the security concerns of employees working for multinational companies in under developed areas of the world. They need to come up with a plan to enforce these policies. I know its easier said than done because the governments in most developing countries are not even able to get handle of these rebel organizations – how will they be able to enforce laws on them when the only language they understand is that of the gun.

These organizations are able to enforce strict measures on the countries and their governments. They should collaborate with governments of various countries and come up with a plan to exterminate these “termites” that are destroying everything. Its not only companies who face these threats on a daily basis but even individuals and citizens of the country are also abducted for ransom. There are times when I have wanted to visit India and Pakistan, but I have been told by my family to stay put because they are kidnapping

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