The Relationship Between Governments & The Global Firm

Recommended readings regarding the relationship with a Multinational Corporation (MNC or MNE) and the Prospected Host or Host Country.

These readings can be found for free download from here.

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A Coopetition Perspective of MNC–Host Government Relations by Yadong Luo

Beyond The Theory of Imperialism by William I Robinson

Corporate Political Strategy by Charles H Cho, Dennis M Patten & Robin W Roberts

Explaining The Political Behaviour of Business by Sandra L Suarez

Firm Level Political Behaviour in The Global Marketplace by Bruce D Keillor, Gregory W Boller & O C Ferrell

Globalisation & The Regulation of FDI by Ajit Singh

Globalisation, Multinational Enterprise & The International Political System by Stephen J. Kobrin

How Do MNCs Vote In Developing Country Elections by Paul M Vaaler

How Multinational Corporations Deals With Their Socio-Political Stakeholders by Dirk Holtbrugge & Nicola Berg

Imperialism & Resistance by Todd Gordon & Jeffery R Webber

International Actors & Multinational Water Company Strategies In Europe 1990 - 2003 by David Hall & Emanuele Lobina

MNEs & Development by Jennifer Oetzel & Jonathan P Doh

Multinational Oil Companies and The Spartly Dispute by Sanqiang Jian

Multinationals Political Activities on Climate Change by Ans Kolk & Jonatan Pinkse

NGOs & International Business Research by Richard Lambell, Gary Ramia, Chris Nyland & Marco Michelotti

NGOs, Business & International Investment by Andrew Walter

One of These Things Is Not Like The Others, What Contributes To Dissimilarity Among MNE Subsidaries Political Strategy by William P Wan & Amy J Hillman

Raising Rivals Costs Through Political Strategy by Aragail McWilliams, David D Van Fleet & Kenneth D Cory

Sanctions At Bay, Hengemonic Decline, Multination Corporations, and US Economic Sanctions Since The Pipeline Case by Kenneth A. Rodman

Testing The Bargaining Hypothesis In The Manufacturing Sector In Developing Countries by Stephen J. Kobrin

The Collective Aspect of Corporate Political Strategies by Dominique Jacomet

The Effectiveness of Strategic Political Management by Christine Oliver & Ingo Holzinger

The Impact of Foreign Direct Investment on International Conflict by Solomon Polachek, Carlos Seiglie and Jun Xiang

The Rediscovery of Imperialism by John Bellamy Foster

Tobacco Industry Attempts to Counter the World Bank Report Curbing The Epidemic and Obstruct The WHO Framework Convention on Tobacco Control by Hadii M mudu, Ross Hammond & Stanton Glantz

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No. 8 Wire & New Zealands Innovative Mentality

“The No. 8 wire culture was a key part of New Zealand enterprise during the 19th and 20th centuries. Is it still relevant to New Zealand today? ” Critically discuss this statement.



The term “number eight wire culture” used to describe a typical mentality of New Zealanders refers to the creativity and ingenuity they exude. New Zealand as a nation is viewed as having a very unique approach to problems and a way of over coming them, even when they do not have all the necessary means. It only seemed natural that no. 8 wire culture would seep into New Zealand enterprise, and in doing so it ended up playing a vital role in the development of our countries business sector. This ability and mentality flowed on through into the 19th and 20th centuries and continued to aid New Zealanders all over the country in business and in everyday situations. However, as time continues on and technology continues to advance, there as been debate as to whether the no. 8 wire culture is still relevant in New Zealand today or whether the mentality that has served the country so well for so long has now become obsolete. No. 8 wire culture is still relevant in today’s business society for several reasons, but mainly as the mentality created by the number eight wire culture gives New Zealand businesses an added advantage when it comes to creating new markets and/or new products. It also aids a business or company explore itself and increases their ability to find and fix any internal or external problems, also it helps with reducing company costs when it comes to aspects such as transport. The no. 8 wire culture is still relevant on an individual scale as well, as it allows New Zealanders to use alternative tools or products when they do not have the conventional equipment for a task they wish to complete.

Number eight wire culture springs from 19th century when, as an isolated country, imports from the motherland, England, rare and travelling into town was extremely time consuming from a lot of farmers. Due to the scarcity of technology and tools in the 19th century for the New Zealand population, they learnt to deal with the problems and issues they faced on a daily basis through other means and also learnt the art of making do with what you have, thus becoming a self reliant country . The use of unconventional tools to complete a task became widely recognised across the world and unique New Zealand products or a unique way of doing something was given the title of having ‘kiwi ingenuity’, another name for number eight wire culture. The term number eight wire culture comes from the numerous uses for number eight wire, a particular gauge of wire designed for fencing that was developed by New Zealanders. The 19th and 20th century enterprises in New Zealand relied some what heavily on the kiwi ingenuity that came with the number eight wire culture. Typically many businesses in the 19th century were farming orientated, or large wool and timber industries, however many individuals came in search of gold . On an individual level, you are able to see the effects of the no. 8 wire mentality in the search for gold, where people would use whatever they had in order to sieve out the pebbles on the riverbeds and find pieces of gold until they could afford more efficient equipment. By the end of the 19th century New Zealand had entered a depression (late 1890’s) which saw the end of the mass emigration and the fall of many businesses. However New Zealand enterprise struggled on through into the 20th century with a greater proportion of the population becoming farmers as the gold started to dry up. A great example of kiwi ingenuity and the no. 8 wire mentality occurred just after the middle of the 20th century when farmers turned an animal deemed a national pest into a source of profit. Deer were first imported into New Zealand from England and Scotland for sport in the mid to late 19th century, however the flourished in the Southern Alps and began to impact negatively on the environment and native forest. However in the 1960’s farmers had found a way to solve their pest problem and make a profit at the same time. They began to export feral dear and by the early 1970’s many farmers had built a base by capturing and farming deer. This show that the number eight wire culture and mentality has been an essential part of New Zealand enterprise from the very beginning, because if it weren’t for ‘kiwi ingenuity’ the deer farming industry may not even exist yet, but instead the New Zealand farmers managed to produce profit while eradicating a national pest. There is even controversy over whether the Wright brothers were the first people to have the ability to fly. A New Zealander, Richard Pearse, is believed to have been the first man to build and test a successful aircraft, on 31st March 1903, approximately nine months before the Wright brothers success, however he is not widely recognised for it. This event is another extraordinary example of kiwi ingenuity and the number eight wire culture.

Further into the future, in the 21st century, the debate about whether the number eight wire culture in New Zealand still has any relevance in the business sector. One of the arguments for the relevance of the no. 8 mentality is how it aids in the invention and creation of new products and markets. Because of the number eight wire mentality that many New Zealanders have our business sector has an advantage over the offshore businesses. This advantage is the result of the kiwi ingenuity, and the ability for the businesses employees to find simpler and potentially cheaper and faster methods of producing the same product, or to produce a product to the same quality as a global giant but with non of the equipment that they use. It also aids in the creation of new products and inventions as the number eight wire mentality drives New Zealanders to seek better methods of completing a task and can lead to the invention or refining of a product or service. Two major New Zealand businessmen which have shown aspects of the number eight wire culture in the creation of their business in the 21st century are Bill Day, founder of Seaworks, and John Managh, founder of RoadCraft. Entrepreneur Bill Day founded a company known as Seaworks in 1990’s, the idea behind Seaworks was not new; however the approach that Bill took to achieving the businesses goal redefined the industry. In an industry that typically used large ships in order to lay and maintain international communication lines as well as other ocean services, Bill was able to design and build a small vessel capable of completing the same job at a lesser cost . Similar to Bill Day, John Managh created his own company by adapting technology that already existed and improving it making it his own. The 21st Century company, RoadCraft, incorporates the ingenuity of the number eight wire culture and started when John Managh first started into the campervan business. He imported old campervans and redid them so that they were of a high quality and then resold them for a profit. John then went on to create a new class of campervan known as the OCV (Overland Camping Vehicle), improving on the international campervan standards, making a vehicle that seemed to have as much room inside it as a bedroom. The number eight wire culture has served both Bill Day and John Managh is their business ventures along with countless other New Zealanders. Bill Day and John Managh both exude several characteristics of the number eight wire mentality and that becomes even more obvious when researching their businesses. Therefore it becomes clear that kiwi ingenuity and the number eight wire culture in New Zealand has not lost its relevance in the 21st century but taken on a slightly different role so that it may be harder to recognise.

The number eight wire culture in New Zealand is still relevant in today’s society when it comes business as it gives New Zealanders a bit of an edge when locating and correcting flaws within their own or another persons business. As well as the ingenuity aiding in the invention and refinement of goods and services the number eight wire mentality grants New Zealanders an advantage when it comes to detecting and correcting business flaws. When a business is created there are many issues which may arise, whether they are obvious or not, the initiative and ingenuity of the New Zealand culture gives an advantage to the local businesses in finding these issues and solving them before they cause the business too much damage. Also as a business progresses there is a never ending supply of faults, flaws and hurdles which must be overcome for the business to run successfully making the number eight wire mentality quite relevant and useful in today’s enterprise. Even Microsoft has recently experienced a major flaw in their programming which they must overcome . Due to the unique way of thinking that is created by the number eight wire mentality New Zealanders are able to locate the source of many of the problems that can cause damage to a business and in turn eradicate the issue before it can do any harm. A great example of this has occurred at the end of last year, Beau Butler (a New Zealander) is a software engineer and exposed a major flaw in Microsoft security. Beau used his technical expertise along with his kiwi ingenuity in order to expose the flaw in Microsoft’s security that left millions of computers all over the world vulnerable to cyber criminals. The flaw allows hackers to access a person’s computer and steal the victim’s passwords and data in a single go and had affected over 160,000 New Zealanders before Beau could reveal the security flaw. Thanks to Beau’s technical expertise accompanied by his number eight wire mentality Microsoft could now correct the security flaw in their Windows programming potential saving their customers from being robbed of millions of dollars through the internet by cyber criminals. Beau Butler’s accomplishment shows how the number eight wire culture in New Zealand is still relevant in today’s industry and workplace for isolating flaws and critical errors in the running of businesses. The usefulness of this mentality has very little limits, as shown by Butler, a single individual, who aided an international giant, potentially saving them millions if not billions of dollars in research and repair.

On a personal level, the number eight wire mentality is still relevant. The biggest industry in New Zealand, even today, is still farming, or more specifically the dairy industry. New Zealand exceeds exports of $6.3 billion per year in dairy products. The number eight wire mentality and kiwi ingenuity helps farmers become more efficient at producing dairy products and in turn they receive higher revenues. The use of the number eight wire mentality as a farmer helps both himself as an individual but also aids the company, Fonterra, and the countries budget surplus for that year. Originally the number eight wire culture was centred around the ability of New Zealand farmers to create just about anything they need from the materials they had around them, typically number 8 wire. As New Zealand progressed as a nation and technology became more readily available, the need for innovation and ingenuity in both the business sector and farming sector decreased, however the way of life that was etched into the minds of New Zealanders for almost 200 years wasn’t going to go away completely. Like in the business sector the number eight wire culture still exists in the dairy industry, but it has changed and developed as time has moved forward. In the past farmers would use the kiwi ingenuity to fix problems such as a broken part in a trailer or a broken latch on a gate, now however, although these issues to occur and are often given a temporary fix using the number eight wire mentality, farmers often use kiwi ingenuity and innovation to devise more accurate and cost effective means of measuring, transporting and storing the dairy products. An example of some equipment which is used to accurately measure a farmers produce and make transportation more cost effective is the hand held computers carried by the truck drivers. Previously a truck driver transporting milk from a farmer to the processing plant would only be able to collect one farmers produce at a time, (i.e. travel to the farm, collect milk, travel back to processing plant, unload milk, travel to next farm), making the collection process expensive and extremely time consuming. However, ever since the truck drivers began using hand held computers to store and record information the process has become a lot less time consuming and much more cost effective. The hand held computer allows the truck driver to register information about the quantity of the product to each farmer’s details in the Fonterra database. Also a technique referred to as ‘reverse osmosis’ developed in New Zealand through kiwi ingenuity has managed to decrease Fonterra’s milk transport costs even further, by filtering out solids before transport, allowing a single truck to hold numerous farmers milk at the same time. According to Fonterra the new technology will decrease lorry movements by approximately 3000 per year when it is implemented in Australia. The international company, Fonterra, has obviously been aided by the number eight wire culture and kiwi ingenuity as the inventions which took place in New Zealand have massively decreased the businesses transport costs and increased the company’s time efficiency. Although this is a massive advantage to Fonterra, the individual farmers also gain from this invention; the decreased cost to Fonterra may be used as an added incentive to farmers to produce the top quality milk for a higher price and also they wouldn’t need to spend as much time tracking their shipment to making sure that it is the truck drivers benefit from this invention as they minimise the time the are on the road and tracking back and forth between farmer and processing plant. This shows how the number eight wire culture in New Zealand is still relevant today.

The number eight wire culture in New Zealand has been a key part of our countries enterprise in the 19th and 20th century, but by the 21st century the debate has arisen as to whether the culture is still relevant. The term number eight wire culture springs from a time when New Zealand was an isolated country and its people began to improvise, using unconventional tools to complete tasks. Through the 19th and 20th century, it was possible to see the application of the number eight wire mentality when it came to eradicating pests, fixing fences and broken equipment. However by the 21st century technology had progressed so far that New Zealand is no longer isolated and the need for kiwi ingenuity has all but depleted. This may be true, but the number eight wire mentality still exists, although in a slightly different way. Instead of kiwi ingenuity being used to fix fences and gates or turn a national pest into an export earner, it is now being applied on an international basis aiding companies, such as Seaworks and Roadcraft, to compete with international giants and helping entire industries, like the dairy industry (Fonterra), minimise their transport costs and increase time efficiency levels. For these reasons, the number eight wire culture which has served New Zealand and New Zealanders since the early 19th century is still relevant in today’s society. Although the application of the mentality may have changed and adapted to the way of life of the 21st century, the number eight wire culture is still extremely relevant.


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References:

1) Scott, Anthony. 22 March 2008. Hiding Our Light Under No. 8 Wire. Accessed 12 September 2008 at: www.sciencenewzealand.org/opinion/ hiding_our_light_under_the_no_8_wire

2) New Zealand Tourism Online Ltd. 2008. No 8 Wire. Accessed 12 September 2008 at: http://www.tourism.net.nz/new-zealand/about-newzealand/ kiwiana.html

3) Fernbook. 2008. C19th Emigration: Why travel to New Zealand. Accessed 12 September 2008 at: http://www.fernbook.co.uk/emigration

4) Deerfarmer.com. 25 July 2003. Deer & Elk Farmers’ Information Network: Industry, Deer Farming In New Zealand. Accessed 12 September 2008 at: www.deer-library.com/artman/publish/article_99.shtml

5) The New Zealand Edge. 2008. The New Zealand Edge: Speedsters: Richard Pearse. Accessed 13 September 2008 at: www.nzedge.com/heroes/pearse.html

6) Seaworks Ltd New Zealand. 2008. Seaworks Ltd New Zealand: A New Zealand Company specialising in submarine cable installation. Accessed 12 September 2008 at: http://www.seaworks.co.nz

7) RoadCraft Motorhomes For Sale. 2008. RoadCraft Motorhomes For Sale – Get One! Accessed 12 September 2008 at www.roadcraft.co.nz

8) Managh, John. 12 August 2008. Guest lecturer for Management 202: Foundations of Enterprise. The University of Auckland, Semester 2, 2008

9) New Zealand Herald. Rowan, Juliet. 01 December 2007. No 8 wire culture saves global giant. Accessed 12 September 2008 at: www.nzherald.co.nz/sect ion/story.cfm?c_id=5&objectid=10479433

10) Market New Zealand. 2008. Market New Zealand.com: New Zealand Dairy Industry. Accessed 13 September 2008 at: http://www.marketnewzealand. com/MNZ/aboutNZ/sectors/14713.aspx

11) Woods, Chris. 22 July 2008. Lecturer for Management 202: Foundations of Enterprise. The University of Auckland, Semester 2, 2008

12) Mercer, Chris. 28 November 2005. Osmosis Cuts Fonterra’s Milk Transport Costs. Food Navigator. Accessed 13 September 2008 at: www.foodnavigator-usa.com/Financial-Industry/Osmosis-cuts-Fonterra-s-milk-transport-co

Multinational Corporations & The Idea of Corporate Social Responsibility

Introduction
Through the progression and advancement of technology, individuals and businesses, as well as entire cultures and countries, are becoming increasingly interactive on a global scale. This phenomenon has been given the title of ‘globalisation’. Globalisation has allowed for the formation of multinational corporations, known as MNCs, who have become increasingly pressured by external groups, such as NGOs (non-governmental organisations), to operate with a higher level of social responsibility. This essay, with specific reference to the works of Milton Friedman, Michael Porter and Mark Kramer, will critically discuss whether or not multinational corporations have non-profit roles in society. This essay will endeavour to explain the reasons for the existence of corporate social responsibility, discussing the major advantages, as well as disadvantages, it presents to those MNCs who implement it in their corporate and business strategies. Overall this essay will argue the existence of, and necessity for, non-profit, socially responsible roles within the multinational giants. Finally concluding that the socially responsible multinational corporation is the business of the future.

The Arguments of Corporate Social Responsibility
The multinational corporation, as defined by many academics, is a large firm that has operations in more than one country (Hill, 2009; Knights & Willmott, 2007). MNCs have been the main source of a debate which has been waged since the time of Friedman in the early 1960s. Over the last few decades the debate has only increased in intensity, and there is no clear sight of any end to the issue. The argument is based around the idea of whether or not multinational corporations, such as Coca Cola, have a non-profit role in society. Specifically, this is referring to the notion of corporate social responsibility (CSR). Corporate social responsibility has been defined as “the firm’s considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social [and environmental] benefits, along with the traditional economic gains which the firm seeks” (Davis, 1973). There are two clear sides to the debate. The first, which takes its point of view strictly from a monetary and profit-making attitude, suggests that the only social responsibility of business is to increase profits. The second point of view appears to be based predominately on an ethical perspective, seeing businesses as an instrument to create social value. Both arguments are supported by well respected businessmen and academics such as Milton Friedman and Edward Freeman, respectively. Regardless of the debate, however, multinational corporations are finding themselves been placed under ever increasing pressure from both internal and external groups to participate in non-profit roles in order to benefit society (Davies, 2003; Freeman, Pica, & Camponovo, 2001; Logsdon & Wood, 2002).

The Traditional Business Is Business View
While there are many academics that make persuading arguments for businesses to engage in non-profit roles within society, there are also those against the idea. Possibly the most avid supporter of the argument against businesses and multinational corporations having non-profit roles in society is Milton Friedman, claiming that the only social responsibility of a business is to increase its profits (1970). Therefore, logically, the expenditure on charitable causes should cease. Milton Friedman summed up his views and the views of those against CSR in one, six word, sentence: “The business of business is business.” This quote means that the only concern of a corporation should be the production and sale of the goods or services which they produce. According to Mark Kramer and Michael Porter (2002) the majority of companies feel compelled to give to charity, but executives are finding it hard, if not impossible, to justify the expenditures. This is because of the most important stakeholders in a multinational corporation are the shareholders, not the customers or general public (Hill, Jones, Galvin & Haidar, 2007). The main argument against corporate social responsibility suggests that a firm spending additional money on areas non-essential to the production and continuation of the business goes against the wishes and imperatives of the main stakeholders, giving the firm an economic disadvantage. Examples of MNCs which have adopted the view of Friedman’s “the business of business is business”, at least in some part, include Nike, which used sweatshops and child labour in their offshore operations (Knight & Greenberg, 2002), and Coca Cola, who are responsible for the rapid decline of water in water wells in South India (Woods, 2006). Both these cases primarily focus on human rights, however many businesses and MNCs show a disregard for the environment, for example a supplier Gap and Levi Strauss based in Lesotho has been found to be polluting the local river, drenching the plant life along the river banks with clothing dye, turning the grass and soil a dark shade of blue (3 News, 2009). The desire to satisfy the demands of a company’s shareholders is highly regarded by managers and the board of directors, especially with the threat of legal persecution if they fail to do so. Such an event occurred in 1985 where the directors of the Trans Union Corporation, according to a Delaware (US) court did not adequately fulfil their obligations to the shareholders (Hill, Jones, Galvin & Haidar, 2007). This fear of persecution as well as the personal monetary drive to achieve greater profits for the corporation can easily lead to a decision resulting in the withdrawal of all spending on non-profit aspects of the business. Another, less common, argument against CSR explains how multinational corporations already have a vast amount of power, including social power, and should not engage in activities that may give it more (Zu, 2009). However while the arguments against corporate social responsibility have some merit and basis to their reasoning they neglect to consider the ramifications of not engaging in non-profit roles within society.

Ramifications
Over the last few decades there has been a rise in social conscience. The extent of this rise of social conscience has reached the point in which a study presented evidence that many individuals would rather earn less than work for a corporation with a socially irresponsible reputation (Barbian, 2001). In this aspect, business has been somewhat slow to react, often placing monetary gain above the ideals of the societies in which they operate. This is a sign of a company which has aligned its values with that of Friedman. However, while some multinationals have gotten away with being social irresponsible, such as Coca Cola, other companies have suffered dramatically. According to Estes (1996) and Frooman (1997) the total social cost of corporate social irresponsibility in the US is estimated to be around two and a half trillion US dollars per annum. One such corporation to suffer from the exposure of corporate social irresponsibility is Nike. Accused of using sweatshops in its offshore operations, Nike was boycotted by many consumers and consumer groups. Only now just starting to recover from the effect of the allegation (Knight & Greenberg, 2002). The ramifications that Nike faced due to their business practices breaching the values of their customers indicate that while some multinational corporations do not currently have a non-profit role in society, they should, at the very least, consider the long term advantages of implementing a CSR strategy.

The Advantages of Corporate Social Responsibility
There are many arguments supporting the non-profit role of multinational corporations, and indeed all businesses, within society. These arguments supporting CSR (corporate social responsibility) primarily suggest that a corporation which engages in non-profit roles and functions within society will achieve greater market share and a higher level of employee satisfaction (Porter & Kramer, 2002; Barbian, 2001). Supporters of CSR argue that the overall impact of corporations showing a level of social responsibility increases their productivity and revenue, outweighing the monetary cost of expenditure on philanthropy. According to Barbian (2001) many individuals would gladly take a decreased salary to work for a socially responsible firm. Therefore a socially responsible corporation is more likely to attract applications from high quality candidates. The elevated quality of job candidates allows the multinational to raise the calibre of its goods or services, giving the company a superior product, likely to result in greater sales and market share. This finding is backed up by two separate studies done by Greening and Turban (1997; 2000) which suggest that the perception of a firm’s social performance influences an individuals desire to work for that firm. Another advantage of non-profit expenditure for multinational corporations, and perhaps the most obvious one, is company image (Hond, Bakker & Neergaard, 2007). This cause-related marketing, as termed by Porter and Kramer (2002), comes as multinationals are becoming increasingly aware of the relationship between their social image and consumer reactions to their products (Creyer & Ross, 1997; Sen & Bhattacharya, 2001). CSR has become a cost-effective form of public-relations and advertising, with philanthropy expenditure in the US up from $125 million US in 1990 to approximately $828 million US in 2002 (Porter & Kramer, 2002). Porter and Kramer (2002) continue on to explain that while these marketing campaigns provide support for worthy causes, they are intended to heighten company visibility and improve morale, strengthening the company’s long-term business prospects. Another argument for pursuing non-profit roles within society is the idea of securing a high quality work force for the future. Both Cisco Systems and DreamWorks SKG have devised a strategy which allows them to achieve economic gains directly from their social expenditure (Porter & Kramer, 2002). Cisco Systems’, Cisco Networking Academy, funded the education and training of computer administrators, alleviating potential constraints on future growth. DreamWorks SKG have a similar method, financing the training of low income students for a career in the film industry. Thus, Cisco Systems and DreamWorks SKG illustrate that MNCs can create social value while achieving direct economic gains. These arguments indicate the overwhelming advantages of CSR and display the essential need for MNCs to engage in non-profit roles within society, showing that a multinational corporation with a high level of corporate social responsibility is likely to gain a higher financial performance (Cornell & Shapiro, 1987).

Personal Opinion
In my own personal opinion I believe that multinational corporations, and all other businesses alike, should embrace the concept of non-profit roles in some form or the other. Whether the aim is to improve the standards of living, fight world hunger, cure cancer or even just to increase long-run profits through company image, the benefits of corporate social responsibility vastly outweigh the negative impacts of being exposed as socially irresponsible like Nike was in the 1990s. Support for NGOs from the general public is growing and the idea of CSR is certainly increasing rapidly, pushing businesses further towards their idea of a socially responsible corporation. This trend is only increasing the need for MNCs to act accordingly. As it is now, firms engaging in non-profit activities benefit in a magnitude of ways: increasing company image, avoiding additional governmental regulations, increasing long-run profitability, a lower level of labour problems, and alleviating constraints on future growth (Zu, 2009); the trend of the general public’s attitude towards CSR only indicates that in the future, those businesses that are deemed socially irresponsible will be completely boycotted, resulting in their death. Therefore it is within the best interest of multinational corporations, and indeed all other businesses, to have a non-profit role within society, and to embrace the ideals of corporate social responsibility.

Conclusion
While business academics such as Milton Friedman refuse to accept that corporate social responsibility is anything more than a firms’ duty to raise profits, the evidence for the existence of and increased philanthropy within multinational corporations strengthens as time continues forward. This evidence, demonstrated in the works of Barbian, Porter, Zu and many others, illustrates the need for businesses to act upon the growing demand of the societies in which they operate. As well as adhering to the demands of society, they must also satisfy the desires of NGOs, like the WTO (World Trade Organisation) and ILO (International Labour Organisation), which have enough political and social power to cause even the biggest of the multinationals financial difficulties. From the examination of the arguments for and against the non-profit roles of business in society, it is clear that the economic and social gains of implementing a strategy incorporating CSR, and the potential ramifications for not doing so, vastly outweigh any benefits argued by those who disagree with the idea that MNCs, and other businesses, should participate in non-profit actions for the good of man-kind and the environment. Through the works of business academics, including Frooman, Greening and Turban, this essay has shown that many businesses, such as Cisco Systems and DreamWorks SKG, embrace the notion of corporate social responsibility, giving back to the community. This essay has also proven that while non-profit roles already exist within several corporations, the demand for greater social responsibility is likely to increase year by year. It is possible that the demand for CSR will become so great that those companies that fail to live up to the standards of their community will perish. Overall this essay has exposed that multinational corporations have, and most likely will do in the future, a non-profit role in society.



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References

3 News., (2009, August 03). Gap, Levi Strauss Factory Pollution Exposed in Africa. Retrieved August 04, 2009, from http://www.3news.co.nz/Gap-Levi-Strauss- factory-pollution-exposed-in-Africa/tabid/417/articleID/114915/cat/259/
Default.aspx

Barbian, J., (2001). The Charitable Worker: Training. Minneapolis, US. 38, 50-55.

Cornell, B. and A. Shapiro., (1987). Corporate Stakeholders and Corporate Finance. FinancialManagement, 16, 5–14.

Creyer, E. H., & Ross, W. T., (1997). The Influence of Firm Behaviour on Purchase Intention: Do Consumers Really Care About Business Ethics? Journal of Consumer Marketing, 14, 421–432.

Davies, R., (2003). The Business Community: Social Responsibility and Corporate Values. From J. H. Dunning (Ed.), Making Globalization Good: The Moral Challenges of Global Capitalism, 301–319. New York, US: Oxford University Press.

Davis, K., (1973). The Case For and Against Business Assumption of Social Responsibilities. Academy of Management Journal, 16, 312–323.

Estes, R., (1996). Tyranny of The Bottom Line. San Francisco, US: Berrett-Koehler.

Freeman, B., Pica, M., & Camponovo, C., (2001). A New Approach to Corporate Responsibility: The Voluntary Principles on Security and Human Rights. Hastings International and Comparative Law Review, 24, 423–449.

Friedman, M., (1970). Social Responsibility of Business Is to Increase Its Profit. The New York Times Magazine, 13, 122–126.

Frooman, J., (1997). Socially Irresponsible and Illegal Behavior and Shareholder Wealth: A Meta-Analysis of Event Studies. Business and Society, 36, 221-249.

Greening, D. W., & Turban, D. B., (1997). Corporate Social Performance and Organizational Attractiveness to Prospective Employees. Academy of Management Journal, 40, 658–672.

Hill, C. W. L., (2009). International Business: Competing In The Global Marketplace (7th ed.). New York, US: McGraw-Hill Companies, Inc.

Hill, C. W. L., Jones, G. R., Galvin, P., & Haidar, A., (2007). Strategic Management: An Integrated Approach (2nd Australian ed.). Milton, Australia: John Wiley & Sons Australia Ltd.

Hond, F., Bakker, F. G. A., & Neergaard, P., (Ed.) (2007). Managing Corporate Social Responsibility In Action: Talking, Doing and Measuring. Hampshire, England: Ashgate Publishing.

Knight, G., & Greenberg, J., (2002). Promotionalism and Subpolitics: Nike and Its Labour Critics. Management Communication Quarterly, 15, 541–571.

Knights, D., & Willmott, H., (2007). Introducing Organisational Behaviour & Management. London, United Kingdom: Thomson Learning.

Logsdon, J., & Wood, D. J., (2002). Business Citizenship: From Domestic to Global Level of Analysis. Business Ethics Quarterly, 12, 155–188.

Porter, M. E., & Kramer, M. R., (2002). The Competitive Advantage of Corporate Philanthropy. Harvard Business Review. 80(12), 56-68.

Sen, S., & Bhattacharya, C. B., (2001). Does Doing Good Always Lead To Doing Better? Consumer Reactions to Corporate Social Responsibility. Journal of Marketing Research, 38, 225–244.

Turban, D. B., & Greening, D. W., (2000). Corporate Social Performance As A Competitive Advantage In Attracting A Quality Workforce. Business and Society. 39, 254–280.

Woods, B., (2006). A World Without Water. Discovery Channel Documentary, UK.

Zu, L., (2009). Corporate Social Responsibility, Corporate Restructuring and Firm’s Performance: Empirical Evidence from Chinese Enterprises. Germany: Springer-Verlag Berlin Heidelberg.

Fayol's Administrative Theory

The successful French business Henri Fayol (1841 – 1925) moved his up the scalar chain of the mining company, Comambault, and became the companies head. Fayol later recorded the methods of his success in books such as ‘General and Industrial Management’. In this particular book he discusses the fourteen principles: authority, centralisation, discipline, division of work, esprit de corps, equity, initiative, order, remuneration, the scalar chain, stability and tenure of staff, subordination of individual interest of common good, unity of command and unity of direction. These fourteen principle formed Henri Fayol’s Administrative theory, which is a collection of principles designed to improve the productivity and efficiency of a business. Fayol’s administrative theory is still visible in organisations in today’s world. For example the scalar chain and division of work are visibly demonstrated in the New Zealand organisation, Hell’s Pizza. The scalar chain shows authorities both inside and outside of the actual store; and also helps show the division of work (or division of labour) present in the organisation.

The scalar chain according to Henri Fayol in his book titled ‘General and Industrial Management’ (1967) is a pyramid of superiors starting from the top, being the ultimate authority, down to the bottom, lowest ranked workers. As an individual progresses through, and up, the scalar chain they gain higher levels or authority and power within their organisation. This principle strongly enforcers another of Henri Fayol’s principles, unity of command; the scalar chain reflects the distribution of authority and power throughout an organisation which demonstrates a singular ultimate power at the head of the organisation. The scalar chain and its distribution of authority can also be demonstrated physically in two ways:

Fig 1: (Similar to the diagram used in ‘General and Industrial Management’ (Henri Fayol, 1967).

(Image adapted from http://www.firstmonday.org/issues/issue6_11/dafermos/ acquired through a ‘Google Image’ search, note that this was the only reason this source was used; no information was extracted from the written material, only the picture)

Fig 2: (The more frequently used diagram by organisations today).

(This is a basic diagram involving only four members of the organisation; a full diagram should involve all the employees (Samson & Daft, 2005)).

The purpose of the scalar chain in administrative theory is maintains the idea of unity of command and authority but at the same time provide employees with the opportunity to use their own initiative and judgement. As well as enforcing unity of command, authority and initiative the scalar chain aids the flow of communication between employees and superiors. Each employee has an individual from which their instructions or orders come from and to which they can go for advice, with permission from their superior an employee may communicated directly with another in a different field of the organisation; e.g. a general employee from distribution may communicate directly with a general employee from marketing or production. This “gang plank” (Fayol, 1967) approach allows communications and transmissions to be finished and deals agreed to within a matter of hours compared to the delayed effect of both sides of the communication reporting to their superiors until the decision is made at the head of the organisation. The physical representation of the scalar chain portrays the lines of authority and can provide and incentive for employees to strive to be better and more efficient at their job by either subconsciously or consciously setting goals and motivating them to reach higher levels of authority.

This principle brought to light by Henri Fayol is still apparent in organisations today. For example the New Zealand organisation ‘Hell’s Pizza’ uses the idea of the scalar chain to motivate workers, improve efficiency in communications and enforcing the authority of superior positions in the employment of Hell’s Pizza. Hell’s Pizza have several employees in each store as well as outside the store locations, however all these employees are fitted into the scalar chain and given the opportunity through hard work and efficiency to progress into a higher status level with a greater amount of authority and power associated with it. A simplistic form of the scalar chain for Hell’s Pizza is as follows:

The scalar chain developed to help Hell’s Pizza New Zealand to motivate their workers and enforce authority has limited effectiveness. While it does work in terms of motivation the scalar chain does not aid in enforcing the authority of certain superiors. Theoretically the scalar chain should function without flaw; however this is assuming that the thirteen other principles described by Fayol are fully functional. In the case of some Hell’s Pizza stores (not all) the duty managers and/or higher level employees are not respected and therefore a proportion of or even all the orders from this individual are disregarded. This freedom of choice in accepting orders is known as the ‘acceptance theory of authority’ (Samson & Daft, 2005). In terms of motivating workers the scalar chain meets its purpose; when workers are first employed they started at a low level, generally a general employee, however after spending a length of time as an employee and showing a set of skills and hard work an employee is likely to receive a promotion to a higher level of authority. The motivation of achieving a greater level of authority and power is coupled with the opportunity of a larger pay, which aids in motivating the workers to progress up through the scalar chain.

Division of labour, or division of work as referred to by Henri Fayol, is about dividing a task up into several smaller tasks for employees. This means that an employee can become specialised in a certain area. An employee that becomes specialised in producing one product or producing a single part of a product will be able to focus his skills into becoming more efficient in a single area of the organisation rather than in several areas. This limits the need for training and makes learning better techniques easier. A specialised employee by theory will be more productive than a non specialised employee.

The idea behind specialisation or division of work according to Henri Fayol is increase the efficiency of an organisation, allowing them to produce more of a product at a greater level of quality, but by using the same amount of effort that would be consumed by a non specialised organisation (Fayol, 1967). To achieve this division of work minimises the number of objects a single employee needs to pay attention to and concentrate on; this allows a greater level of concentration on a single area in production increasing the level of expertise in that area, specialisation also eliminates the time it takes for a worker to switch from one job to another and provides an environment for invention (Stiglitz & Walsh, 2006). For an organisation to become more efficient generally means that they are making a greater level of profit in the same time period and/or at lower costs; a specialised work force needs only to be paid for their skills (this often means the employees of companies such as McDonalds or Hell’s Pizza are lowly paid) saving the organisation money in terms of wage cost but at the same time increasing the level of output.

In the New Zealand organisation, Hell’s Pizza, the employees are trained in certain areas, dividing the work load up into several sections. Fayol’s theory of specialisation is demonstrated at two levels in this organisation. When an employee first comes to Hell’s Pizza they are given a basic training (lasting no more than half an hour) on each individual job within the store, however they are trained thoroughly in one particular area, such as ‘make’ (this is the physical making of the pizzas). There are several subsections of the production of pizza at Hell’s; these are: phones and counter (taking the orders), fryer (cooking the deep fried food), cut (cutting and boxing the pizzas), make (applying the toppings to the pizzas), driver (delivering the pizzas) and managerial roles (organising and controlling staff). However on a busy night these jobs are divided even more thoroughly making workers even more specialised, for example ‘make’ would be broken down into three areas, the application of: vegetables, meat and cheese. Fryer is also broken down into cooking and packaging, making employees more specialised and productive.

In this particular organisation the concept of division of labour works extremely well and is quite effective. This principle needs to be balanced and according to Fayol (1967) has limits that should not be exceeded. Hell’s Pizza seems to have found this balance with specialisation maximising efficiency in it employees but not producing brainless unmotivated staff. Within this organisation the purpose of division of work has been reached, with workers specialising in specific areas in order to produce the products at a greater pace and great quality; allowing a larger profit to be made by the organisation. However specialisation does have a down fall, the reduction in skills of an individual worker lead to a reduction in the average pay rate of employees of that organisation (Fitzsimmons & Fitzsimmons, 2006). Due to division of labour allowing a company to pay only for the skills that is required to perform a specific task a low paid work force becomes less motivated to do well.

The Frenchman Henri Fayol put together the fourteen principles of administrative theory, and although adapted due to changes in the industrial environment, these principles are still visible in organisations, such as Hell’s Pizza, today. Both the principles of division of labour and the scalar chain are evident, and used effectively to fulfil their purpose, in Hell’s Pizza as an organisation and work force. Although some components of these principles are used more effectively than others, Fayol’s approach to management has proved useful in the productivity and efficiency of business’ over eighty years after his death. The use of division of labour or specialisation by Hell’s Pizza proved extremely useful in boosting productivity and when used effectively, as done by Hell’s Pizza, the rewards of specialisation are great. As well as specialisation; the use of the scalar chain to motivate and enforce unity of command and authority aided in the up-rise of greater productivity within Hell’s Pizza.

Word Count: 1608

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Reference List


1) Dafermos G.N (2001) Management and Virtual Decentralised Network: The Linux Project, http://www.firstmonday.org/issues/issue6_11/dafermos/, First Monday
2) Fayol H. (1967) General and Industrial Management (Paperback Edition), Great Britain, Photolithography Unwin Brothers Limited
3) Fitzsimmons J.A. & Fitzsimmons M.J. (2006) Service Management (Fifth Edition), United States of America, New York, McGraw-Hill/Irwin of The McGraw-Hill Companies, Inc.
4) Samson D. & Daft R.L. (2005) Management (Second Edition), Melbourne, Thomson Learning
5) Stiglitz J.E. & Walsh C.E. (2006) Principles of Micronomics (Fourth Edition), United States of America, New York, W. W. Norton & Company

An Evaluation of Post Bureaucracy

The idea of post bureaucracy has been around for several decades, arising as a proposed answer to the flaws of the bureaucratic system. However, while the idea of post bureaucracy is designed to rectify these short comings, the critical approach suggests it has several pitfalls. This essay will critically evaluate the major imperfections of post bureaucracy and endeavour to make a suggestion on how the negative effects can be minimised. Although many companies such as McDonalds like to view themselves, and claim that they are, post bureaucratic, many academics such as Heckscher and Donnellon claim that there is no such thing as a pure post bureaucratic organisation. They do, however, acknowledge the existence of the central ideas of post bureaucracy in several organisations such as the Saturn Corporation, GE-Canada and Shell-Sarnia. These fundamental aspects of post bureaucracy, “trust, empowerment, personal treatment and shared responsibility” (Knights & Willmott, 2007), are the issues which this essay will analytically discuss, exploring the mainstream and critical views of each. These attributes also double as Knights and Willmott’s definition of post bureaucracy. Overall this essay will demonstrate that while the quintessential principles of post bureaucracy have positive implications, the potential negative effects vastly outweigh the benefits for a pure post bureaucratic organisation.

Trust is an important feature of the post bureaucratic system. While the idea of trust between employers and employees in an organisation is desirable and can lead to many advantages, it can also be socially and economically costly to the business. The idea of post bureaucratic trust refers to a lack of rules and discipline, and the use of normative control. It acts on the assumption that employees and customers are motivated by a desire to serve the organisation they are a part of, as well as to do the right thing. It assumes that an implication of rules would likely be detrimental to the organisations relationship with its employees and customers. From a mainstream point of view trust in post bureaucracy is believed to be a combatant against the demoralising onslaught of regulations and rules within bureaucracy. It is designed so that employees, customers, and other stakeholders of the organisation feel as if they are a vital part and essential to that organisations function. The aspect of trust also allows for personal emotion and judgement to arise, which is closely linked with the other characteristics of post bureaucracy. In others words, the concept of trust is used to the ensure happiness of all the people related to the organisation. A successful occurrence of this is within the Hells Northcross store, where general staff are trusted by the managers of the organisation enough that they are given the password for issuing monetary discounts to customers. The privilege of having this information could easily be misused and cause Hells Northcross a lot of monetary loss if the staff used the password for personal gain. However the failure of this post bureaucratic hall mark is evident in many website community organisations, such as ‘Christ Almartyr’, ‘Audiobooks For Download, Your Number 1 Source’ and ‘Totally Free Movie Download’. Although these particular organisations have few, if any, employees, the trust aspect is between the organisation and its customers. These websites do not necessarily have a particular rule or disciplinary measure restricting its users from abusing the material and service they provide. Instead they rely on trust, and the honesty of that user. These particular organisations allow access to copyrighted material for free, but instead of having the rules and regulations in place that a bureaucratic organisation would have, ‘Christ Almartyr’, ‘Audiobooks For Download, Your Number 1 Source’ and ‘Totally Free Movie Download’ assume that the people visiting the website will not misuse their services. However, while this is an ideal situation, it is rare for an organisation like this not to be exploited by any individual. For example websites such as these almost halved the revenue of the film industry in Hong Kong between 1997 and 2004 (“In 1997, Hong Kong-made films generated HK$700 million in revenues. By 2004, this had almost halved to HK$380 million, a decline that has been largely attributed to piracy.” (Rochester, 2008)). It is evident from these figures that the ability to download copyrighted material is being abused, and the confidence of organisations has been broken. This illustrates that the trust aspect of post bureaucracy is flawed and defective as suggested by the critical approach.

Alongside trust, empowerment is a major component of post bureaucracy. It represents organisations awarding power and authority to those lower in the organisational hierarchy (Knights & Willmott, 2007). The intention of empowerment in the post bureaucratic society is to create an environment where the organisations employees are empowered enough, and awarded the ability to make decisions, so that they begin to feel as a sense of individuality and personal identification with that organisation (Iedema, 2003). Although the fundamental ideals behind empowerment are exhilarating and in the right environment would allow a business and other types of organisations to flourish, the critical approach would have us believe that there are some considerable downsides to allowing the empowerment of employees in a work place. While in the perfect situation, empowerment would allow the organisations workers to function without managerial governance and effectively increase the organisations performance efficiency, the human element is responsible for disintegrating this potential. People as whole are unpredictable and potentially irrational; because of this the empowerment of employees is an impending disaster for business. In keeping with the Hells Northcross example, the staff privileged with the knowledge of the manager’s password are empowered. If one of these staff members were to betray the trust of their employer and use the information they were empowered with for personal gain, applying discounts to orders where none should be given, the business would suffer economically. While this example is hypothetical and has only a small effect on the business, empowerment can cause much more devastating effects, including the liquidation of organisations. In a large organisation, for example an innovation firm such as IdeaConnection, the empowerment issue can be even more costly and occur further up the hierarchical ladder. Assume one of IdeaConnection’s empowered employees made a decision based on their own limited experience and expertise. Because the idea of empowerment is to allow employees to construct, and implement, such decisions without the prior approval of higher authority the statistical probability of an incorrect and detrimental decision being put into practice increases dramatically. IdeaConnection is an organisation designed to, and a self proclaimed problem solver for the good of the public (Online Data Services Ltd., 2007). This means that IdeaConnection is an organisation which other organisations and business can look to and confide in, when it comes to their problems. If the situation occurred where an employee of IdeaConnection made an inadequate and grave decision on the behave of the company hiring them as a consultant, the ramifications could result in massive monetary loss, job loss and even liquidation for that organisation. Although many of the arguments for and against post bureaucracy are based purely on theory as a result of lack of physical evidence, the potential for disaster is extremely clear. The critical analysis of the theoretical data exemplifies that the post bureaucratic system is far from perfection.

The organisation system of bureaucracy has an underlying emphasis on impersonality, post bureaucracy on the other hand emphasises personal treatment. The problem with impersonality in organisations is the fact that the distance created from treating the stakeholders as if they don’t matter breeds alienation. Post bureaucracy set out to amend this negative impact. To do this personal treatment arose, however while personal treatment does negate the feeling of being just another cog in the machine (Kamenka & Krygier, 1979), it creates its own problems. According to Heckscher & Donnellon the ideal post bureaucratic type has people treated as individuals (Heckscher & Donnellon, 1994). The idea behind treating the stakeholders (employees, investors, and customers) as individuals is so that there is no alienation, and all the individuals associated with the organisation are satisfied with their role, or roles, within and concerning that organisation. Along with the other fundamentals of post bureaucracy, the flexibility entailed in personal treatment is all about the emotional well-being of the people involved with an organisation. When successfully executed, personal treatment can make an experience with an organisation bearable when it would otherwise be demoralising and painful for the individual. Trade Me New Zealand while predominantly a bureaucratic organisation does however employ the post bureaucratic ideal of personal treatment and is a prime example of successful execution of this aspect. Even though each customer is given a member number they have the ability to select a name for themselves, such as sentosa1, and when they contact the organisation for advice or about an issue relating to their experience within the Trade Me organisation the email responses are personalised and use the individual’s name. This, while accurately addressing any issues presented in the users email, assures the individual that they are being looked after and are in fact a valued member of the organisation. While Trade Me can effectively employ the use of personal treatment, many other organisations both in New Zealand and all around the world suffer the pitfalls of this feature of post bureaucracy. Personal treatment, literally means to treat each individual personally, this often, and undoubtedly, leads to discrimination within the organisation. Prejudice and discrimination in a post bureaucratic organisation are unavoidable, whether an individual be discriminated against because of ethnic background, gender, religion or sexual orientation, personal treatment can effectively eliminate the chance of organisation recruiting and employing the best possible staff for the job. Discrimination against employees is not the only worry. Customers may also be discriminated against negatively impacting on their experience with that organisation. An example of the negative effects of personal treatment can be seen in job applications. If a single position was available and there were multiple applicants, it is possible that the employer could make a decision based on personal bias rather than what is best for the organisation. The employer may discriminate against an applicant because of their sex, for example, and consider only the male applicants where in fact it was the female applicant who was best qualified for the vacant position. Because of this, while the idea is genuine, personal treatment and post bureaucracy is not the optimal system for organisation, particularly when dealing with the task of employment.

Shared responsibility is an equally important part of the post bureaucratic organism (Knights & Willmott, 2007). With the post industrial era emerging in the 1970s, shared responsibility within organisations was given increasingly more emphasis. It is based around the idea of involving everybody in the work place and gives all the organisations employees a voice. This means that the tasks, and responsibilities that come with them, within an organisation are divided up and allocated to the employees based on competence regardless of their hierarchical status (Heckscher & Donnellon, 1994). It also refers to the segmentation of responsibility spread between several project and functional managers, removing the dictatorship effects of a single authoritative figure. Shared responsibility is designed to satisfy the desire for autonomy in workers and a world in which their personal opinions are recognised and count in the broader context (Kamenka & Krygier, 1979). While this overlaps with the idea of personal treatment, shared responsibility approaches the ‘cog in the machine’ problem from another angle, aiming to boost morale through awarding employees with greater liabilities. In the ideal post bureaucratic organisation, shared responsibility will allow the concepts of the most qualified employees’ minds to flourish regardless of the hierarchy structure. However, this can also be detrimental to the organisation. Assume that responsibility was allocated out to various employees, this would confuse the centralised control and hierarchical authority within the organisation. This can lead to decisions being made, and policies being implemented, that harm the organisation. The loss of control is one of the three significant downfalls of the post bureaucratic system, coupled with this, is the increased risk. Shared responsibility brings these two chief issues into a reality, emphasising the negative effects of post bureaucratic trust and empowerment. While many organisations such as JB Hi-Fi and several government departments do not employ shared responsibility in the sense of low level employees being allocated high level responsibility, they often use shared responsibility in a more bureaucratic way. Division of labour is one the key elements to bureaucracy, JB Hi-Fi uses this element when it comes managerial staff, departmentalising the responsibilities into multiple sections with each branch being allocated a separate manager. Through this JB Hi-Fi is able to respond to customer needs quickly and efficiently, because the managers are able to focus on one particular category of the organisation. This example of shared responsibility at the management level within an organisation illustrates the potential benefits of it successful execution. However, if JB Hi-Fi were to increase the level of shared responsibility, leaking the managerial duties down the hierarchical ladder to the bottom level employees, the probability for errors increase dramatically and the organisation would imminently start to lose control. While the danger associated with shared responsibility within organisations is clear through critical analysis, it is also obvious that there are considerable advantages indicating that the post bureaucratic system is not entirely flawed when applied in moderation.

In my personal opinion, while post bureaucracy has several aspects which may be inviting from both an employer and employee perspective, as the mainstream approach would like everyone to think, the critical approach suggesting there is several flaws in the organisational system has a legitimate argument. From examining organisations and the resources relevant to post bureaucracy, it is my opinion that a purely post bureaucratic organisation does not, and will not, exist. However I believe that the fundamentals of post bureaucracy will be kept alive in some form through an ever changing organisational structure, balancing the aspects of both bureaucracy and post bureaucracy. This hybrid structure will soon become the dominant organisational structure throughout the world, as organisations try to find the most efficient and successful way to operate. It is my opinion that post bureaucracy will not take over the bureaucratic form, but instead be absorbed into it, forming the hybrid structure.

Through the critical evaluation of the key attributes of the post bureaucratic system, examining both the mainstream and critical approaches of its application in organisations, this essay has shown that the potential for economic disaster vastly outweighs the benefits that it offers. While the idea behind post bureaucracy has merit, a purely post bureaucratic organisation would suffer from its obvious deficiencies caused by the trust, empowerment, personal treatment and shared responsibility aspects of the organisational system. The same can be said about an organisation that is purely a bureaucracy. Ironically the downfalls of post bureaucracy can be solved by using the organisational system it set out to correct, bureaucracy. Because of this it is apparent that the most successful businesses of the future, and present, would be those that are able to the balance the fundamentals of both bureaucracy and post bureaucracy within their organisation, thus creating a hybrid structure. This alternate view, the hybrid system, will become the dominate form in organisations and would be easily able to keep the impersonality aspect of bureaucracy without alienating employees or customers as well as have some rules and regulations in place while being flexible and adaptive. Overall, regardless of the positives behind the post bureaucratic system the pitfalls will cause an evolutionary change in organisational structure, with the hybrid system being the child of this evolution.





Word Count: 2607

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References:

Knights, D., & Willmott, H. (2007). Introducing Organisational Behaviour & Management. London, United Kingdom: Thomson Learning.

Rochester, A., (2008). What Effect Has BitTorrent Had On The Media Industry? Reading Room. Retrieved March 23, 2009, from http://www.lawdit.co.uk/ reading_room/room/view_article.asp?name=../articles/7006-What-effect-has BitTorrent-had-on-the-media-industry.htm

Iedema, R., (2003). Discourses of Post-bureaucratic Organization. Amsterdam, the Netherlands: John Benjamins Publishing Company.

Online Data Services Ltd. (2007). IdeaConnection. About the Company. Retrieved March 23, 2009, from http://www.ideaconnection.com/about.html

Heckscher, C. & Donnellon, A. (1994). The Post-Bureaucratic Organization: new perspectives on organizational change. Newbury Park, CA: Sage.

Kamenka, E. & Krygier, M. (1979). Bureaucracy: The Career of a Concept. London, United Kingdom: Edward Arnold.

New Zealand's Microeconomics: A Look Into 'The Fat Tax'

Obesity, defined in the medical dictionary by Dr. Frances Mackenzie as existing “when bodyweight is 20 percent greater than normal” , is a growing problem in all the western countries, including New Zealand. In order to ameliorate this problem the consumption of calorie dense and high fat food must be minimised. One suggested method of doing this involves the government passing a “fat tax” which would increase the prices of high fat foods; potentially decreasing consumption. In order to predict the impact of the “fat tax” research and an economic analysis must be conducted. For the most accurate result the analysis should compare the “fat tax” to an alternative method, aimed at decreasing consumption, and a prediction and recommendation of action should be made.

According to a news article on Television New Zealand’s website scientific testing on biological effects has indicated that fast food and other high fat foods are mildly addictive. The fat content causes the person to slowly become more and more resistant to Leptin and Galanin, hormones that control eating behaviour. The lack of effect from the Leptin and Galanin hormones means that the consumer is unable to control his or her eating habits, and therefore will eventually eat themselves into obesity. The addictive aspect of high fat foods means that the demand becomes slightly inelastic.

Price elasticity, the responsiveness of a good or service to a change in the price of the commodity, is very important when calculating the effect of a tax or subsidy. It enables the prediction of the effect of the government’s intervention, thus its effectiveness. In this case we see that fast food, and other fatty food’s, have an addictive element; this means that the commodity may become a necessity for some consumers. If a good is a necessity will mean that it is price inelastic. When a good or service is price inelastic a price change in that good or service will evoke a less proportionate change in quantity demanded. The inelastic nature of high fat foods indicates that the proposed “fat tax” will cause the price of the goods to increase but quantity demanded will decrease only slightly (less proportionate than the change in price), as illustrated below in diagram (A).

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The diagram above shows an imaginative tax of $4. This $4 tax increased the price of the commodity by $3.50 but only decreased the consumption by a quantity of 2. Price increased by 3.50, quantity demanded decreased by 2. This diagram does not show the exact effect that the “fat tax” would have on consumption of high fat foods; however it does give a good indication.

Consumer surplus is the difference between what the consumers pay at equilibrium and what they are willing to pay for fewer units, similarly producer surplus is the difference between what the producers are being paid at equilibrium and what they are willing to be paid for fewer units. When a sales tax or subsidy is implemented upon a good or service the nature of the commodity decides whether the tax will be paid for mainly by the consumer or the producer. The vast majority of cases will see a change in both consumer and producer surplus. In a situation such as the proposed taxation of high fat foods (an inelastic good) the majority the ‘incidence of sales tax’ will be forced upon the consumer, thus meaning that the consumer surplus will decrease more than the producer surplus.

Although product taxation is an easy method for the government, and means that only those who consume the commodity will pay the tax, the inelastic features of addictive commodities mean that the government has not reduced consumption greatly. Therefore an alternate method may be employed, such as subsidising an advertising campaign or healthier products. The New Zealand government has subsidised advertising campaigns throughout New Zealand to help reduce the level of high fat food intake. Campaigns such as the ‘5 Plus a Day’ have had government aid when it came to advertising costs. Also McDonalds have introduced their fresher, greener, healthier menu accompanied by a massive advertising campaign promoting the health meals, although this is not subsidised by the government the morals of this change in McDonalds menu is complementary to the purpose of the ‘fat tax’ and follows the idea of subsidising healthy food products. The government subsidy on healthier foods has the opposite effect as a tax, the price of the commodity decreases and the quantity demanded increases.

Both the taxation and subsidies mentioned above will affect the mind set and/or consumption of high fat foods but the affect of a single method is minimal. In order to get a much greater change in eating habits the government should employ both methods. Tax collected from the sale of high fat foods and use the revenue received to fund the subsidy of healthier foods and advertising campaigns. The combination of taxation on demerit foods and subsidising merit foods would create an influential market change. The taxes will decrease the supply and consumption of high fat foods whilst the subsidies will increase the supply of and consumption of healthier, beneficial foods.

The addictiveness of fatty foods, due to the fat breaking down Leptin and Galanin hormones which control eating behaviours, means that the proposed taxation of high fat foods will cause price to decrease but only a less proportionate decrease in quantity demanded, the demand curve is price inelastic. The inelasticity of high fat foods in New Zealand causes the majority of the tax to be paid for by consumers rather than producers; in order to reduce consumption even further the New Zealand government could re-circulate this money, investing it into an extensive advertising campaign for healthier foods as well as subsidising companies which sell those health conscious products. Employing both the methods of the ‘fat tax’ and subsidising healthy food would be a productive and cost effective means of reducing the obesity in New Zealand.

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Resources

Books:

“Family Health and Medical Guide” by Dr. Frances Mackenzie published Penguin Books Ltd in 1991

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Internet sites:

“Could Fast Food Be Addictive” published 30/01/03 http://tvnz.co.nz/view/page/425826/164983

“Fight the Obesity Epidemic newsletters” published 27/08/04 http://www.foe.org.nz/archives/22ObNews27Aug04.doc

“Gareth Morgan on a Fat tax” published 08/11/05 http://articles.garethmorgan.com/fat-tax_1036.html

“Cutting the Fat; How a Fat Tax can help fight Obesity” published 24/08/04 by Diabetes New Zealand and Fight the Obesity Epidemic, Inc.

“Needed: One Billion dollars to fight Fat” published 24/08/04 by Diabetes New Zealand and Fight the Obesity Epidemic, Inc.

New Zealand & The OCR

Over the last four to five years the New Zealand government has faced and dealt with a number of different challenges in the New Zealand macroeconomy. These challenges have been meet with policies imposed by the policymakers in order to keep the economy under control. On April 24th, 2008 the Reserve Bank of New Zealand (RBNZ) posted a news release entitled “OCR Unchanged at 8.25 percent”. The statement elaborates on the potential challenges the New Zealand macroeconomy is facing and may face over the next year. These challenges indicate bear market activity for the New Zealand economy, with a decreasing rate of supply, demand, investment and net exports and also the inflationary problem. These challenges arising in the New Zealand macroeconomy are dealt with by the government regularly through the likes of the Official Cash Rate (OCR), exchange rate intervention, taxation, subsidies and tariffs. Each policy is specifically designed to influence one area of the economy, focusing on that area and improving its condition.

The OCR in New Zealand is set by the RBNZ, and regulates the interest rate at which banks can borrow money, thus indirectly setting the personal interest rate for both borrowing and investing. Inflation is a concern in all economies, as it is an increase in the general price level of goods and services, indicating that the value of money has decreased and potentially causes a fall in the standard of living . The rate of inflation in an economy is affected by inflationary factors: money supply, interest rates, consumer demand, cost of production, terms of trade, productivity, overseas prices, the exchange rate and inflationary expectations. A change in the OCR would be directed at influencing the interest rate, potentially decreasing or increasing consumer demand (expenditure), interest rates and investment, thus the money supply (as investment increases the money supply increase and vice versa). However Mr Bollard (Reserve Bank Governor Alan Bollard) has decided to keep the OCR at its current level in order to meet the PTA (Policy Target Agreement) stating that inflation must remain between 1% and 3% on average over the medium term . Although short term inflation is expected to remain at a high level, with prices rising quickly, the RBNZ is confident that the weakened economy in NZ will begin to ease these pressures . According to Allan Bollard the high OCR will be beneficial in the long run by stabilising the economy, which has fallen into uncertainty after the failure of overseas economies, and keeping investment in NZ high by having a high interest rate, thus increasing the money supply.

However the Reserve Bank may wish to consider the short run implications of leaving the OCR at such a level. With the economic doubts cast over economies throughout the world, fuelled by the collapse of financial organisations in America, the government may want to look at stabilising the NZ economy quickly and reduce inflation. Leaving the OCR unchanged at 8.25 percent means that inflation will continue at a high rate pushing the prices of goods and services higher and higher, which will decrease the aggregate demand and supply even more; putting greater pressure on a weakened economy. Although a high OCR means a high rate of return on investments and encourages individuals to invest in the NZ economy, the global economy is in doubt, meaning that investment will be low even with a high rate of return. Therefore it may be better for NZ to ease inflation immediately rather than trying to increase the money supply. The Reserve Bank should consider lowering the OCR to stimulate consumer demand and boost the overall wellbeing of the economy. The government has announced a policy in order to increase disposable income; it will do this by implementing tax cuts. The increased disposable income will allow consumption and investment to increase, thus Y↑=C↑ +I↑+G+NX. The high NZ dollar is also contributing to counter the effects of inflation (high exchange rate) but this causes a decrease in the number of goods exported as they are now relatively expensive, thus Y↑=C↑ +I↑+G+NX↓.

Investment in the NZ economy is decreasing due to the instability in economies around the world. The low level of investment is having a domino effect throughout the economy, decreasing the money supply (as money generation cannot exist without investment) and adding to high inflation rates. The Reserve Bank acknowledges the low investment, saying “There have been sharp falls in consumer and business sentiment…” indicating a decreasing level of consumption as well as investment and the productivity growth rate, causing the standard of living to decrease. However in response to the low investment levels the government can implement several policies to boost this sector of the economy. Tax deductions free up personal income allowing the economy to increase total investment, although a lot of New Zealand’s investments come from overseas. Income tax cuts would not influence foreigners to invest in NZ. In order to do this the government may consider lowering the tax on interest received (further again boosting investment from New Zealanders but also increasing foreign investment in NZ). Alternatively in order to increase the standard of living and investment the central bank may choose to conduct Open Market Operations (OMO), this is when the government buys or sells government bonds to/from the public. When the government chooses to buy back government bonds it causes an increase in the money supply of the country, increasing investment, and consumption. Another way of increasing the money supply is if the RBNZ lowers the reserve ratio, allowing banks to issue more loans to the public. A similar tactic was used in February 2006 to deal with liquidity problems, where the RBNZ increased the Settlement Cash rate to $2000 million . Although the RBNZ has decided to keep the OCR unchanged it is possible, as a last resort, to increase investment from abroad by increasing the OCR to a point where the gains of investment in NZ out weigh the risks of an unstable economy.

The rate of investment and consumption in an economy are closely linked. As well as the decreasing investment the government has to deal with the decreased rate of consumption. Allan Bollard mentioned in his press release that New Zealand’s “Economic activity has weakened more markedly than expected…” but continues on to say that this weakened market does not necessarily have purely negative consequences . The weak NZ economy will help ease the high inflationary rate. The decrease in the short run aggregate demand can easily be fixed through monetary policies, such as personal tax cuts to increase disposable income and increasing the money supply. However the decrease in aggregate supply is not as easily fixed in this case. The “dry summer” recently experienced will shift the short run supply curve to the left, but the high NZ dollar means NZ goods and services are now relatively expensive compared to those of other countries, thus decreasing exports, (↓NX), and increasing wages, due to inflation, will cause a shift in the long run supply curve. For the government to increase New Zealand’s long run gross domestic product (GDP) it may consider decreasing the natural rate of unemployment by imposing a higher minimum wage (which has recently occurred this year), or to subsidise businesses creating capital resources which increase the countries GDP and hence long run supply. A third possible policy would be to fund technological research, as new and more efficient technology increases an economy’s long run productivity. A further alternative to increase the long run supply of New Zealand’s economy is through economic reform, similar to that implemented in the 1980’s and 1990’s. This economic reform reduced the cost of resource allocation, leading to gains in efficiency throughout the economy . The gain in efficiency would increase productivity in the NZ economy, bringing up the GDP and therefore increasing long run supply.

The NZ economy is experiencing a decreased ratio of net exports. This change in the net export ratio can be caused by an increased value of imports or a decreased value of exports. The high exchange rate means that our products are relatively expensive to those from overseas. Because of this the value of our exported goods and services has decreased, decreasing the net exports (↓NX). A decrease in the net exports means that more money is following out of the country than in, relative to the NX ratio before the decrease in exports (for example pretend that before the high dollar NX = $0 meaning the value of exports matched the value of exports, but once the NZ dollar is high NX = $ -2, meaning that for every dollar imported into our economy, $2 exits to foreign economies). This decreases the money supply. Although the Reserve Bank Governor doesn’t go into detail on the decrease in net exports specifically in his statement, he does state that the “persistently strong New Zealand dollar…remains a drag on export growth” . Therefore it is apparent that low net exports are contributed primarily to the exchange rate. A government policy of controlling net exports, and thus increasing the net foreign income, is through the practice of exchange rate intervention. This policy is the most effective way of dealing with a problem with net exports and helps increase the money supply.

Overall these challenges faced by the New Zealand government and RBNZ have the ability to incite a bear market, bringing New Zealand’s economy to it’s knees. However the policies implemented by the government and RBNZ to deal with these challenges help protect the long run economy from, and limit the short run, economic slowdown. With various monetary and fiscal policies including personal and interest tax cuts, open market operations, minimum wage laws, business subsidies, research funding and exchange rate intervention the NZ economy can be spared from the high rate of inflation and decreasing aggregate demand and supply, investment and net exports which weaken our economy.

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References:

Visual:

1) Mankiw, N., Bandyopadhyay, D., Wooding, P. (2006), Principles of Macroeconomics in New Zealand. South Melbourne, Thompson Learning Australia.

2) Macro, M. (1998), Credit, Investments & the Macroeconomy. Cambridge, UK, the Press Syndicate of the University of Cambridge.

3) Reserve Bank of New Zealand. (1986), Financial Policy Reform. Wellington, Hutcheson, Bowman & Stewart Ltd.

4) Reserve Bank of New Zealand, Governor Allan Bollard. (2008), OCR Unchanged at 8.25 percent. Wellington, News Release.

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Electronic:

1) Reserve Bank of New Zealand (2006). Low Equity Investment Leaves New Zealand Vulnerable, retrieved 19/05/08, http://www.rbnz.govt.nz/news/2006/2406180.html

2) Reserve Bank of New Zealand (2008). Monetary Policy, retrieved 19/05/08, http://www.rbnz.govt.nz/monpol/

3) Reserve Bank of New Zealand (2008). The Monetary Policy Decision Making Process, retrieved 19/05/08, http://www.rbnz.govt.nz/monpol/review/0096438.html

4) Reserve Bank of New Zealand (2006). Reserve Bank to Raise Settlement Cash Level to $2000 Million, retrieved 19/05/08, http://www.rbnz.govt.nz/news/2006/2406180.html

5) University of Auckland, The. (2008), Econ 111 Macroeconomics Course Book Semester 1 2008, retrieved 19/05/08, http://cecil.auckland.ac.nz/Cecil.aspx?SessionID=5f30089a-3ed3-4762-9232-bdf3d3e0a993&UserID=06461baf-e0c0-4560-861a-4361361e8b6a

The Country of Origin Debate

The scale of the ‘Country of Origin’ debate in New Zealand has recently sky rocketed to a nation wide discussion promoted and encouraged by some political leaders such as Green MP Sue Kedgley (Country of Origin Label, 2007). Country of origin has already begun to make a large impact in the economic and industrial sector. As the environment (primarily the consumers of the businesses product and their ideals and concerns) of the businesses operating in New Zealand changes, there are massive effects on production and consumption of particular goods and services. The country of origin debate is based on the idea of mandatory labelling of products (especially food products), stating where the product was manufactured and packaged. A move towards country of origin labelling would see the decrease in the consumption of products produced overseas, particularly in ‘third world countries’ known for child labour, and an increase in the goods consumed that are made on New Zealand soil. From these initial effects of the country of origin labelling several more run on effects could occur, including increase in the price of locally produced goods, decrease in the price overseas goods and a wave of growth through New Zealand businesses and organisations.

Overseas companies supplying New Zealand with goods, or New Zealand companies manufacturing goods overseas will be negatively impacted upon by country of origin labelling. A label stating that their good is produced in a country outside of New Zealand will deter the consumers from purchasing the product, and possibly all the other products under that companies name, whether or not they are produced inside or outside of New Zealand. This decrease in demand for the companies’ products will cause a drop in the revenue collected from overseas produced goods. The loss in revenue, and thus profit, may possibly even force some small companies and manufactures out of the New Zealand market. Leaving it to be dominated by New Zealand made commodities. The decrease in demand will result in an economic response by the strong overseas manufactures. In order to minimise their loss of the market share a company may reduce the prices of their goods. This reduction in price will bring the market back to equilibrium and eliminate any surplus production (Stiglitz & Walsh, 2006). The declining level of consumption due to the mandatory country of origin labelling, and the markets environment change, would force the overseas companies to resort to such measures as price war and aggressive marketing. This change is an illustration of how businesses must adapt constantly to accommodate the ever changing population and ideas in their market, one of the major contributors to the companies environment.

For large businesses, whether they have local or foreign ownership, the concept of outsourcing is quite common. Outsourcing is where a company will search for the cheapest resources in an overseas market and then move their production to that country (Samson & Daft, 2005). For example Nike is an American company who produces in Asia, because of the cheaper resources. This is outsourcing. Large New Zealand companies also outsource production because of the cost benefits in doing so. The idea of products being outsourced from New Zealand is the basis for the country of origin debate, with consumers demanding to know which country their food, and other products, was produced in. Watties (of Heinz Watties Ltd), however, does not outsource production but uses product from overseas to mix with their own product. This is also a concern established in the country of origin debate; that companies may produce a product that they can call “Kiwi Made” but contains ingredients brought at the cheapest possible prices from countries all over the world. Both these methods of outsourcing labour and production and importing cheap goods are methods of minimising the company’s production costs. A company producing in New Zealand will incur greater costs than one producing in, or importing goods from, countries similar to and including Indonesia or Malaysia; due to government measures such as taxation and minimum wage imposed in New Zealand, land costs for factories, the cost of raw materials and various other costs involved in production. However despite this move towards a more “Made in New Zealand” or “Kiwi Made” society, large companies and business, like Watties, still continue to produce their product overseas, or use overseas product in their production, due solely to the major cost advantages involved.

The country of origin debate is essentially a positive prospect for New Zealand companies and companies producing in New Zealand for the New Zealand market. As the concerns of their business/market environment increase and consumers want to have more and more purely New Zealand made goods the sales and revenue of New Zealand companies will increase, possibly dramatically. Several years ago the ‘Buy NZ’, campaign supported by the government as mentioned in a journal article by Ernie Newman (1988), had already considered country of origin labelling for food, clothing and most, if not all, other imported products (Newman 1988). By law in New Zealand, at the present time, producers do not need to label products stating where they were made, imported from or the origin of the ingredients; however consumers in the New Zealand market have indicated clearly that they want country of origin labels to be made compulsory (Schneider 2007). The country of origin is already a demand factor when consumers are purchasing a product from supermarket selves and other outlet stores, however due to the current law on country of origin labels it makes it almost impossible for a consumer to know whether the product they are holding was made in Indonesia, China, the Americas or New Zealand. This means the country of origin demand factor is rendered irrelevant. If the New Zealand government to make country of origin labelling compulsory by law there would be a great impact on the sales of New Zealand made/produced products. The country of origin demand factor will have a major effect on sales, boosting New Zealand made goods sales higher than ever before. This increase in turnover and sales will give New Zealand companies a larger market base and allow for profit increases through the ability to increase price with minimal, if any, loss in sales. New Zealand made goods will become inelastic goods (Stiglitz & Walsh, 2006).

Elasticity of Demand refers to the responsiveness in quantity demand of a product to a change in the price. An elastic good has a proportionate or greater change in quantity demanded to a change in the price of that good or service. An inelastic good however results in a less proportionate change in quantity demand to a change in price, thus the price of an inelastic good or service could theoretically increase by ten percent and have no change in the quantity demanded (Stiglitz & Walsh, 2006). Due to the inelastic nature of New Zealand made products, companies who produce these goods will be able to charge a higher price for each item than what an overseas business can. This is price advantage for New Zealand made goods and services will increase the revenue and profit made from each individual sale. The extra profit produced because of the country of origin demand factor is extremely positive for New Zealand business, as more revenue and profit is generated and returned into the business the company will be able to grow and expand out of being the ‘typically small New Zealand business’ to potentially large organisation that could venture overseas. The country of origin labelling would positively affect three New Zealand groups, the consumers, New Zealand businesses and the New Zealand government. The consumers are positively affected as they wish to be able to decide whether or not to by products from other countries. NZ businesses are positively affected by growth and income (as mentioned above) while the New Zealand government will be able to reduce subsidy spending on small New Zealand manufactures as they will no longer require the assistance; leaving money in the budget for other areas; the nation gross domestic product (GDP) will increase and money coming into the government in the form of company tax will also increase. In turn this money saved and acquired from the New Zealand business growth will aid the consumer once again, possibly even leading to individual tax reduction. In addition to this the growth of New Zealand manufactures will require new jobs to be filled and thus open job vacancies in New Zealand owned businesses; potentially reducing New Zealand unemployment rate.

The overseas producing companies who have outsourced or imported cheap overseas product have the cost advantage over New Zealand producing organisations with minimal monetary expenditure in the production of each product, however the New Zealand producing companies have the price advantage, with the ability to sell their product for a much higher price than the overseas producing companies without losing consumers.

The cost advantage held by the overseas producing companies is due to the ability to find the cheapest resources and utilise them outside of New Zealand. A company in this position may even outsource completely (if they are a New Zealand company producing with overseas products) to another country, most likely the country from which they can buy the cheapest resources. The factory and majority of staff may be situated in a country other than New Zealand, for example Indonesia, and the head office in New Zealand could import the cheaply made products into the New Zealand market. With country of origin labelling this product would have to state it was produced in Indonesia not New Zealand. The utilisation of the cheap materials and resources in countries outside of New Zealand by companies such as Watties allows for minimal cost expenditure giving the overseas producing companies a major advantage over New Zealand producers. NZ producers entail a much higher production cost due to the cost of raw materials and resources in New Zealand. However they are able to call their product “100% Kiwi”.

Although the cost advantage is on the side of the overseas producing companies the price advantage is given to the New Zealand companies. The pure, 100% Kiwi made image associated with the New Zealand made products give them an inelastic quality. This inelastic quality acquired by the New Zealand products enables the companies and organisations producing them to charge a much higher price per item than the overseas producers. The overseas producers, such as Watties, have an elastic quality with their products; in terms of the country of origin demand factor; due to the lack of the pure, 100% Kiwi made image. The elasticity of the overseas goods means that an increase in price will cause a decrease in the quantity demanded. If an overseas producer charged a high price for their products there will only a small amount of people will and able to purchase the products, thus the companies could potentially make a negative accounting and economic profit. However if the producer/company was to charge a lower price, possibly only slightly above cost, cutting the profit made on each individual commodity/good, they could continue making a stable profit from those unable to afford the more expensive, luxurious New Zealand made products. Therefore the New Zealand companies, producing in New Zealand, have the price advantage, controlling the ability to set the price of their goods.

The country of origin debate is not a new debate in New Zealand. Consumers showed concern for the origin of the products they were purchasing two decades ago, but recently with the help of campaigns led by political leaders such as Green MP Sue Kedgley, the country of origin debate has escalated to the point where consumers are beginning to demand that products, such as food and clothing, have country of origin labelling. Mandatory country of origin labelling will greatly affect New Zealand as a whole. The government would experience a rising gross domestic product and an increase in collected business tax. This would be due to the higher demand for New Zealand made products, and thus the growth of New Zealand businesses. Consumers would experience a higher quality product and a greater freedom of choice (a higher level of knowledge in the market) and New Zealand producing business will see a rise in sales and revenue and potentially profit leading to expansion and growth. Overall the idea of mandatory country of origin labelling would benefit the New Zealand community, business, government and consumer.

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References:

1) Country of Origin Labels (2007) Should All Food Have A Country of Origin Label?, New Zealand, The New Zealand Herald

2) Stiglitz J.E. & Walsh C.E. (2006) Principles of Micronomics (Fourth Edition), United States of America, New York, W. W. Norton & Company

3) Samson D. & Daft R.L. (2005) Management (Second Edition), Melbourne, Thomson Learning

4) Newman E. (1988) Buy NZ campaign needs country of origin labels, Auckland, Manufacturer Magazine

5) Schneider S. (2007) Label Lies, New Zealand, FitnessLife