THIS WAS THE ANSWER I GAVE TO THE PROFESSOR\'S ORIGINAL QUESTION: The territoria
ID: 461185 • Letter: T
Question
THIS WAS THE ANSWER I GAVE TO THE PROFESSOR'S ORIGINAL QUESTION:
The territoriality Principle: It is one that is used in the United states. Under this principle, each nation has the right to exercise jurisdiction within businesses operating in its territory. ex.) If a German firm sells a defective product in England , they can be sued under English law. A similar case happened wtih Volkswagen. It is a german company. However, they beneded rules and use illegal equipment to pass the stringent US laws relating to pollution laws. As aa result, upon being caught, the US government had all rights to punish it, despite Volkswagen being a German MNC. Since Volkswagen was operating in the US, its US operations came under the US jurisdiction. The US government and courts took it upon themselves to place a huge Corporation defining fine on the firm. The implication of the above is that due to the territoriality principle, an MNC mut operate according to rules set by various countries where it operates. Moreover, in order to fulfill the different norms in different countries, they may need serious modifications to their product lines or service offerings.
THE PROFESSOR THEN RESPONDED TO MY ANSWER WITH THIS QUESTION THAT I NEED AN ANSWER TO:
The reverse of this is a US MNC needing to adhere to laws in other territories. It raises the question of whether a US MNC could reduce it's standards when exporting? (We're back to ethics again from last weeks discussion!) For instance what if a US based MNC built a car for another territory that did not have the EPA standards we have here? Could they cut corners and make the car more inexpensively because the country to which it's being sold does not have those same standards?
Explanation / Answer
The US car makers have a choice to make a car following the EPA standard or maintaining the local standard norms. The company is liable to follow the local law because any case against the car manufacture for local territory will follow the local laws thus is is mandatory for the company to adhere to the territorial norms for smooth business. It is the choice which company has to maintain the same quality standard the different markets. Most of the Suzuki car models that are manufactured in India have failed International Crash test but all of these car fulfill the local standard thus in legal terms company have no liability. But if a US firm built a car in US for another territory then the same quality standard will help in reducing the cost because of volume. Once the process is set then it will be convenient to follow it so I think cutting corner and laying different quality check is not going to serve the company better. Moreover, Company can position itself in another category if it follows extra safety rules that are present in local territory.The US car makers have a choice to make a car following the EPA standard or maintaining the local standard norms. The company is liable to follow the local law because any case against the car manufacture for local territory will follow the local laws thus is is mandatory for the company to adhere to the territorial norms for smooth business. It is the choice which company has to maintain the same quality standard the different markets. Most of the Suzuki car models that are manufactured in India have failed International Crash test but all of these car fulfill the local standard thus in legal terms company have no liability. But if a US firm built a car in US for another territory then the same quality standard will help in reducing the cost because of volume. Once the process is set then it will be convenient to follow it so I think cutting corner and laying different quality check is not going to serve the company better. Moreover, Company can position itself in another category if it follows extra safety rules that are present in local territory.
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