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Globalization and multinational corporations
Challenges facing managers working in multinational corporations
Implications of cultural differences for international businesses
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Recommended: Globalization and multinational corporations
Multinational corporations (MNCs) are investing and operating in many foreign markets around the world. With this globalization, it is becoming increasingly important for managers at all levels to become proficient in cross-cultural management. This paper will explore the challenges encountered by a British expatriate managing the Chinese business unit for a British pharmaceutical MNC. An assessment of the national cultural differences using Hofstede’s research on work-related values differences will be explored. The data will be analyzed to determine if these differences had an impact on the organizations ability to successfully manage cross-culturally.
GlaxoSmithKline, Plc (GSK) is the largest British pharmaceutical company with a presence in more than 100 countries around the world. In July 2013, the Economic Crimes Investigations Unit of the China Public Security Ministry in Beijing accused GSK of bribing government officials and doctors to prescribe higher costing branded drugs to treat their patients. GSK reportedly offered approximately $489 million in illegitimate travel packages, meeting expenses, entertainment and cash over six years to these doctors and officials (Sukhija). Often, the incentives were funneled through travel agencies, who would send doctors on international trips and provide them with luxuries while at other times payments were simply made in cash.
GSK released a statement explaining that the allegations made against the senior executives of the company are ‘shameful'. ”We are deeply concerned and disappointed by these serious allegations of fraudulent behavior and ethical misconduct by certain individuals at the company and third-party agencies. Such behavior would be a clear breach of GSK'...
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...013. El-emergente.com. Web. 20 May 2014.
Okoro, Ephraim. "International Organizations and Operations: An Analysis of Cross-Cultural Communication Effectiveness and Management Orientation." Journal of Business & Management (2013): 1-13. Document.
Philippidis, Alex. "China's Challenges Stretch Beyond the GSK Scandal." 01 August 2013. Genengnews.com. Web. 19 May 2014.
Reilly, Mark. "Mark Reilly, China - GlaxoSmithKline." 10 December 2009. gsk.com. PDF file. 19 May 2014.
Shobert, Benjamin. "Three Ways to Understand GSK's China Scandal." 04 September 2013. Forbes.com. Web. 18 May 2014.
Sukhija , Sheetal . "GSK China scandal: What have been the highlights?" 31 July 2013. BioSpectrum Asia Web site. Web. 2014 May 16.
Voreacos, David. "China's Bribery Culture Poses Risks for Multinationals." 21 November 2013. Bloomberg.com. Web. 19 May 2014.
Many businesses that achieve great success become greedy and want more. Pharmaceutical companies, such as Turing, have been overpricing life-saving drugs since they’ve been discovered. Martin Shkreli, the CEO of the company that raised the price of the H.I.V medicine, was arrested because of wrongdoings involving his former hedge fund and a pharmaceutical company he previously headed. He has been charged with conspiracy to commit security fraud, wire fraud, and using his previous company to cover personal debts. U.S. Attorney Robert Capers says, “As alleged in the indictment, Shkreli essentially ran his companies like a Ponzi scheme, where he used each subsequent company to pay off the defrauded investors in the prior company” (Shkreli).
Terrill, Ross. "China Is Rising, but for How Long?" New York Times. N.p., 11 Sept. 2006. Web. 23 Feb. 2014.
An Analysis of GlaxoSmithKline The business that I have done research into is GlaxoSmithKline. This company is a globalised research-based pharmaceutical public limited company. Its ownership structure has changed a great deal since the original company was first established in 1715. Originally a pharmacy, the company has expanded, merged with and taken over other companies over the decades.
The World Bank has had many controversial operations in their history. Their existence has been rife from inclusions into conspiracy theory, all the way to globalization activists of which the current president of the World Bank once was (World Bank President Jim Yong Kim: The Vice News Interview). While some of the allegations towards the group might be exaggerated, they are far from freedom of scrutiny. In particular is the exceptional case of the Chixoy Dam in Guatemala, of which it is difficult to imagine a worse outcome.
Moorhouse, A. (2005, November). International Management Organizational Behavior. Retrieved October 16, 2008, from University of California Berkley: http://www.ocf.berkeley.edu/~matran/Files/proKarenLeary.doc
The cons to the argument for saying the Foreign Corrupt Practices Act is obsolete is discussed in the article With Wal-Mart Claims, Greater Attention on a Law by Charlie Savage. In this article Charlie Savage argues that the FCPA has always been a useful tool in stopping corruption but in recent years with companies becoming more globalized other countries gradually adopted similar laws, the United States has started to enforce it more strictly. The dollar amount of fines imposed by the Justice Department and the Securities and Exchange Commission has increased even more, including a record-setting $800 million paid by Siemens in 2008. Enforcement under the act has soared, from just two enforcement actions in 2004 to 48 in 2010. There are currently at least 100 open investigations, specialists estimate.
CNN. “China builds a Great Fire Wall” http://edition.cnn.com/2001/ASIANOW/business/01/10/china.netcontrol/ , consulted on Friday, April 11, 2003
Rabinovitch, S., Hughes, J., McCrum, D., & Jones, S. (2012). China investors grow angry at mud-slinging. The Financial Times.
Sangvhi, Saurabh. "Trading China.(US Senate Votes To Extend Normal Trading Relations With China)(Brief Article)." Harvard International Review 1 (2001): Academic OneFile. Web. 13 Dec. 2013.
In the article, Cultural constraints in management theories, Geert Hofstede examines business management around the globe from a cultural perspective. He explains how he believes there are no universal practices when it comes to management and offers examples from the US, Germany, France, Japan, Holland, China and Russia. He demonstrates how business management theories and practices are very much subject to cultural norms and values and by understanding these differences, it can give managers an advantage in global business practices.
The Instability of China–US Relations", The Chinese Journal of International Politics 3, no. 3 (2010): 263-292, http://cjip.oxfordjournals.org/content/3/3/263.
Lyke, B and Jickling, M. (2002). WorldCom: The Accounting Scandal. CRS Report for Congress, p2.
James S. O’Rourke IV, Brynn Harris, Allison Ogilvy: Google in China: government censorship and corporate reputation Journal of Business Strategy Vol. 28 NO. 2 2007
The existence of bribery and unethical behavior is rampant in the world market and may not change overnight. The question of bribery has been distilled in business literature as a question of ethics. In this situation at the airport with the customs officer, it is important to distinguish between business ethics and personal ethics. In a business ethics situation, the Foreign Corruption Practices Act would prohibit offering any bribe to the custom office – for example to free a shipment of goods that was lost in red tape (Pitman & Sanford, 2006). Most companies also have policies against bribery as well. In this situation, however the main issue at hand is that of personal ethics. When in a situation where your company is unknown and there is no business being conducted, normal business ethics and laws (including FCPA) do not apply only personal ethical standards.
Sonderberg, A-M & N Holden. (2002), Rethinking cross cultural management in a globalizing business world' International Journal of Cross Culture Management 2(1): 103-121