The rise of MNCs

At this stage of the course, in order to understand how the corporations act, and the impact of their actions in the society we saw "The Corporation". The Corporation is a documentary directed by Mark Achbar and Jennifer Abbott, who goes into the psychopathic business world. Is based on the book entitled 'The Corporation, the pathological pursuit of profit and power', by Joel Bakan.

The documentary begins by explaining the enormous power that was given to corporations by giving them the rights of a person. But if corporations have the same rights as a person, what kind of person is the corporation? Over the years we have seen the last of these entities interest was wealth, profit above the good of the society, people use to describes corporations as constructive members of the society, because they produce goods we need for daily life, besides offering employment to the community. But we can’t forget that the primary goal of a Corporation is the money, they have a profit motivation.

Every action implies a sequel, but who bears the consequences of the actions of corporations? Experts use the word "externality", Milton Friedman describes it as the effect of a transaction between two parties on a third party who is not involved in the transaction. One of the interviewees summarized this way of behaving in a simple sentence, but worrisome, " let somebody else deal with the problems the corporation creates… let someone else take care of it".
The corporation can then be described as an “externalizing Machine”. The documentary describes cases in which externalities listed as: Harm to workers (Union busting, layoffs, factory fires, sweetshops), harm to human health (with dangerous products, emission of pollution and toxic waste, and using synthetic chemicals), harm to animals (through habitat destruction, factory farming and experimentation) and harm to biosphere (through clear-cuts, CO2 emissions and nuclear waste). The damage done to the world is becoming the only legacy for future generations.

But going beyond the documentary assesses the behavior of corporations, and as these are considered as a legal person, as his acting, and using a personality diagnostic checklist by the World Health Organization, it is concluded that corporations have a psychopath behavior. This conclusion begs the question, Who controls the balance of corporate behavior?.

Another important issues highlighted in the documentary is privatization, the way in which public goods such as water, are being privatized and managed by corporations. The directors of the documentary lead us to ask whether we can trust in a corporation to manage public goods through the Pfizer case. Pfizer's policy is to "make the community better” therefore has its own traffic private transit security system. When there is a demonstration of this system for the cameras, the results are counter to the policy described.

Many of the cases discussed in the documentary are serious and disappointing; to see how the power is given to corporations have been allowed to act as they wish. But people have begun to notice, there are critical views that are raising their voice against the corporations and the indiscriminate use of resources. The union of the people is perhaps the only way to stop the psychopaths.

To view the documentary clicks the following link:
http://www.youtube.com/view_play_list?p=FA50FBC214A6CE87

Questions

1. Do Corporations pursue today other interest or the "bottom-line" remains as their single priority? what are the factors influencing the corporation’s objectives and goals?

“It is difficult to write about the growth of multinational corporations (MNCs)3 without yielding to stereotype. On the one hand, there is the image of the modern business enterprise, staffed by highly competent managers, working at the cutting edge of technology to overcome logistical challenges and bring improvements to human life. On the other hand is the increasingly pervasive picture of the transnational corporation as the behemoth of modern life — large and powerful enough to control governments while engaging in big brother social control of consumers and unchecked exploitation of people in developing countries. Both stereotypes invoke the large size and important economic impact of MNCs.” (1)

So it is difficult to answer this question, especially after seen the documentary, because it expose a very negative perspective. I believe that as many of the corporations in the world respond to what Michael Moore says, that at the end corporations seek to make as much money as possible and the real problem is the profit motivation and to understand when enough is.

But I think the desire of consumers to learn more about the products they consume or the goods and services that are part of daily life are exerting significant pressure, forcing corporations to build processes and protocols aimed at social responsibility and sustainable development.

“Chocolate manufacturers in Europe devised ethics codes and built model factories to the benefit of their workers, supplied health and adult education facilities and reduced the length of working week.In the USA pharmaceutical such as Merck developed Codes of conduct, which underlined the Corporation’s goal to serve public health. These two are just a sample of Corporations’ respect for constituents other than shareholders” (2)

Without a doubt I think we are learning from past mistakes, and there are corporations that are changing their ways of act.

2. The film focuses on the negative consequences that the Corporation’s behavior cause to the environment, to human health and animal life. Discuss from a critical perspective, the possible benefits and arising from the actions of MNCs for these 3 groups.

Some of the analyses made by the interviewees have in common the concern to know what we are leaving to future generations.

The documentary shows several images that reveal the damage that corporations are causing to the environment, such as the indiscriminate abuse of exhaustible resources like water and oil, and use of pesticides and toxic substances have caused havoc on the flora and fauna of the world. Global warming, the extinction of species, starvation and birth defects are just some of the consequences we face.

“In recent years, MNCs have increasingly been accused of engaging in polluting or environmentally degrading activities through their subsidiaries, particularly in developing countries. Human rights groups and local communities have done much to highlight instances of pollution or illegal resource depletion, and often allege that these activities are linked to MNC collaboration in violating human rights”. (3)

Privatizing public elements and turn them into a private business has left a big profit corporations. Animal testing may have led corporations to great discoveries, and the dismissal of workers may have saved many companies from bankruptcy. No clutch, endangering the life and the world is destroying the future for all.

3. Do you think a corporation should be considered a "person"? discuss the implications and limitations of granting such legal existence to corporations.

I do not think corporations should have the same rights as a person. As Dr. Vandana Shiva (Physicist, Ecologist, feminist and seed activist) says in the documentary, the Corporation is not a person, because it doesn’t think, people think, the individuals of the corporation are those who think. Corporations do not have feelings, do not breathe and think, how they can be considered part of "us".

No doubt the corporations gain too much power when they are granted the same rights as a person. But a corporation faces the same consequences as a human being to commit a crime?
When we have seen a corporation in jail, a corporation facing the death penalty? or otherwise, upon the coming of economic crisis in the United States some corporations receiver government financial aid even though it was these same corporations were the ones put at risk the economy of a country, the same thing would happen if a citizen threatening the stability of a country, would receive economic aid from the government?

This makes me conclude that we can not give the same treatment to corporations and individuals because simply they are not the same.

References

(1) Michael Anderson (2002), Transnational Corporations and Environmental
Damage: Is Tort Law the Answer?. Pag 2

(2)Elena F Pérez Carrillo (2007) Corporate Governance: Shareholders’ Interests’ And Other Stakeholders’ Interests. Universidad Santiago de Compostela.

(3) Michael Anderson (2002), Transnational Corporations and Environmental
Damage: Is Tort Law the Answer?. Pag 4

Kline, John M. 2006. "MNCs and Surrogate Sovereignty." Brown Journal of World Affairs 13, no. 1: 123-133.

The Corporation, a documentary made by Mark Achbar and Jennifer Abbott. http://www.youtube.com/view_play_list?p=FA50FBC214A6CE87

Images taken from:

http://wideawareness.files.wordpress.com/2010/02/41980_the_corporation.jpg
http://www.cccb.org/rcs_gene/07_corporation_1.jpg

Merging organizational cultures

To work this issue of course, use the text: "Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies - Deutsche Bank-Bankers Trust, British Petroleum-Amoco, Ford-Volvo." This reading informs the experiences and lessons from the situations that arise in mergers and acquisitions, analyzing each case.

It is the Common Knowledge That mergers and acquisitions are strategic solutions that improve the company's position in the market, also represent a source of knowledge and learning opportunity. No clutch, are also difficult decisions, which, not being managed properly can jeopardize the stability and future business of an organization.

The paper explains that what is really important when making a decision that ends in a Merger and Acquisition (M&A) should be taken into account the creation of value, since this is the goal. But that value is not created until capabilities are transferred.

To understand the possible situations in a process of integration, the term acculturation is exposed, the text takes the term proposed by Malekzadesh, that means: "The changes resulting from the interaction of one organizational culture with another, or: ... the ways in which two groups adapt to each other resolve emergent conflict ".

The text is very clear explaining that two companies can effectively integrate, ie, combining two companies into one group, resulting in joint efforts to conquer the objectives of the new organization, despite cultural differences, as long as they consider two aspects, the need for individuals to have a strategic independence between firms, and the need for organizational independence.

Another factor to consider is to give importance to the process of integration, not only to the transaction as such, but the process that connects the two companies. Therefore, through the three cases of effective integration, the authors showed common characteristics, such as the creation of integration teams who worked actively in the process, the commitment of the executives and the role they play as guides for the rest of the company in order to manage the uncertainty, the identification of the aspects that differentiate firms and commonalities between them, the statement of common goals, and strengthening the common identity.

In conclusion, it argues that a successful integration is possible when the benefits are designed after an effective acculturation process.

Questions

Based on the required reading for this module, list and explain - using evidence from the cases presented in the reading - the main challenges and opportunities arising in processes of mergers and acquisitions from an organizational culture perspective.
Include at least 3 challenges and 3 opportunities.

In the cases presented in the text assigned for this topic, one can see several opportunities and challenges, which I'll go looking for cases.

• Case 1: Integrating Deutsche Bank (DB) and Bankers Trust (BT)

This case presents three main challenges. The first is to convert a German bank in a global organization, so which one of the strategies was precisely the integration. About that, Rolf-E. Breuer, Spokesman of the Board of Managing Directors of Deutsche Bank, said: "The strengths of Bankers Trust allow Deutsche Bank to place its globally-orientated business areas on a transatlantic platform. After the combination with Bankers Trust, Deutsche Bank will stand for innovation, financial strength and client focus on both sides of the Atlantic. Our assets are outstanding human resources in all parts of the world, excellent products and a strong brand name. Deutsche Bank operates successfully as a multi- specialist for financial services and will stay on course for expansion. Deutsche Bank will be able to satisfy its customers' wishes even more successfully on a global level. It will thereby secure and create qualified jobs. With its forward-looking strategy, Deutsche Bank is laying the foundations for long-term growth in company value for shareholders." (PR Newswire, 1999)

Another challenge is the internal conflict that existed between BT Alex Brown, Alex Brown employees felt they had lost their identity, thus, the name given to the company resulting from the integration was: The Deutsche Bank - Alex Brown Investment Bank, so not only reinforced the brand, identity also remained. The third challenge I think is important was to overcome the opinion of BT employees to DB. It was thought that DB was a rigid company, with a strong bureaucracy, hierarchical, and with a slow decision making process. The executives then decided to hold the views that BT had on the DB as a way to challenge employees to improve their work.
One of the exciting opportunities posed by this case integration is Alex Brown, the Oldest U.S. investment bank. Using the image of this institution was to play the card of confidence, experience and knowledge, as Alex Brown reached to meet 200 years before being acquired by BT.

• Case 2: Integrating British Petroleum (BP) and Amoco into a single organization.

The main challenge posed by this case is the main challenge for any integration of companies with different cultures, building a new corporate culture. To this end, several meetings took place with about 500 managers, where they explained the philosophy of BP and led participants to socialize among themselves.

• Case 3: Volvo and Ford.

In the automotive industry, technology is one of the tools that make a difference; this was the main chance with the integration of these companies, the technology transferred. As a result of the integration Volvo and Ford engineers visited the various plants, shared knowledge on topics such as safety, ergonomics, among others.

Another opportunity is given to the integration of Volvo and financial power, because Volvo “needed money to develop new models in order to stay competitive in the world market where its 400 000 sold cars per year constituted a modest one percent of total world sales” (Buerke, 1999).

One of the major challenges is the one that came with the contact between two totally different organizational cultures. Volvo Swedish culture was characterized by being decentralized and teamwork-oriented, while Ford's culture was characterized by being structured and hierarchical.

References:

• Alzira Salama, Wayne Holland, Gerald Vinten, (2003) "Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies – Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo", Journal of European Industrial Training, Vol. 27 Iss: 6, pp.313 – 321.

• Daniel Oxelman, Gustav Scott, Per Stohm (2008). “Strategic Fit in Mergers and Acquisitions, A Case Study of Volvo Cars”, JÖNKÖPING UNIVERSITY. 2008

• “Acquisition of Bankers Trust Successfully Closed; Deutsche Bank Expands in U.S.A.”, PR Newswire (1999)

Images taken from:

• http://cdn.content.compendiumblog.com/uploads/user/5b2280ff-c6dc-40ef-b01f-e69de12edb59/818dd2f5-8492-4236-b126-3dfccca75c4f/Image/c8cb262e3618aa6feca1c6de1113b3bd.jpg
• http://www.danpontefract.com/images/merge4.jpg

Managing change and conflict

To be actively involved in the world and the marketplace, organizations face a continuous change. That is why we speak of the organization as a dynamic entity. Change is a common way for a company to adapt, improve or evolve.

This module talks about two types of change, the change has been planned in advance, and the change that is imposed on the organization (regulations).

Whether any type of change, the reasons for which an organization transforms may vary, there are external forces and internal forces. External forces are those such as globalization, technology, diversity in the workforce, among others. The internal forces are described by the attitude and expectations of employees, and the situations and results derived by the crisis or financial loss.

Surely we can describe the change as inevitable and manageable. Companies often face competitive environments, where the improvement of products and the search of the process optimization is a constant. Likewise, individuals within the company are changing; who is now in command may not be in charge tomorrow. But all these variables or conditions may be modified and managed.

We can talk about small changes, such as those that occur when you upgrade the technological tools of a company. There are strategic changes, which are slightly larger, such as restructuring or entering a new business. Other changes are radical, like when the organization changes its core business.

To change, individuals often react in different ways. The unknown always involve some resistance at first. Individuals may express positive or negative feelings to change. Negative feelings are a normal response against what is a threat.

To address the change in a positive way, the leaders of the organization must increase and improve the communication, trying to express in an assertive and rational way what is happening in the business. Participation in the change is also a useful tool and demonstrates commitment. Another tool that is favorable is the support in the process, motivating and advising.


Questions

1. Ubuntu at the workplace:

• It’s Ubuntu present at the workplace, it there a link between this philosophy and organizational culture?

As the document: Building competitive advantage from Ubuntu explains, Ubuntu philosophy is manifested in many ways the organization. The language and communication, time management perspective, the way in which decisions are made, the importance of age and beliefs, are elements that are manifested in the organizations of South Africa regularly.

As the Professor Dani W. Nabudere saied in his text Ubuntu Philosophy. Memory and Reconciliation: “… Ubuntu philosophy, in its different settings, is at the base of the African philosophy of life and belief systems in which the peoples' daily-lived experiences are reflected”. This appreciation leads us to confirm that the African philosophy is present in the organization, as part of the individual's life.

As philosophy and way of life, Ubuntu is part of African culture and is part of the organizations whose members believe in this philosophy. This philosophy and organizational culture are linked, since the Ubutnu helps internal integration, because it allows members of the same organization know how to interact between them.

Ubutnu philosophy also provides stories, symbols and structures of power in the organization. As explained in the document proposed by the teacher and mentioned above, respect for elders, their knowledge and wisdom, determine to some companies operating in Africa, the way the organization is structured and how are awarded by within it.

• Please select and explain 3 aspects of organizational life that evidence the presence of Ubuntu at the workplace.

• Organizational aspect which is evident in the Ubutnu philosophy is in the timing. Time is seen as a whole, not fragmented as in Western culture, is also an element that can cure. In Western culture we tend to say that "time is money", try to spend our time in large part to business and maximize our profits. In Ubutnu philosophy, rather than use the time to maximize profits in business, is used as a time to improve the lives of the community, even when harm personal finance.

• Another aspect in which organizational philosophy is evident is in the decision making process. Not only seeks greater profitability for the organization, it seeks also to ensure the welfare of the collective. Rather than seek a consensus to maximize profitability for the organization, it seeks also to ensure the welfare of the collective. Making a decision is not only a democratic consensus; it is to get a result that favors the community.

• Finally, another aspect that shows the presence of Ubutnu Philosophy is the way that individuals relate within the organization. Co-workers are seen as brothers or sisters, and are treated that way. The organization is seen in some form sa extended family, so apply the collective thought: "I blong, Therefore I am".

2. African Bank Miners Credit – case study:

This case study illustrates the main difficulties faced in a process of merging two companies and the role played by culture. It is very important that in this section, you try to build relevant links between the 2 readings and your research about change theory.

• Please identify and explain 3 strategies used by the acquiring company in order to facilitate the change process through the use of Ubuntu.

As we saw in class, some changes occurring in the organization are planned. This happened to African Bank Miners Credit when it bought a controlling stake in the National Union of Mineworker's (NUM's). This was a change of strategic character, it was a larger change.

The company had to find a way to harmonize the process of splicing, and therefore relied on the Ubuntu philosophy as it's common knowledge in the South African region. “The Ubuntu It is a traditional African philosophy that gives an understanding of us as human beings in relation with the rest of the world.” (1) That's why it becomes a way of explaining the change and the individual's relationship with the organization

One strategy was the presence of the drum in the organization. The drum is an example of how the Ubuntu philosophy and the organization are linked, in addition, the drum is also a symbol of communication, and communication is one of the strategies for managing resistance to change.

As a strategy to explain how they wanted to grow in the market, the Company use the history of the bird and the badger. In this way it was explained that in order to grow as an organization it was needed to work together. Additionally, this idea is also supported by the Ubuntu philosophy, which says that what is good for the individual is good for the group and vice versa.

To remember the strategy being carried out, and to improve the understanding of this, the organization used as a strategy to resort to storytelling, which is common in the Ubuntu philosophy also used what they called "Our Ubuntu" booklets where employees could contribute to the success of the company.

References:

Mangaliso, Mzamo. 2003. Building competitive advantage from Ubuntu. In Thomas, David Clinton, editor, Readings and cases in International Management: Across-cultural perspective.

(1) David Suze Manda (2009) “Ubuntu philosophy as an African philosophy for peace.”

Barney Erasmus, Ben Swanepoel, Marius Van Wyk, Hans Schenk (2003) “South African Human Resources Management: Theory & practice”, Third edition, pp. 363- 364

Images taken from:

http://blog.leadingresources.com/wp-content/uploads/2008/08/managing-change.jpg

http://www.the2ccompany.com/images/conflictmanagement.gif