Multinational Corporations

There is not much point in running a business if it does not make profit. Basic business strategies for a profitable enterprise are to create a market and a public demand for your product, and to keep production costs as low as possible. In order to achieve the latter many companies have established their production in countries where running costs are lower than in their home countries. It is called outsourcing and it is not a new phenomenon. In a historic perspective it was welcomed as the companies were seen as agents of civilization and had an important role in the commercial and industrial development of Asia, South America, and Africa. In recent times the multinationals have come to be viewed with more scepticism by many governments and international networks.

Admittedly, there are some obvious benefits: The companies create jobs in developing countries that usually are faced with high unemployment rates, and they increase the general wealth of the country by paying taxes and duties. However these benefits are overshadowed by a number of dubious aspects of the practice of these corporations.

Seen in a business perspective, the world’s biggest multinational company, McDonald’s, is a success story. That is mainly due to the company’s ability to adapt their products to the local culture where it is established. Another big name in international business is Apple, whose market value even surpasses that of McDonald’s. And in terms of making money these are successful enterprises, no doubt about that. But at the same time these two companies may serve as prominent examples of why this business practice is heavily criticised.

Much of the bad reputation of the multinationals is owed to the way they take advantage of their position and role as an employer in a poor country. The criticism is mainly directed at poor corporate ethics and bad working conditions for their employees, who in most cases work long hours for low pay. McDonald’s has a reputation for disrespecting basic workers’ rights, such as regular contracts and minimum wages. It has even been accused of firing workers who were union-organized.

Another bad example is the computer giant Apple which has been accused of exploiting its workers, in some cases with fatal consequences. The illustration below shows protesters in Hong Kong praying for workers who committed suicide due to bad working conditions at an Apple-owned company in China. The posters read “Bloody Apple”, and there is little doubt what they think of Apple chief executive, Steve Jobs, one of the richest business owners in the world.

International business is a complex organism. A free competitive market may be a good thing as long as the basic guidelines for ethics and workers' rights are followed. But that is not always the case. The multinational corporations are followed closely by international trade federations and labour organisations. There is even a special international network called Centre for Research on Multinational Corporations which since 1973 has been investigating multinational corporations and the consequences of their activities for people and the environment around the world. The multinationals have an unflattering list of accidents with environmental damage and loss of lives. The Bhopal incident which occurred in India in 1984 is remembered as the worst example. A chemical plant operated by the American company Union Carbide exploded due to unsafe handling and poor maintenance. Toxic gas leaked out and the death toll was estimated to more than 3000 lives.

Monitoring multinational companies is an important task for the world community; they have a powerful influence economically and in many countries even politically. And it is important to keep an eye on their activities to secure a fair and respectful treatment of the workers.