Why did Chavez decide to nationalize Cargill? Do you think he was justified?
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Though hardly anyone could expect the nationalization of Cargill to occur, the reasons behind the decision taken by Chavez are quite obvious. Seeing that the president has been known for his enmity towards foreign companies within the state, the nationalization of the Cargill Factory, which was owned by a foreign entrepreneur, seemed a rather plausible move to make. However, because of the controversy that surrounded the issue, the nationalization of the Cargill Factory turned out to damage the reputation of the government, not to mention the fact that it was economically unreasonable.
A closer look at the policy of Chavez will reveal that he aimed at restricting the influence of foreign entrepreneurs on the economy of the state, thus, hoping to stabilize the latter. The aggression against the private sector of the state can be explained by the fact that Chavez experienced a significant drop in popularity among the citizens: “Bolstered by resilient approval ratings, the former soldier is likely to keep moving against the private sector this year as he pushes ahead with his plan to build a socialist state in South America’s top oil-exporting nation” (Chavez seizes Cargill Factory, 2009, para. 3).
Apart from the termination of any activities of foreign companies in the state, the nationalization of the Cargill factory can be interpreted as a step towards taking control over the activities of private entrepreneurship so that the prices for food in general and rice, in particular, could be reduced (Gupibagha, 2010, 00:00:24). The aforementioned supposition concerning controlling private organizations seems a more plausible explanation than the one suggested previously, as it does not presuppose the elimination of any foreign companies from the state.
If you were the executive of Cargill, what would you do?
Because of the controversy surrounding the forced process of nationalization, which the Cargill Factory was subdued to, determining whether the step taken by Chavez was the right thing to do is rather hard. While the nationalization must have had a positive effect on the state economy, the ethics of the strategy adopted by Chavez leaves much to be desired.
At this point, the individualism vs. collectivism conflict (Daniels, Radebaugh, & Sullivan, 2011) must be brought up. While each of the approaches has its pros and cons, individualism seems to lead to more impressive outcomes in entrepreneurship, as Daniels et al. (2011) explain. Whereas individualism allows for the introduction of innovative solutions into the company’s operations, collectivism contributes to the creation of team spirit, thus, allowing for cohesion among the actions of team members. However, with all the benefits of teamwork, the collectivist setting still does not uphold the standards of the global economy, specifically, innovativeness. Therefore, the approach undertaken by Chavez seems to be flawed at its very basis.
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The authors also warn that the political system adopted within the state also affects the success of the organization’s performance (Daniels et al., 2011). For instance, in the democratic setting, the premises for further development are quite numerous, while in a totalitarian state, the threat of a company stalling in its evolution is quite high (Daniels et al., 2011). As long as a state provides private entrepreneurs with an opportunity to manage the organizational processes on their own, as well as encourages the development of foreign business in the state, the economy will develop successfully. Therefore, Chavez’s management of the private business sector is a prime example of the actions that are not to be taken in the specified scenario.
Chavez seizes Cargill Factory. (2009). Washington Times. Web.
Daniels, J., Radebaugh, L., & Sullivan, D. (2011). International business (pp. 131–174). 13th ed. Upper Saddle River, NJ: Pearson.
Gupibagha. (2010, Jan. 29). Political risk of international business: Chavez and Cargill. YouTube. Web.