Question

This journal deals with globalization and its economic effects. US firms have almost no restrictions on where they can do business and invest. The strategic options are virtually unlimited. Firms look to global markets for sales growth, but they also seek important inputs including human resources. These things - investment and seeking valuable inputs - cannot be seen separately. Do you feel that US firms should try to exploit as many strategic options as possible at home before seeking options overseas? What kind of obligation do you think firms here have when it comes to seeking all kinds of inputs for their operations?

Answer 1

It is not mandatory for US firms to seek strategic options at home before venturing outside. Since most firms are in business to maximize shareholder’s wealth, their primary duty is to seek resources which can expand their business and maximize value to the firm and its shareholders. If the inputs which could make the maximization of value possible lies outside the US, then these firms are not obligated to stay at home and leave these inputs and instead US firms should capitalize on these inputs fast to maximize the value to them.

The obligations that the firms have to maximize the business value is to ensure that the inputs provide long term sustainable value to their businesses. Also these inputs should have been acquired in a legally and morally (to an extent) correct manner. Moreover in today’s environmental scenario, the firms also have an obligation that acquisition of these inputs don’t harm the environment and the community in any manner.