Student: Globalization and International Codes Essay

Submitted By dallenups
Words: 560
Pages: 3

Multinational Corporations A multinational corporation (MNC) is company that is headquartered in one country and does at least some of its business in a foreign or host country. A few foreign employees, assets, and sales all contribute to helping a company become multinational. As a large emerging multinational corporation, Deere had the power to be based in rich countries rather than small and poor countries. In 1912, Deere & Company emerged in the neighboring country of Canada. Deere & Co had 11 manufacturing plants in the United States and one operating in Canada. Later, Deere established 25 sales organizations, five of which were export departments in Canada. From 1912 to today, John Deere has reached 27 countries across the world. The company has grown to be one of the world’s largest operating agriculture machinery companies. Deere has grown foreign profits by 6%, which results in $460 million in revenue (Stynes, 2011). Like other MNCs, John Deere is able to stimulate the economies of the rich foreign countries and receive better returns on investments. As John Deere move to increase its foreign direct investments (FDI), the company began to cater to the foreign markets. By doing so the company has increased the long-term presence in the foreign countries. All MNCs must comply with International Codes of Conduct in order to do business in foreign countries. “International codes of conduct are aspirational statements of principles, policies, and rules for foreign operations that a multinational corporation voluntarily agrees to follow” (Steiner & Steiner, 2012). Before International Codes of Conduct were established, multinational corporations followed Sullivan Principles. The 1977 Sullivan Principles were primarily the code of conduct for doing business in South Africa. The principles required all foreign corporations doing business in South Africa to do business nondiscriminatory manner. Along with the Sullivan Principles and the International Codes of Conduct is the Organisation for Economic Co-operation and Development (OECD). Formed in 1961, the OECD is a group of 33 nations that works to further economic growth by expanding trade. The participation in the OECD is voluntary. Each government has the authority to set up its own “national contact point”, since the rules vary slightly, the guidelines are not binding. Therefore there can