8/12/2019 GLOBALIZATION ISSUES FACED BY MULTINATIONAL COMPANIES, WHILE OPERATING IN DIFFERENT COUTRIES

1/2

PROBLEMS FACED BY COMPANIES DUE TO THEIR GLOBAL OPERATIONS

Assignment # 1

HAFIZ MUHAMMAD UMAR FAROOQ

Section: A 2K13

Cultural:

Wal-Marts attempt to apply the companys proven US success formula in an unmodified manner tothe German market, however, turned out to be nothing short of a fiasco. Wal-Mart stores are

designed for customers who are willing to spend lot of time shopping. But in Germany, customers

dont have the habit of spending lots of time in a store - wandering around for the things they need.

Coupled with this problem, German customers do not like to be assisted by Wal-Marts friendly

store assistants. Germans like to see the advertised discount products upfront. This implies that the

discount products must be placed at the eye level. Instead Wal-Mart chose to use its US style

merchandise display strategy - where premium priced products are kept at eye level and discount

products are kept at higher shelf or in the bottom racks.

Political:

Fidel Castro's government took control of Cuba in 1959, and it nationalized the Texaco, Esso and

Shell oil refineries that very U.S. companies. Hundreds of millions of dollar worth of American-

owned assets and companies were expropriated.

Regulations:

Nestle, that create breast milk substitutes promote their use very heavily in many developing

countries, as a replacement for breast feeding altogether. This is shown to have negative health

effects on babies. UNICEF, the World Health Organisation and others came up with a code of

conduct to ensure responsible advertising and promotion of substitute products

Weather:

Thailand floods of November 2011, both the hard-drive industry and the automotive sector

experienced serious supply chain problems. As Edmunds reported, car production dropped by

600,000 units.

Raw material:

8/12/2019 GLOBALIZATION ISSUES FACED BY MULTINATIONAL COMPANIES, WHILE OPERATING IN DIFFERENT COUTRIES

2/2

Fords supply chain work faces the issues as some of their suppliers were practicing forced labor

and child labor, illegal working hours, they have to discontinue their agreements with some of

the foreign contractors and Now their supplier guide covers human rights and working

conditions amplifies the expectations set out in the Terms and Conditions, providing context on

Fords expectations for the automotive supply chain.

Natural disasters:

Renesas Electronics Corporation is a Japanese semiconductor manufacturer and the worlds largest

manufacturer of microcontrollers. The corporations Naka Factory and other manufacturing facilities

were severely damaged by the earthquake. In addition to the cost for restoring damaged properties,

Renesas had to dispose of damaged stock and other fixed assets as well as compensate the loss of

leasing contracts. (Abe, une 2012)

Ethics:

Talisman Energy Inc., a Canadian oil company, expanded its operations internationally to the oil

fields of Sudan in the 1990s through acquiring the African holdings of Arakis Energy. While Talisman

had a legal license from the government to operate, it ignored the needs and concerns of the

Sudanese people in the oil concession areas. It was sued by an NGO and as a result Talisman sold its

Sudan operations.

ReferencesAbe, L. Y. a. M., une 2012. The impacts of natural disasters on global supply chains.Asia-Pacific Research

and Training Network on Trade, ARTNeT Working Paper Series no. 115(2012).

Anon., n.d. Cubian history Bay of Pigs. [Online]

Available at: http://www.marxists.org/history/cuba/subject/bay-of-pigs/

[Accessed 17 FEB 2014].

Jebe, D. M. a. R., 2012. The Legal and Ethical Environment for Multinational Corporations. In: Good

Business. s.l.:s.n., pp. 160-171.

John Madeley, Big Business Poor Peoples; The Impact of Transnational Corporations on the Worlds

Poor, (Zed Books, 1999) p.63

Winston, A., November 1, 2012. Should Companies Care If Hurricane Sandy Was "Caused" By Climate

Change?. HBR.