Machiavelli Prince and Contemporary Issues Concerning Globalization - Essay Example

?Critical Assessment of How Extract from Machiavelli's Prince Relates to the Contemporary Issues Concerning Globalization and the Business Activitiesof MNCs Extract from Machiavelli’s Prince: ‘For however strong you may be in respect of your army, it is essential that in entering a new Province you should have the good will of its inhabitants. Hence it happened that Louis XII of France, speedily gaining possession of Milan, as speedily lost it; … For the very people who had opened the gates to the French King, when they found themselves deceived in their expectations and hopes of future benefits, could not put up with the insolence of their new ruler.’ ‘I conclude, therefore, that when a prince has the goodwill of the people he must not worry about conspiracies; but when the people are hostile and regard him with hatred he must go in fear of everything and everyone. Well-organized states and wise princes have always taken great pains not to make the nobles despair, and to satisfy the people and keep them content; this is one of the most important tasks a prince must undertake.’1 Globalization is the term used to refer to the continuous process by which different economies, societies, cultures and traditions interact with one another (Berberoglu, 2005). A multinational corporation is a company that has operations in more than one country. Multinationals have for a very long time been the major agents of globalization. Multinational business has been in existence since overseas trade began (Toporowski, 2010). In the context, the Prince in Machiavelli’s book can be equated with multinationals or businesses which have international operations. In this age of rapid globalization, there are many issues that multinational companies face as they try to forge new ground in various parts of the world (Berberoglu, 2005). These issues are talked about by Machiavelli when he gives guidelines to Princes on how they are supposed to interact with people from new territories. Machiavelli and Globalization In the excerpt above, Machiavelli extols internationalization. He gives a few tips to Princes who want to thrive in a new environment. One of his tips is to “have the goodwill” of the area’s residents. He gives an example of the King of France who quickly gained possession of a foreign country, but lost it just as quickly because he had not thought about how to get their goodwill. He says that when one has the goodwill of the people, he should not have reason to worry that he will not receive their support and cooperation. However, he warns that anyone who ventures to a foreign place and fails to gain the people’s goodwill, he is bound to fail in whatever that he is doing. Machiavelli’s advice to the Prince can be used to look at how multinational companies today can thrive in new areas of operations. It is true that a company cannot just decide to start operations in a certain place and go ahead with it. There are few things that the company has to fulfill before business can start. Many of corporations trying to break ground in new markets have been unable to do so due to the fact that they do not have the goodwill of the countries where they want to set up operations (Choucri, 1991). There have been a number of international bodies and organizations that have been set up to ensure that international dealings are mutually fair. Most of these organizations were formed through treaties to ensure that trade between countries does not favor one country at the expense of the other. The organizations also regulate how multinational corporations operate in foreign countries so that no party feels victimized. The regulations set forth by these organizations help multinational corporations to gain acceptance in new regions or countries, as long as the companies fulfill certain obligations (Toporowski, 2010). Two of these organizations are discussed below. The World Trade Organization The World Trade Organization (WTO) is an international organization that deals with and regulates the rules of trade between countries. There are several trade agreements that have been negotiated and signed by several countries which carry out international trade. The main aim of these agreements is to enable multinational companies, importers and exporters to carry out their businesses without any hindrances (Hill, 2004). The International Monetary Fund (IMF) The IMF is one of the United Nation’s specialized agencies which was set up to assist the world economy. It provides the central international financial system, whereby payments and exchange rates are systemized. This monetary system enables multinational corporations to carry out business in various parts of the world without facing serious economic challenges. The International Monetary Fund, by systemizing payments and exchange rates, helps create a good working relationship between the multinational corporation and its host country (Gao and Pan, 2010). Issues Concerning Globalization and the Business Activities of MNCs Although multinational corporations have grown by leaps and bounds in the recent years, they continue to face various challenges. Many governments and even consumers view these corporations ambivalently. This lack of trust has led to the downfall of a number of multinational corporations (Stopford, 1998). Below is a discussion of the issues that are facing the businesses of multinational corporations in the world today. Government Control Globalization has been criticized for undermining the sovereignty of certain countries. The presence of multinational corporations is seen as one of the major threats to sovereignty in a country. It is not uncommon to find a single multinational company exercising control in a whole country’s economy (Toporowski, 2010). This is normally the case in third world countries which lack strong economic policies, which are normally overridden by international agreements. These agreements mostly tend to favor multinational corporations at the expense of the host country. When the government lacks control on the operations and business of a foreign company, there is usually a tendency for the said company to practice unchecked monopoly in the market and in the whole economy. This has some significant impact on the economy as there will not be enough competition. This will affect demand and supply, which will further affect pricing of certain goods (Stopford, 1998). The powerful multinational company will have all the freedom to price its products any way it wants and this will reflect badly on the country’s economy. This also will make people to have a negative attitude toward the multinational corporation. If this trend is not checked, it might lead to a downfall of the company. Employment Issues When a new multinational company opens up operations in anew country, it has to find labor. The easiest way to get employees is by employing the local workforce. In some instances, the jobs in he companies may require skills which are available in the local job market (Barton and Bishko, 1998). This forces the multinational companies to find workers from outside the host country. Getting expatriates to work in a foreign-based company is one of the major reasons why hostilities arise against the company. The local people need to feel the benefits of having a big international company in their midst and if they feel that their expectations are not being met, they are likely to be unreceptive and antagonistic towards the company (Ojasalo, 2009). The result of such a situation is decreased production on the part of the foreign company since it cannot run its businesses as effectively as it should. When multinational corporations find that they do not have common ground with the government and people in their new areas of operations, they are likely to face countless challenges as they go about their business (Yue, 2010). These challenges are what Machiavelli refers to as hostilities, which are likely to hinder the normal operations within a multinational entity. The challenges that a company might face in such a situation include boycotts from workers and customers, most of who are part of the host country’s population. There might be legal repercussions for corporations that go against the authority and laws of a country (Buckley and Casson 2009). Solutions to Issues Faced by Multinational Corporations 1. Adoption of Sound Economic Policies Countries need to adopt strong economic policies which will enable investors to carry out their businesses without antagonizing the existing governments and consumers. The policies should create business environments that will enable multinational corporations to carry out their operations without fear of retribution from the governing authorities in a particular country (Toporowski, 2010). The policies should also be created in such a way that multinational corporations are not given leeway to act in a way that antagonizes the people and systems they find in a certain area (Barton and Bishko, 1998). The policies should enable the corporations to co-exist with the local communities without one feeling like they are being victimized or treated unfairly. When a new corporation establishes itself in a country, it needs to feel welcome and it should integrate well with the people it finds there. 2. Corporate Social Responsibility Sometimes it is quite hard getting people to trust a new business venture, especially if it is a foreign one. One way of cementing the relationship between an international company and locals is by being involved in corporate social responsibility activities (Bartlett and Ghoshal, 1989). These companies come up with projects that are targeted at helping the local communities. These projects can be based on health, education, environment and the economy. Most corporate social responsibility activities are meant to help the local communities live better lives. By being committed to a community’s well being, a foreign company gains full acceptance and will have no problems whatsoever going about its business (Choucri, 1991). Through these social development activities, the local people can feel that the new investors do care about their plight and will go out of their way to help them out of their problems. This will go a long way in creating what Machiavelli described as goodwill, without which it would be quite an uphill task for business to do well. 3. Cross-Cultural Management Managers in companies that have operations in more than one country need to manage across cultures. Given the trend today of corporations imposing their cultures on the people in host countries, it is not surprising that many such companies are normally viewed with hostility and distrust (Mead, 1994). Managers in these corporations need to ensure that their companies can adapt well to changes in cultures and way of doing things. In fact, they should be able to enhance their productivity by accepting and making use of the existing socio-cultural practices they find in a new place. This is far better than imposing foreign cultures that will be rejected outright, leading to the company’s poor performance. Multinational corporations must not go into a new market with a view to conquer and finish off all the competition (Buckley and Casson 2009). Rather they should focus their intent on becoming part of a successful economy. They should not be too money oriented so as to forget that can be forced to move out as quickly as they came in. to be successful in whatever kind of business it is involved in the multinational corporations needs to Machiavelli makes it very clear that only Well-organised corporations and wise managers can make it in a new environment. They take care not to antagonise their hosts and to keep them content at all times so that their businesses can thrive. Machiavelli says that “when a prince has the goodwill of the people he must not worry about conspiracies”2. The same thing applies to multinational corporations in the global world. Conspiracies in this case may refer to the hostilities that a company may face due to its inconsiderate way of doing things. The company must not enter a new market with the intent of lording it over the people it finds there. The managers of the company must ensure that there is a level of friendliness between the people and the company as a whole. The manager and his team must integrate well with the people so that both sides may benefit from one another. Machiavelli says that when the people are hostile and filled with hatred towards a new entity, he must live in fear of everyone and everything. To survive in the global world today, one must learn to cultivate trust and understanding wherever he goes. Managers need to learn more about the countries where they want to set up operations before they start business. They should be conversant with the local and regional trade regulations so that they do not have to be in conflict with the law. They should also know more about the socio-cultural life of the people so that they can know how best to forge relationships. This will enable multinational corporations in different parts of the world to operate profitably. Conclusion Multinational corporations have definitely played a big role in the process of globalization. In the Prince, Machiavelli discusses the issues concerned with establishing oneself in a new place. The issues that Machiavelli touches on are also applicable to the modern multinational corporations and hoe they establish themselves in new markets. He speaks of how a powerful and resourceful leader must find ways of gaining the trust of people in a new land. This same concept is applicable in the multinational world today. A company might be highly successful in its mother country, but this does not mean it has to be just as successful in another country. The company must be able to gain acceptance in the new country or area of operation. Gaining this acceptance is never an easy thing. The company has to learn about the things that are accepted and respected in the said country or region. It must be ready to change how it does things to conform to how things are done in the new place. The leadership in multinational corporations has to come to terms with the fact that to be successful in a new place, one has to be ready to accept the established system in that place. They must be ready to accept the legal, economic and social requirements that come with investing in a new place. It is only when a new company shows a willingness to adapt its operations to the local standards and requirements that it can gain acceptance. With acceptance comes trust, which is very important in the success of any business entity. To sustain successful operations in new countries, multinational corporations must find ways to increase trust and acceptance. Machiavelli gives the example of the French King who lost a principality after the locals found out that his being their king was not helping them at all. Multinational corporations need to find ways through which their presence in foreign lands can be beneficial to the people there. Nowadays, the concept of corporate social responsibility has gained popularity as a way through which companies, big and small, are giving back to the community. These companies come up with projects that are targeted at helping the local communities. These projects can be based on health, education, environment and the economy. When people feel that a company cares for their well being, they will; not find it hard to accept and trust it. Machiavelli recommends that when a Prince has the goodwill of the people, there should be no reason why he should worry about conspiracies against him. No matter how strong it might in its mother country, it should not go imposing itself on the new country as this might lead to its downfall. The multinational company needs to remember that the new country’s population is also its potential customers and so, it needs to treat them with respect. To be a market leader, the multinational corporation in a new country has to ensure that there is some goodwill between itself and the people. Such a company needs to make its customers in the foreign country content so as to sustain its own development and success. References Bartlett, C.A. and Ghoshal, S., 1989, Managing Across Borders: The Transnational Solution. Boston, Mass: Harvard Business School Barton, R. and Bishko, M., 1998, “Global Mobility Strategy." HR Focus Berberoglu, B., 2005, Globalization and Change: The Nature, Dynamics and Impact of Globalization in the 21st Century. Paper Presented at the 100th Annual Meeting of the American Sociological Association, Philadelphia, PA. Buckley, P.J. and Casson, M.C., 2009, “The Internalisation Theory of the Multinational Enterprise: A Review of the Progress of A Research Agenda after 30 Years”, Journal of International Business Studies. Vol. 40, Iss. 9, pp. 1563 – 1580 Choucri, N., 1991, "The Global Environment and Multinational Corporations." Technology Review Gao, G.Y. and Pan, Y., 2010, “The Pace of MNEs' Sequential Entries: Cumulative Entry Experience and the Dynamic Process”, Journal of international Business Studies. Vol. 41, Iss. 9. pp. 1572-1580 Hill, C.W., 2004, Global Business Today, New York: McGraw Hill Machiavelli, N., The Prince, Accessed 9 January: http://www.anuragbindal.com/artdir/ebooks/The_Prince_eText.pdf Mead, R., 1994, International Management: Cross cultural Dimensions. Oxford: Blackwell Ojasalo, J., 2009, Risk, Cultural Theories and Global Management. The Business Review, Cambridge. Vol. 14. Iss. 1, pp.83-91 Stopford, J., 1998, "Multinational Corporations." 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