Management

Contemporary International Firm Practices Student’s Name Institutional Affiliation Course Professor Date Contemporary International Firm Practices In the current period of globalization, international organizations faces problems related to unpredictable conditions, ethical concerns, and complicated HR management. The efficiency of contemporary political risk management, responsible practices, and human resource management in the bais of such challenges implies the sustainable success of the global organizations. Therefore, it is crucial for any global organization to implement risk management strategies. This process involves evaluating, identifying, and control of risks to an organization’s earnings and capital. The risks that result from different soruces, comprising technological influences and financial uncertainties, legal liabilities, and strategic management. Success risk management processes help organizations consider different risks to survive in an internal market. This paper delves into various approaches in every field and underscores the connection and collaboration between political risk, ethical behavior, and HRM. Moreover, the paper explores the emerging corporate world and the transformation in behavior patterns, with a quick shift occurring in the issues of ethics, workforce management, and political risk management. The goal is to offer a comprehensive global business practice, ethical standards, and human resource management networks, which are indisputably obscure and complicated. Part A: International Political Risks Management Political risk management at the international level deals with the identification, analysis, and mitigation of political uncertainties that likely cause the interruption of business operations and investment abroad. Research shows that the presence of political risk is one of the most crucial hindrances to investment and project growth in foreign nations for many organizations (Mervenur, 2022). The rise in direct capital investments and exports to foreign countries and, particularly to developing nations, increases the significance of accurate risk management strategies both for the company and for macroeconomic balance. Successful multinational corporations (MNCs) have utilized various approaches to avoid such risks. Such methods have benefits and drawbacks, along with changing corporate behavior patterns. Identifying Potential Risks Political risk management comprises a proactive approach to identifying risks related to political instability, including changes in regulations or tensions at the geopolitical levels. Such risks manifest themselves within MNCs in different ways. Research identifies that political risks occur due to changes in government policies and regulations, instability arising from social unrest, and geopolitical issues (Ali et al., 2021). In most cases, such causes arise from influences that are beyond the company's repair, including changes in government policies, social unrest, and terrorism. Risks such as credit risk and market risks are often caused by economic or financial influences. Moreover, political risks are more challenging to control and alleviate within the organization (Ali et al., 2021). Even though corporations can utilize risk management approaches to manage market or credit risk, political risk might demand more practical measures, such as monitoring political occurrences and changes and building relationships with key shareholders in foreign nations. By identifying the risks involved, MNCs can generate a uniform strategy for the political area where they operate and neutralize the disruptions that limit them from continuing their daily business operations. For instance, the international business of General Electric (GE) has a risk management unit that closely adheres to political development in different nations and tries to determine their influence on the performance of their universal operations (Maher, 2022). Using proactive political risk management, the company has been able to identify and stay ahead of crises in advance. Creating Contingency Plans Even though global businesses can take actions to control political risk, having a contingency plan is important for alleviating the influence of unforeseen occurrences. Research describes a contingency plan as a proactive method of managing political risks that helps corporations respond to unexpected changes in the political setting (Ali et al., 2021). The plan comprises setting procedures for risk management, evacuation procedures for workers in risk parts, and having alternate supply chain paths to ensure dependable supply and business steadiness in case of undefined hazards on the supply chain. Contingency planning helps international businesses minimize the effects of political risks and address the consequence when the adversity strikes, keeping businesses running proficiently and protecting the elaborate assets. Risk Management and Decision-Making Processes in MNCs Employing risk management in the decision-making process approves that political contemplations are thoroughly useful in strategic planning and the supply of crucial resources in MNCs. Such initiatives encompass creating a culture of risk consciousness and accountability in the entire organization, where all employees, at various levels, feel accountable for recognizing and managing political hazards in their parts of work. A study classifies that integrating political risk management into decision-making progressions comprises anticipating risks and their effect on business events, consenting MNCs to make better choices to reduce hazards (Ali et al., 2021). By incorporating such choices into the risk management progression, MNCs can ensure that they are mindful of probable risks and make informed choices about addressing them. Diversification International businesses are categorized by escalating their practices and resources for investments across diverse states and counties to verge political uncertainty in any single county. For instance, after trusting completely on China to make its products, MNCs including Apple decided to expand its invention with new firms in India that produce iPhones and others in Vietnam, which make MacBooks (Yin et al., 2022). Such a strategy ensures that the company’s supply chain is secure from uncertain political risks, such as changes in regulations or geopolitical disagreements in specific regions. Moreover, such practice helps to spread risk among a significant number of markets and helps organizations alleviate the influence of any political event. Political Lobbying and Advocacy Research provides that most of the MNCs utilize lobbying and advocacy as a way to engage with governments and politicians in nations of origin, region of operations, and or in international level to mitigate political risks (Iftinchi & Hurduzeu, 2018). Developing ties with government officials and politicians in foreign nations might offer useful communication channels and insights into the government’s behavior. For instance, reports show that MNCs, such as Google, reported 27% higher U.S. lobbying expenditures for 2021 to restructure its government relations teams (Alatorre & Eraslan, 2021). The goal was to advocate for changes in different laws concerning the privacy of user data and antitrust laws, among others. Regardless of the benefits of such an approach, it raises a few ethical concerns, including the excessive power of businesses run by democratic governments. Moreover, this tool does not guarantee the mitigation of political risks because governments can easily go against businesses regardless of whether they have developed good relationships in the past. Contrasting the Strategies Even though diversification shows a comprehensive risk reduction approach, it is not without higher operating costs and organizational intricacy that stakeholders would expect to be prepared for or informed about. Political lobbying and advocacy focus on specific policies but, in the long run, might include unethical practices that involve corruption and manipulations. Moreover, risk identification and contingency planning are embedded into the broader risk management process, which informs corporations on ongoing and future practices to succeed in the global market space. Connection with Ethics and HR Management Political risk management mechanisms are mostly linked to ethical choices and HR management practices. For example, as explored above, lobbying and advocacy in MNCs involves manipulation, which is one of the unethical practices in global business operations. Therefore, leaders in MNCs and related governance are crucial in directing the ethical behaviors in these organizations. Moreover, HR functions include talent management and diversity efforts that ensure sensitization of political landscapes and developing a tolerant work setting that can endure pressures. Generally, MNCs' political risk management comprises a complex strategy that incorporates ethical concerns and the role of HRM to see their success in foreign markets. Part B: Managing Ethical Behavior in International Business Managers in MNCs have a responsibility to acknowledge their duties in shaping organizational ethics and seize such opportunities to develop a climate that can improve the relationships and reputations on which their organization relies. The research proposes that executives who ignore ethics run the risk of personal and corporate liability in the current evolving, challenging legal environment (Zhang et al., 2023). However, for managers to engage appropriately in universal business practices, it is important to acknowledge and apply respectful ethical theories, such as utilitarianism and deontology, to guide decision-making and behavior in global business operations. Utilitarianism Theory in MNCs Utilitarianism emphasize those actions that produce the most significant outcome for the most significant number of individuals. In MNCs, such ethical frameworks offer guidance on identifying the choices to be considered through the effects or outcomes of decisions. Most international businesses often utilize utility standards when making decisions to maximize outcomes for varied shareholders, such as customers, workers, stakeholders, and communities. In this case, utilitarianism offers a universal and objective moral framework th...