Globalization is the process of integration of various regions in chiefly economic and political fields. This process has increased trade, competition, connectivity and cultural exchange over the last couple of decades (Zinn & Eitzen, 2011, p. 56). However, despite the benefits of globalization to the world, there are some forces that are working against it. These forces include trade tensions, political differences and religious divisions.
The process of globalization has been identified as a source of increased trade between countries. However, most third world countries have come to realize that the promise of free trade associated with the increased connectivity is not always assured. Several African countries are downplaying the opportunities of trading with the west and opting to enter trade agreements with China (Zinn & Eitzen, 2011, p. 83). This is because the trade resulting from globalization is more advantageous to the USA and other leading economies whose superior products are no match to those in smaller economies. As a result, firms in third world countries are downplaying the process of globalization to protect their market share.
A principal effect of globalization is an increase in interactions between various countries. However, due to increasing political differences between the east and the west these interactions have been hampered. As a result, there is limited integration between the principal super powers: the USA and China. This limited integration is further extended to countries affiliated to the super powers based on which side they support.
Religion has been accused of causing more divisions in the world than any other single factor. A few centuries ago the main religious divisions were between Islam and Christianity; however, there are now three conflicting religious sides- Islam, Christianity and the religious liberals (Zein & Eitzen, 2011, p. 154). The liberals believe in debatable issues such as homosexuality and abortion. These increase religious conflicts subsequently define how countries and businesses interact. For example, the USA has threatened to impose sanctions on Uganda for making homosexuality a criminal offence.
A multinational enterprise should ensure consistency in its ethical standards in various countries. This is necessary because the firm should possess an image that can be identified despite the location of their branch. Consistency in ethical standards ensures that the human resource department is standardized, and management can make global decisions instead of decisions for each branch. As a result of this consistency, the employees do not view the firm as applying double standards in how it treats them.
Ethics are meant to establish an aspect of moral authority for any enterprise; however, these can only be achieved if there are no contradictions, hence the need for consistency (Velasquez, Andre, Shanks & Meyer, 1988). Also, ethical codes are based on a need for rational behavior, which is best achieved through uniformity. Lack of this uniformity would deny the company the ability to exercise moral authority amongst its human resource. Also, the different ethical codes would be subject to frequent violations mainly due to the loopholes resulting from inconsistencies.
Inconsistency in application of ethical standards would also result in lack of cohesion between various national branches as they would be governed by different standards. As noted in the previous paragraph, a uniform ethical code creates moral authority for the multinational enterprise. However, different ethical codes result in various perceptions of the authority has over different companies. This lack of cohesion would subsequently lead to suboptimality which would negatively impact on the productivity of the enterprise.
The European Union has been facing several financial constraints over the past 5 years. The EU’s banking sector has been identified as playing a key role in creating the region’s financial problems. The sectors limitations have been emphasized since instability in this area further aggravates the financial problems in the Euro Zone. A key problem facing the EU banking sector is the interdependence of national financial markets. As a result, a problem with one bank profoundly affects other banks regardless of whether or not they are in another country (European Commission, 2012, para 2).
Unethical conduct has also been a significant problem facing banks in the Euro Zone. The latest incident has been Barclays bank, which was found guilty of tampering with the Libor (Ahmed & Protess, 2012). The misconduct by such banks leads to massive losses mainly through fines and compensations. Also, misconduct leads to reduced consumer confidence in the banks which subsequently lowers their profitability.
The interdependence of the banks in the EU identified previously further aggravates the impacts of one bank’s misconduct.
Corporate greed is another key constraint affecting banks in Euro Zone. The banks in this region are taking more risks in an attempt to increase their profit margin which in most cases ends up in massive losses. Most governments have had to inject money in various banks to help them recover from such losses. Such funds would have been used in development projects if the banks had taken calculated risks and reduced their corporate greed.
Countries adopting a strict political control, in most cases have a bureaucratic form of governance. This implies that adopting change and adjusting to the developing and advancing technological, political and social settings is a challenge, based on the form of governance that these governments adopt. However, it remains essential that every government should adopt a modern market economy. Based on the fact the twenty first century is characterized by fast, consistent and unpredictable rate of technological, political, social and political development, the global market has consequently been based on this form of economy. According to Sowell (2010, p. 277), every country heavily relies on international investors and investment to achieve local and international financial success, adopting a modern market economy is essential. These countries should adopt a modern market economy, regardless of whether this country has a strict political control or not.
Many countries as well as multimillion-dollar organizations and investors will always target the developed countries like China in investing with their products and services. As a result, such developed countries receive many investment bids, locally and from international companies, organizations, entrepreneurs and potential-partnering governments. As a result, these developed countries must have strict political control and adherence to their set investment and business legislations. This will ensure that only the deserving and competent investors get the tenders and the government’s acknowledgement to invest in the country.
For every politically stable country, one of the areas that many international investors and governments focus on is the country’s financial and the market’s set up (Sowell, 2010, p. 275). Combining a strict political control with a modern market economy is essential, bearing in mind that the government will closely monitor all the market and business activities that the country will engage itself in. This is particularly essential in countries with a democratic form of governance but with business ventures and organizations adopting a bureaucratic form of administration.
European Commission (2012). New EU framework for crisis management in the financial sector for managing problems before they spiral out of control. European Commission. Retrieved from http://ec.europa.eu/news/economy/101020_en.htm
Sowell, T. (2010). Basic economics: a common sense guide to the economy. New York: McGraw-Hill.
Protess, B. & Ahmed, A. (2012). As Libor Fault-Finding Grows, It Is Now Every Bank for Itself. New York Times. Retrieved from http://dealbook.nytimes.com/2012/08/05/banks-in-libor-inquiry-are-said-to-be-trying-to-spread-blame/
Velasquez, M., Andre, C., Shanks, T. & Meyer, M. (1988). Consistency and ethics. Santa Clara University. Retrieved from http://www.scu.edu/ethics/practicing/decision/consistency.html
Von Pischke, J. D. & Matthaus-Maier, I. (2010). Eu Accession- Financial Sector Opportunities and Challenges for Southeast Europe. New Jersey: Springer
Zinn, M. & Eitzen, S. (2011). Globalization: The Transformation of Social Worlds. New York: Wadsworth