How can expanding globally become a threat to a multinational enterprises (MNEs) reputation? Explain with the help of a real-world example.

Question

What will be an ideal response?

Answer 1

Student examples will vary. A sample answer follows.

One of the most valuable resources that a firm may possess is its reputation. A firm's reputation can have several dimensions, including a reputation for innovation, customer service, or brand reputation. Apple's brand, for example, stands for innovation and superior customer experience. Apple's reputation is also one of its most important resources. Apple's brand is valued at $230 billion, making it (with Google's) one of the two most valuable brands in the world.

Globalizing a supply chain can have unintended side effects. These in turn can lead to a loss of reputation and diminish the MNE's competitiveness. A possible loss in reputation can be a considerable risk and cost for doing business abroad.

Low wages, long hours, and poor working and living conditions contributed to a spate of suicides in 2010 at Foxconn, Apple's main supplier in China. The backlash against alleged sweatshop conditions in Foxconn prompted Apple to work with its main supplier to improve working conditions and wages. Apple also started to diversify its supplier base.