Discussion 1 Week 3 M902
Week 3 – Discussion 1 Many papers have been writing on the subject of exploitation of the poor by multinationals and there is no easy answer or solution to satisfy both sides; economists and ethicists are continuously debating on the back of the increasing expectations from the consumer population for firms, to behave socially and environmentally responsibly.
The Economist Approach
The world of business is no romance; it is a place populated with various stakeholders and the survival and long-term success of an MNE is dependant on meeting the needs of these stakeholders. Friedman’s free market school of thought from the 70s is still relevant today: the key role of a business is to satisfy the needs of these stakeholders (Peng. 2009). As a CEO, I would justify my global strategy very simply; doing business with the bottom of the economic pyramid (BOP) is part of the global strategy of any MNE and ignoring this segment would be a failure on my part to my primary stakeholders. While the billions of people in the world who survive on $2 a day may seem to have little purchasing power, ‘the sheer number of these individuals makes up a potential market of trillions of dollars as disposable income” as suggested by Prahalad and Hart (2002). With a little vision to the not so far future, it is easy to imagine that as developing economies become transient economies, these billions of people “move up the income distribution ladder and swell the ranks of the lower-middle and middle income tiers” (Prahalad,C.K. 2005).
In emerging markets, the BOP has needs as much as the top of the pyramid but they do not have the same income, therefore I would adopt different distribution, packaging and pricing strategies for that specific segment.
The Ethicist Approach
As a businesswoman, I would want to keep a strong ethical reputation and as a CEO, I would want my firm to keep a strong ethical brand image and not be seen to be exploitative. While my primary role would be the pursuit
The Economist Approach
The world of business is no romance; it is a place populated with various stakeholders and the survival and long-term success of an MNE is dependant on meeting the needs of these stakeholders. Friedman’s free market school of thought from the 70s is still relevant today: the key role of a business is to satisfy the needs of these stakeholders (Peng. 2009). As a CEO, I would justify my global strategy very simply; doing business with the bottom of the economic pyramid (BOP) is part of the global strategy of any MNE and ignoring this segment would be a failure on my part to my primary stakeholders. While the billions of people in the world who survive on $2 a day may seem to have little purchasing power, ‘the sheer number of these individuals makes up a potential market of trillions of dollars as disposable income” as suggested by Prahalad and Hart (2002). With a little vision to the not so far future, it is easy to imagine that as developing economies become transient economies, these billions of people “move up the income distribution ladder and swell the ranks of the lower-middle and middle income tiers” (Prahalad,C.K. 2005).
In emerging markets, the BOP has needs as much as the top of the pyramid but they do not have the same income, therefore I would adopt different distribution, packaging and pricing strategies for that specific segment.
The Ethicist Approach
As a businesswoman, I would want to keep a strong ethical reputation and as a CEO, I would want my firm to keep a strong ethical brand image and not be seen to be exploitative. While my primary role would be the pursuit