Walmart and Foxconn

Contents

Executive Summary

Introduction 2

Challenges caused by International CSR issues 3

Challenges caused by Cultural issues 5

Challenges caused by Global Marketing issues 7

Challenges caused by Legal Issues 9

Reflections 11

- International CSR

- Cultural

- Global Marketing

- Legal

Reference List

Introduction

As globalization brings the world closer together, businesses have transcended borders and companies have expanded their operations to other countries, such companies are called Multinational Corporations (MNCs). MNCs are a corporation or an enterprise that manages production or delivers services in more than one country (Investopedia 2011). Many MNCs have relocated their productions to countries where the labour costs are lower, places which allow them to have an advantage in production or allow for further expansion and growth. Apart from the benefits that they will receive from going global, there are also problems which the MNCs will face when their operations are located overseas. Problems that the MNCs may face include challenges caused by International Corporate Social Responsibilities (CSR), Cultural issues, Legal issues and Global Marketing issues.

Challenges caused by International Corporate Social Responsibility (CSR)

One of the challenges that an MNC faces is International CSR. In this modern age, MNCs are expected to fulfill their duties of exercising CSR. As the company strives towards increasing their revenue and profits, they should also look to ensure that the lives of their workforce are able to earn a decent wage and not look to exploit them. Companies who ill-treat their workers have been said to pay their workers low wages, making them work for long hours (sweatshop practice) or even administer a military style treatment within their facilities.

One particular company that faces challenges caused by CSR issues is Foxconn Technology Group. Meng (2010) wrote that Foxconn is a global leader in the electronics manufacturing sector, accounting for 44% of the global revenue of the entire electronics manufacturing and service industry in 2009.On its path to achieve such impressive results, its working processes and management methodology were placed under close scrutiny. Workers of Foxconn facilities in China were paid a meager salary, which was way below the nation's monthly living wage, making it hard for them to maintain a decent living condition (SACOM 2010).

Workers were also made to do excessive and involuntary overtime. Labour laws in China state that overtime should not exceed 36 hours per month but worker in a Chengdu facility were clocking 80 to 100 hours a month on top of the grueling 174 working hours (Brown 2011). On top of all these, workers were not allowed to talk, carry a mobile phone or even sit down. If anyone were to make a mistake or break any rules, they would be punished or sometimes even humiliated. Workers were often yelled at for minor mistakes and or being slow (SACOM 2010). Workers in the various Foxconn facilities where not issued proper safety equipment when they are handling harmful chemicals. Sacom (2010) also mentioned that when workers resign, a proper health examination is not arranged for them before they leave the company. These harsh working conditions have caused suicide cases to be constantly linked to the Chinese company from 2007 through to 2011.Moore (2011) highlighted that since 2007, with more than 25 attempted suicides, resulting in over 20 deaths, one would question the reason behind these deaths.

Ward (2010) reported that Foxconn have since taken measures to address the issues. Workers' salaries were raised from 900 yuan month to 2000 yuan, to offset critisims of low salaries of Chinese workers. The increase in pay will also ensure that the workers do not have to commit that many overtime hours as compared to the past. In 2009, to improve their occupational health and safety standards, Foxconn (2009) stated that training was provided to more than 500 employees who were likely to be exposed to radiation, disseminated more than 8,000 radiation dosage cards, installed more than 150 radiation testing machines, acquired safety certificates for 50 radiation machines, and performed more than 2,000 inspections of employees who signed in and signed out of their posts. Physical and Mental health counseling clinics were also established to help workers manage their work stress by conducting company-wide seminars and providing one to one counseling.

Although Foxconn have shown that they have taken measures to counter the issues caused by CSR, but it is still clear that they have not fully resolved the issues as the measures have not been fully implemented to everyone. Therefore Foxconn has failed to overcome the challenges caused by CSR.

Challenges caused by cultural issues

For successful entry and continuous growth in a foreign market, effective communication with the unfamiliar entity and adaptation to its culture is important. Globalization requires cross-cultural literacy and successful management of diversity (Arora 2005). A company has to understand a country and its citizens' culture before you can successfully penetrate the market.

Culture plays a huge part in how people behave and how organizations are run. When an MNC starts an operation overseas, this operation maybe modeled after the system that is being used back at home. Boulton (2007) said that "If you want to be successful in a foreign market, you have to know what your customers want. The system may not be able to satisfy these new customers and in turn causing your whole system to fail.

Culture does not just apply to your probable customers; it includes your organization staff as well. When the company takes over other companies to kick start the operations, they are faced with the problem of dealing with specific conditions of doing business in other countries. A staff from the parent company is often tasked to lead the newly acquired foreign company. Knorr and