Ethical Issues Faced by Multinational Firms Assignment Sample

• Subject Name : Management

Samsung Electronics Using Child Labor in China

Abstract

Samsung is an electronics company with its headquarters in South Korea. The company is among the top electronics manufacturing organization. Despite its top class products and services to the customers, the company was alleged by the Chinese government for not following the legal working laws and employing children in their manufacturing plants. This report focused on the ethical issues faced by Samsung. For this analysis, PESTLE analysis was used, which discussed the political, economic, legal, technological, and environmental issues for the organization in Korea and China.Chinese government allegations have given Samsung a huge loss in the Chinese market. Rebelliousness to guidelines can bring about legitimate forfeits that can cause immense disasters for business. However, the organizational culture of Samsung exemplifies the lasting planned aims for possessing the organization’s ruthless position globally.

Table of Contents

Introduction.

Overview of the ethical issue.

PESTLE analysis.

Political

Economic.

Social

Technological

Environment

Legal

Organizational culture.

Passion for fineness.

Employee development opportunities.

Ethical endowment for unity.

Importance on opulence for all

Analysis of ethical issues.

Conclusions.

Recommendations.

References.

Introduction

Samsung Company is outstanding amongst other mobile companies globally. It has advanced internationally all through different markets by having a well-known supply network and industries in China and numerous different nations. Moreover, Samsung has put forth its attempt by showcasing its products with the activities to seize a bigger share of the market (Bondarenko 2020). In any case, nations that have diverse political guidelines, societies, and factors, etc. would influence the vital development for Samsung, for example in China, the company was suspected of utilizing child labor work. Since 1949, despite prodigious developments made in dropping child labor in China, the enactment has not been exterminated and certainly seems to be increasing (Agence France-Presse 2018). 

In light of the claims of child labor by a Samsung industry in China, actions can be taken by the owner of the organization's international supply network. This will lead to the progress of Samsung in the direction of guaranteeing that dealers are considered responsible for their activities. Regardless of the way that Samsung had recently found a way to screen their dealers, for example, executing an advanced facial acknowledgment framework just as utilizing outsider reviewers to review their processing plants (Shelly 2018). These measures were inadequate in preventing certain industrial facilities from utilizing child labor. This report will discuss the ethical issues faced by Samsung such as child labor. Along with this, the PESTLE analysis of Samsung will also be discussed for China (host country) and Korea (Headquarters). Furthermore, measures to be followed by the company for avoiding similar problems in the future will also be discussed. 

Overview of The Ethical Issue

Samsung Electronics manufactures cell phones and electronic items. Samsung was initially established by Lee Byung-Chulin the year 1938 in Taegu, Korea (Bondarenko 2020). Samsung was first commenced as exchanging organization that trades groceries to China and today it has developed a global enterprise. In 1958, Samsung ventured into enterprises, for example, transport building, synthetic concoctions, etc. throughout the 1970s before proceeding onward during that time to the year 1969 (Bondarenko 2020).Samsung succeeded from its innovative perspectives in the DRAM business for figuring experience all through Samsung Electronics has completed sophisticated progress and deals. By improving products and advertising them out in huge quantities to different nations cleared a path for spreading the business overseas. Samsung, the broadly perceived electronics with its headquarters in South Korea, keeps on battling with its industries which keeps on utilizing child laborers.

In China, three girls of age 15 years were interviewed as they worked for one of the factories of Samsung (Agence France-Presse 2018). This report emphasizes how Samsung combats to actualize its policies to prevent child labor in their plants. Indeed, even as China's work circumstances have enhanced, it is hard to authorize organizations' policies. Children obtained employment in this production line through a "labor dispatch framework" that makes it simpler for child workers to fill the interest for laborers in anticipation of the surge in orders before the season.

Samsung has a zero resilience rule for child workers, to such an extent that they require the laborers in their industries to be more than 18 even though the legitimate employee age is 16 years in China (Agence France-Presse 2018).Despite Samsung's supposed consistent reviews of manufacturing plants, China Labor Watch, a toil rights assembly, found “a few kids utilized without work contracts, working 11 hours of the day and just being paid for 10 hours” (Agence France-Presse 2018). Even though Samsung's endeavors to forestall child labor in their manufacturing plants in China appear to be true, there is simply too much work around these children that has permitted them to dodge the work laws.

PESTLE analysis

Political

Politically, Samsung needs to take the comprehension of strategies controlled in various nations. For example, few governments might secure their local electronic products in the market. This forces a higher tax or confined amount for importing products abroad. This is because a few contenders may have government agreements and Samsung needs to recognize its items to rival contenders. In Korea, Samsung is treated as chaebol, which means that the company has close connections to the government. The company has received much support from the Korean government in the form of taxes, loans, and subsidies. Right now the association works more than 80 countries and terror of distress created domination embodies another noteworthy assessment to the even waged of the commercial.

In China, political risks are more because of widening wealth gaps and major industrial fortunes. However, with rapidly changing geographic conditions, increased income of public and an open business environment helps companies to start their business in the Chinese market. According to the Chinese working law, the minimum age for workers is 16 years. Samsung industries in China were charged by the “China Labor Watch” association for abusing child labor in their plants (Agence France-Presse 2018). It would be genuinely influencing Samsung's brand value and supply networks which were also blamed for employing children under the age of 16.

Economic

Samsung has experienced the Asian financial emergency back in the year 1997 which brought about a negative net benefit although Samsung completed $16 billion from deals and the release of 29,000 workers. In this manner, purchasers' expenditure was also influenced because of a lower discretionary cash flow. This was because of a high joblessness rate in certain nations. Rendering to Statista (2018), the unemployment rate of South Korea is 3.6 percent, it is predictable to bead to 3.1 percent after 2020.

A low-slung joblessness percentage nepotisms productivity of Samsung as professions of the customers ease them in spending high amounts on electronic gadgets. Furthermore, the company contributes to 17 percent of the South Korean economy (Statista 2018). As a chaebol of Korea, Samsung has contributed to the development of the country from small to a well-developed country. However, such corporations are pretentious by the economic circumstances they likewise have a significant impression on the budget as they employ thousands of staff. Nonetheless, a low-slung level of service grades in inferior levels of throw away revenue in the hands of the folks to devote to automated devices.

In China the market share of Samsung is only per cent and is dropping rapidly (Statista 2018). Moreover, “China Labor Watch” has accomplished many inspections of employment conditions at China-based industries of Samsung. These examinations have revealed work infringement including unpaid additional time compensation, above 200 monthly extra time hours, maltreatment of work dispatch, and understudy laborers. Furthermore, it also included job-related security concerns, an absence of social protection, and others. Among all, the most genuine infringement has been the labor of underage children in Samsung's provider industries, as according to Chinese government rules the working age is above 16 years (Agence France-Presse 2018). These government factors and allegations have given Samsung a huge loss in the Chinese market.

Social

As Samsung is a South Korean company maintained by a family implies that despite its global impression worldwide, it functions from the center of a Korean organization and culture. This implies among its worldwide operations, the company is adopting the local conditions, which is very important. The company's electronic gadgets are the most popular in Korea. Samsung has a major influence on the economic development, social, political, and cultural development of the Korean economy. This benefits the company is functioning in a market forte that is unequivocally wedged by the mode of lifecycle inclinations of patrons. So, Samsung should yield this benefit to unceasingly revolutionize and grow its product to endure in the competitive marketplace. Though, there are accusations on Chinese Samsung industries that child labor was being subjugated to labor more hundred hours monthly which violated human rights. This resulted in customers' embargoing Samsung products.

Contrarily, the number of elder residents in China is unswervingly growing with over 230 million Chinese matured above 60, and the number is expected to progress to 255million by 2020. As indicated by a report by Mintel (2018b), China's working class is quickly flattering because of China's high financial development, and more than a portion of China's urban buyers are relied upon to acquire between $9,037-$34,495 every year (Shelly 2018). However, the allegations on Samsung for prohibiting the working policies of China have given a huge loss to the company. The Chinese government marked the company for breaching their ethical laws of the working conditions. Because of these allegations on Samsung, the customers are moving towards other company gadgets in the Chinese market such as Oppo, Mi, Vivo, etc.

Technological

Samsung is amongst the world's driving creative officialdoms. In this manner, the organization is at a bit of leeway of supervisory and operating the concentration of novelty and development for reasonable business. This has come about into an over the top and crucial for the association to surpass its opponents and adversaries, with esteems to novelty and advancements. The organization's essential objective is to be the initial in fabricating gadgets that are preferred by patrons. To improve item execution, Samsung has fused an advanced collaborator Bixby to style gadget connections more simply. The company accounts for 20 percent of the Korean gross domestic product (Daniel 2018).Despite the tragedy of its Galaxy 7, the company is working efficiently and is popular in the Korean market. The augment effectiveness and expand the accomplishment of every gadget. Through its new brilliant App, gadgets will be handily associated and measured over the internet of things. This will upgrade product execution.

Samsung being an excellent brand has unkempt to offer substitutes for its items like cell phones in the low-end showcase which has provoked loss of its piece of the industry to ease sellers like Huawei in nations like China (Mintel 2018b). Samsung has poor notoriety. In China, Galaxy Note 7 cell phone catastrophe brought about $5billion misfortunes for the company. Samsung faces extreme rivalry in both the top of the line showcase, from apple, and the local market advertisers from Huawei, OPPO, Xiaomi, particularly in China. Rivalry from the local Chinese soon has brought about the loss of Samsung's cell phone piece of the overall industry from 20 percent in 2015 to 0.8 percent in 2017 (Daniel 2018).

Environment

Samsung would need to anticipate its climate in Korea and China since it might influence its manufacturing industries. Moreover, Samsung would require yielding the general public and regular habitat into thought because of the contamination and the discharge of vapor from processing plants. In China, the climate and contamination file is awful which would bring about society fighting towards additionally fabricating plants in China that would be negative to their wellbeing. However, in Korea due to the increased floods and storm rates caused significant loss to the manufacturing plants of Samsung. The weather forecast departments point out Samsung and other electronic companies for this climate change as their manufacturing plants emit harmful carbonates in the atmosphere (Shelly 2018).

Samsung has concerted on declining its energy exploitation and managing peril linked with aquatic utilization. The association has arranged energy managing outlines at all workspaces and has excellently observed vivacity incidentals and batons. Additionally, the brand has confined and executed an administration strategy branded with compound substances. The organization has set up focuses to essentially decrease the outflow of harmful greenhouse gases for the period of the survival pattern of its items (Mintel 2018b).

Legal

As several organizations are trying to secure their protected innovation rights, for example, Apple Inc. that as of late sued Samsung for encroaching its plan and different highlights. Furthermore, human rights must be secured where by a lady in China suffered from cancer as she was presented to harmful synthetic concoctions for a large portion of 10 years in her business (Shelly 2018). In this way, it could discolor Samsung's picture, for benefit instead of individuals' anxiety as claims have been made towards Samsung in China for misusing laborers. 

Samsung has confronted overwhelming punishments for mimicking Apple's iPads and iPhones. The demonstration crumbled the brand's observation and picture in the brains of the buyers. The appalling fight in court which kept going for over six years finished on an honest note for Apple, where they got walloping $790 million in the year 2012 (Daniel 2018). Things took an acrid turn for the organization when its Galaxy Note 7 began detonating across the world. 527 baffled clients from South Korea recorded a claim against the organization (Mintel 2018b). The sick clients were looking for pay for the expense of trading the gadget and the mental harm brought about by utilizing a perilous cell phone.

Once in awhile it tends to be hard to track down the lawful labyrinth in the host country as it involves an assortment of claims. The organization is moreover vital to trail a few business and expense related commandments, in any case the brand may need to oppose unaffected repercussions. Rebelliousness to guidelines can bring about legitimate forfeits that can cause immense disasters for business. Samsung has organized a far-reaching structure of rules and guidelines for supervisors and different territories of the work environment.

Organizational Culture

The corporate culture of Samsung highlight on accomplishment of new technology inventions and policies for human supply development. Theoretically, the organizational culture of a company includes the core values, traditions, and customs that are anticipated by the employees of the company. The organizational culture of Samsung interconnects all zones of the multinational. This interconnection designates the importance of the company culture for attaining victory in the marketplace (Samsung). These cultural differences affect Samsung is competing with Google, Sony, Apple, Intel, Dell, Lenovo, and Acer. Samsung has a novelty balanced company culture.

This business ethos is a share of a company's cultural design which accentuates workers' information, abilities, and skills for modernizing the corporation's technological products such as mobile phones and tablets, such as smartphones and laptops. This organizational culture of Samsung exemplifies the lasting planned aims for possessing the organization’s ruthless position. Samsung is amongst the leading companies in the international markets for electronics, semiconductors, and other related technologies. Based on the core values of the organizational culture of Samsung, the important physiognomies of its culture are the passion for fineness, employee development opportunities, and ethical endowment for unity, and Importance on opulence for all (Samsung).

Passion for fineness

The company’s culture motivates its employees in achieving great success in their job roles. This helps Samsung in maintaining its brand value in the international market. Furthermore, this passion motivates the employees for doing new technological innovations and developing new products for the customers globally (Samsung Group 2017).Passion for fineness constructs the company philosophy innovation-centered by the approach of such desire in conniving and inventing unconventional skills to gratify global marketplace demands.

Employee development opportunities

The company guarantees job progress occasions not just by established agendas, but also by inspiring workforces to assist each other to attain their job objectives for improving the technology of the business association. These prospects are also reinforced by Samsung’s business assembly, which eases human supply growth while forcing for invention in business processes. The company culture of inventing new products aids in increasing the commercial, and supports the career growth of their employees.(Samsung Group 2017).

Ethical endowment for unity

Samsung’s organization culture promotes reverence, transparency, and impartiality which are very important for every successful business (Lee 2019). This helps in minimizing the business issues and augmenting new technologies to preserve the brand value of Samsung.

Importance on opulence for all

The company culture motivates its employees for involving in organizational citizenship programs which gives growth opportunities and community problems are solved through technology. This is a modernization centered feature as it inspires the employees to utilizes the company's technology to benefit various investors (Lee 2019).

Analysis of Ethical Issues

Samsung was found guilty of utilizing child laborers in their manufacturing plants. This practice of the organization forced them to pay huge taxes in China for breaking the political and legal working laws of the country. Furthermore, the tragedy of Samsung Galaxy 7 forced the company to follow strict rules and regulations while manufacturing their products. Although the company has an ethical organizational culture which motivates its employees, there is a need of looking into the political, economic, and legal issue of the international market for maintaining the brand value of the company.

Furthermore, Samsung has to consider the environmental effects in China due to the production of harmful gases in the manufacturing plants. As a manager, I would suggest that the organization should emphasize the issues which harm the company culture and its image in other countries. While establishing manufacturing plants in other nations, Samsung should follow the political and legal laws of that country and should not promote child labor. Moreover, Samsung is among the top electronics company in the world, according to Lee (2019), the organization should look after the ethical issues which can lead to high turnovers.

Conclusions

Samsung is among the top electronics company in the international market. Its headquarters is situated in South Korea. This report emphasized how Samsung combats to actualize its policies to prevent child labor in their plants and have accomplished inspections about employment conditions at China-based industries of Samsung. The report has revealed that Samsung industries in China performed work infringement including unpaid additional time compensation for laborers. Furthermore, rivalry from the local Chinese sooq has brought about the loss of Samsung's cell phone piece of the overall industry from 20 percent in 2015 to 0.8 percent in 2017. Samsung has organized a far-reaching structure of rules and guidelines for supervisors and different territories of the work environment.

Along with this, the business ethos of the company's cultural design accentuates workers' information, abilities, and skills for modernizing the corporation's technological products such as mobile phones and tablets, such as smartphones and laptops. This organizational culture of Samsung exemplifies the lasting planned aims for possessing the organization's ruthless position worldwide.

Recommendations

• The company's management staff should pay attention to the legal and political factors.

• Ensuring the safety of customers while inventing new products.

• Strict rules and regulations for age and working hours of the laborers.

• Controlling the emission of harmful gases in the environment.

References

Aaron, T. 2017. Samsung Steals Intel’s Spot As World’s Biggest Chipmaker Forbes. [Online]. Available at: https://www.forbes.com/sites/aarontilley/2017/07/28/samsung-steals-intels-spot-as-worlds-biggest-chipmaker/#79e410af2cc3 [Accessed on: May 19, 2020].

Agence France-Presse. 2018. Samsung sued by rights groups over alleged use of child labour in its Chinese factories. [Online]. Available at: https://www.scmp.com/news/asia/east-asia/article/2127830/samsung-sued-rights-groups-over-alleged-use-child-labour-its [Accessed on: May 14, 2020].

Bondarenko, P. 2020. Samsung South Korean Company. [Online]. Available at: https://www.britannica.com/topic/Samsung-Electronics [Accessed on: May 14, 2020].

Daniel, D. R. 2018. Samsung’s smartphone market share in China drops to 0.8% Notebook Check. [Online]. Available at: https://www.notebookcheck.net/Samsung-s-smartphone-market-share-in-China-drops-to-0-8.296822.0.html [Accessed on: May 20, 2020].

Lee, S. Y. 2014. Samsung halts business with supplier in China on child labor concerns. [Online]. Available at: https://www.reuters.com/article/us-samsung-elec-child-labour-china-idUSKBN0FJ05Y20140714 [Accessed on: May 14, 2020].

Lee, Y. W. 2019. Enhancing shared value and sustainability practices of global firms: The case of Samsung electronics. Strategic Change, 28(2), pp.139-145.

Mathew, B. 2018. The History of Samsung Life Wire. [Online]. Available at: https://www.lifewire.com/history-of-samsung-818809 [Accessed on: May 15, 2020].

Mintel. 2018b. The Chinese Consumer – China – April 2018. [Online]. Available at: http://academic.mintel.com.ezproxy.sussex.ac.uk/display/891839/?highlight [Accessed on: May 20, 2020].

Samsung. n.d. Our people and culture. [Online]. Available at: https://www.samsung.com/ca/aboutsamsung/careers/our-people-and-culture/ [Accessed on: May 14, 2020].

Shelly, B. 2018. “Korea’s Tax Break” Bloomberg. [Online]. Available at: https://www.bloomberg.com/news/articles/2017-08-04/korea-s-tax-break [Accessed on: May 14, 2020].

Statista .2018. South Korea: Unemployment rate from 2012 to 2022. [Online]. Available at: https://www-statista-com.ezproxy.sussex.ac.uk/statistics/263701/unemployment-rate-in-south-korea/ [Accessed on: May 20, 2020].

Statista. 2018b. Samsung Electronics’ global revenue from 2005 to 2017. [Online]. Available at: https://www-statista-com.ezproxy.sussex.ac.uk/statistics/236607/global-revenue-of-samsung-electronics-since-2005/ [Accessed on: May 14, 2020].

Samsung Group. 2017. Open Secrets. [Online]. Available at: https://www.opensecrets.org/lobby/clientsum.php?id=D000042406 [Accessed on: May 14, 2020].

Xinhua. 2017. China’s elderly population exceeds 230m China Daily. [Online]. Available at: http://www.chinadaily.com.cn/china/2017-08/04/content_30347341.htm [Accessed on: May 14, 2020].

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