Friday, June 12, 2009

Say No to Detroit, Say yes to Dimaro?

Our country is not the only thing to which we owe our allegiance. It is also owed to justice and to humanity. Patriotism consists not in waving the flag, but in striving that our country shall be righteous as well as strong.” - James Bryce

On Wednesday Fiat Chief Executive Sergio Marchionne became CEO of the new Chrysler Group LLC, which will take over Chrysler LLC. This is another landmark event in the financial crisis facing the world.

With unemployment hitting 7.1% at the end of Q4, 2008 in Italy, (http://www.italica.sm/shownews.php?newsid=0000000455) and an Italian now being the CEO of Chrysler, would it be fair if Mr. Silvio Berlusconi, the Prime Minister of Italy were to exhort Mr. Marchionne to “Say No to Detroit, and yes to Dimaro?”

Some time ago President Barak Obama said 'Say No to Bangalore and yes to Buffalo'. This was an attempt to ask US corporations to create jobs in the US and not overseas. In this whole contention of job creation one question needs to be addressed, “What of the Status of MNC’s”?

This is a question posed to those organizations, or business entities which are global in nature, normally called Multi-National Corporations (MNC) seeking the lowest cost of operations, to maximize profits.

What is their identity?
Who do they owe allegiance to?
Do they have a nationalistic identity as to a reference of the physical location of their headquarters?
Or is their identity derived from the nationality of the top management?
Or is it derived from majority stock holders and allegiance is towards them?

If an MNC shows outward allegiance to one nation, does it risk its credibility somewhere else, and if so who suffers, employees, owners, or the government’s collecting taxes?

Take the example of Sony Pictures Entertainment (SPE). SPE is a subsidiary of Sony Corporation of America (SCA), a subsidiary of Tokyo-based Sony Corporation. Michael Lynton is its Chairman and CEO. Now is SPE an American company because it’s Chairman is American, or is it a Japanese company by virtue of being a subsidiary of a Japanese company?

Can Prime Minister Aso of Japan say “Say no to Hollywood, say Yes to Hokkaido?”

Chrysler Group LLC still has a majority stake held by American Entities (Government, UAW etc) so it is still an American company, but with an Italian CEO now does it become an Italian Company? Or will it become an Italian Company if Fiat gets majority stake in it?

We are living in a global village, as it has been said “No Man is an Island”. In such a scenario MNC’s can ill afford allegiance to anyone but “Profits”.

1 comment:

Vandana Mohal Dewan said...

Absolutely! AN MNC is a global entity by the very definition of this acronym, so how can the company owe allegiance to any one country. I think as far as companies go, they owe allegiance to all their stakeholders, of which one may be the government. Some would say that they only allegiance to their shareholders, but that is a different debate.

Any MNC can never be of one nation, because then it turns the concept of global economy and global business on its head.

So, while politically it may gain Obama votes when he says, “No to Bangalore and yes to Buffalo”, for an MNC it will be hara-kiri to think along those lines. And if they do so they may need to reword their acronym to Mainly Nationalist Company!!!