Global Trap and Non-for Profit Organizations
Global Trap and Non-for Profit Organizations
An economy can make a nation strong and enrich lives. Economically, the United States was always in the lead. However, the global economic trend is not led by the United States any more. It was heard in many rumors that end one major vehicle company was sold to China on March 2010. That company was Volvo.1) In such a fast changing world, economically, mergers and acquisition2) does not catch us by surprise. Therefore, it is necessary that we make more of an effort to understand the gains, ills and solutions of mergers and acquisition.
Merger and Acquisition and corporate restructuring are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions, which bring separate companies together to form larger ones. When they are not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spinoffs, carve-out or tracking stocks. However, this is just generally theory. The real reason is different. In the early 1980s, according to William Dickens from the Brookings Institution, the biggest US companies shared some seventy percent of their profit potential with their employees,3 and on average they paid more than the labor-market rate for the job. It was also common for the more profitable parts of the firm to subsidize the less profitable; not every sector had to generate the maximum return, so long as the corporation as a whole was in the black. The deregulated finance economy, however, changed this social strength into a management weakness. Clever brokers from Wall Street investment banks soon uncovered these inefficiencies' and opened up the speculators' El Dorado of the 1980s. Loan-backed hostile takeovers made it possible to strip and then sell off selected assets of such companies, shorn of all dispensable or overpaid' labour.4 It is spreading to other country independently of the wealth and power of some specific nations. Then weakened restrictions of government caused terrible double-edged blade called mergers and acquisition.
Mergers and acquisition, be started 1980s, are very charming to investors. It involves liquidation faltering enterprises, restructuring, clear of capitals, and revitalization of the securities. In addition, it was noticed from many economists for new alternative idea about bubble economy of Japan. Especially, in case of China in the 1990s, due to the transfer of delegation of authority for business grew from the government to the corporations, it was able to establish business rearrangement and free economic policies. But, this also involves with a major problem, not only those advantages mentioned above. The problem is that the age of capitalism management which relatively puts less emphasis on human management of corporation has arrived. Since the initial purpose of mergers and acquisitions to appear was started from the idea of merchandising corporations, it has the stigma of being called as a strategy for annihilation of corporations. For example, Merck determined to close sixteen plants and cut sixteen thousand workers after merger and acquisition.5 As a result, the laborers were damaged by that. If reckless hostile takeover among corporations or investors spread, most chief of corporations cannot protect their stakeholders anymore. Because to avoid such corporate raiding, most chief executives themselves became agents of restructuring. No one was spared.
Today, nobody can stop mergers and acquisition which is becoming the trend of globalization. Then we have to have specific tools what defend human right for reducing loss or damage by mergers and acquisition. In addition, economists and investors must consider business ethics for corporation's stakeholders. A stakeholder is a person, a group or an organization that has relationship with corporations, and the business ethics exist for stakeholders. The dictionary definition of ethics are the inner guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the "right" or appropriate way to behave.6 However, business ethicshas more detailed meanings than ethics. It (also known as corporate ethics) is a form of applied ethicsor professional ethicsthat examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Applied ethics is a field of ethics that deals with ethical questions in many fields such as medical, technical, legal and business ethics.7 Therefore, business ethicsstates human morality for the people involved that arises from stakeholder theory, and these cannot be found easily in contemporary corporations. As a result, non-profit organizations (after call NPO) are noticed as proper organizations that protect business ethics and human right. NPOs not only exclude profit, but also do not distribute its surplus funds to owners or shareholders, but instead use them to help pursue its goals.8 They do many political and social campaigns. The typical example is the campaign for against to illegal lay-off and help find employment. Such activities and purpose of NPOs are in accord with business ethicsand protection to stakeholder.
Now, the boundary of economy has disappeared, and many corporations integrate each other. However, there are insufficient rules of mergers and acquisition. Most nations do not prepare to protect their people from this, except some advanced nations. Therefore the works and scopes of NPOs should extend more as much as the economy develops. As previously stated, the profits are not NPOs' purpose. Their purpose is to promote public interests and contribute to our community through schools, hospitals, charities, and relief works. Therefore, the government of each nation should find solutions to increase public benefits more efficiently and effectively through NPO.
Source
1.CNN new (2010). The Volvo was merged. International Economy. Retrieved March 28 2010. Http://money.cnn.com/2010/03/28/news/international/volvo_china.cnnw/index.htm
2.Wikipedia, the free encyclopedia (2010). Merger and Acquisitions. Article. Retrieved October 7 2010. http://en.wikipedia.org/wiki/Mergers_and_acquisitions
3.International Herald Tribune. November 17 1995
4.Martin, Hans Peter (1996). The Global Trap. The law of the wolves. The American model: return of the day laborer. P 120. New York: St Martin's Press, INC.
5.Daily Finance (2010). Merck to Cut 16,000 Workers as Drugmaker Closes 16 Plants, Labs. Economy. Retrieved July 8 2010. http://www.dailyfinance.com/story/company-news/merck-to-cut-16-000-workers-as-drugmaker-closes-16-plants-labs/19546356/
6.Wikipedia, the free encyclopedia (2010). Business ethics. Article. Retrieved October 7 2010. http://en.wikipedia.org/wiki/Business_ethics
7.Gary M. Grobman, White Hat Communications (2008). The Nonprofit Handbook. Everything You Need to Know to Start and Run Your Nonprofit Organization (Paperback)
8.Wikipedia, the free encyclopedia (2010). Non Profit Organization. Article. United State and Tax exemption. Retrieved October 6 2010. http://en.wikipedia.org/wiki/Non-profit_organization
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