Ethics in International Business.docx

Ethics in International Business.docx

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EthicsinInternationalBusiness

EthicsinInternationalBusiness

ChapterOutline

OPENINGCASE:

Wal-Mart’sChineseSuppliers

INTRODUCTION

ETHICALISSUESININTERNATIONALBUSINESS

EmploymentPractices

ManagementFocus:

MakingApple’siPod

HumanRights

EnvironmentalPollution

ManagementFocus:

UnocalinMyanmar

Corruption

MoralObligations

ManagementFocus:

NewsCorporationinChina

ETHICALDILEMMAS

THEROOTSOFUNETHICALBEHAVIOR

PersonalEthics

DecisionMakingProcesses

OrganizationalCulture

UnrealisticPerformanceExpectations

Leadership

ManagementFocus:

Pfizer’sDrugTestingStrategyinNigeria

PHILOSOPHICALAPPROACHESTOETHICS

StrawMen

UtilitarianandKantianEthics

RightsTheories

JusticeTheories

FOCUSONMANAGERIALIMPLICATIONS

HiringandPromotion

OrganizationCultureandLeadership

Decision-MakingProcesses

EthicsOfficers

MoralCourage

SummaryofDecision-MakingSteps

SUMMARY

CRITICALTHINKINGANDDISCUSSIONQUESTIONS

CLOSINGCASE:

GoogleinChina

LearningObjectives

1.Befamiliarwiththeethicalissuesfacedbyinternationalbusinesses.

2.Recognizeanethicaldilemma.

3.Discussthecausesofunethicalbehaviorbymanagers.

4.Befamiliarwiththedifferentphilosophicalapproachestoethics.

5.Knowwhatmanagerscantodotoincorporateethicalconsiderationsintotheirdecisionmaking.

ChapterSummary

Thischapterfocusesonhowethicalissuescanandshouldbeincorporatedintodecisionmakinginaninternationalbusiness.Thechapterstartsbylookingatthesourceandnatureofethicalissuesanddilemmasinaninternationalbusiness.Then,thereasonsforpoorethicaldecisionmakingininternationalbusinessarereviewed.Next,thereisadiscussionofdifferentphilosophicalapproachestobusinessethics.Finally,thechapterconcludeswithareviewofthedifferentprocessesthatmanagerscanadopttomakesurethatethicalconsiderationsareincorporatedintodecisionmakinginaninternationalbusinessfirm.

OpeningCase:

Wal-Mart’sChineseSuppliers

Summary

TheopeningcaseexaminesWal-Mart’srelationshipwithitssuppliers.Wal-Martiscommittedtomaintainingitspositionastheworld’slargestretailer.Intoday’shighlycompetitiveenvironment,achievingthatgoaloftenmeanssourcingproductsfromfactorieslocatedindevelopingcountries.SomepeoplehavecriticizedWal-Mart,claimingthatthecompanysourcesfromfactoriesthatusesweatshoplabor.Thecompanydeniestheallegations,andpointsoutthatitregularlymakesunannouncedauditsofitssuppliers’factories.However,criticschargethatdespitetheseefforts,theuseofsweatshoplaborcontinues.SomefactoryownersnotethatWal-Mart’spressuretocontinuallylowercostsoftenleavesthemwithlittlechoicebuttoadoptasweatshopapproachtoproduction.Discussionofthecasecanrevolvearoundthefollowingquestions:

SuggestedDiscussionQuestions

QUESTION1:

Wal-Marthasbeenaccusedofbuyingfromcompaniesthatusesweatshoplabor.Inyouropinion,isitethicalforWal-Marttousesuppliersindevelopingcountrieswheresweatshopconditionsmightexist?

ANSWER1:

Wal-Martrecognizesthatsomecompaniesindevelopingcountriesusesweatshoplabor.Inanefforttoensurethatitisnotsourcinggoodsfromthesesuppliers,Wal-Marthasdevelopedanauditingsystemthatlaysoutexactlywhatispermissible,includessurprisevisitstocompanies,andleviespenaltiesoncompanieswheresweatshopconditionsarefound.MoststudentswillprobablyagreethatWal-Martistryingtobeethicalindealingwithitssuppliers.Studentsmaysuggestthatitwouldbeunreasonabletoexpectthecompanytoabandontheoptionofsourcinggoodsindevelopingcountriesaltogether.StudentstakingthisperspectivewillprobablyarguethatWal-Mart’sstrategyisbasedonofferingthelowestprices-astrategythatinvolvesbuyingfromlowcostsuppliers.However,otherstudentsmaynotethatwhileWal-Mart’spoliciestowarditssuppliersareastepintherightdirection,thecompanyneedstodomore.

QUESTION2:

Whatroledoyou,asaconsumerintheUnitedStates,playincreatinganincentiveforfactoryownersindevelopingcountriestousesweatshoplabor?

Wouldyoubewillingtopaymoreforproductsifitmeantthatsweatshopconditionswereeliminated?

ANSWER2:

Thisquestionshouldencouragesomedebateamongstudents.Manystudentswillprobablyinitiallyrespondthattheyhavenoroleincreatingthepoorconditionsthatexistinmanyfactoriesindevelopingcountries.However,whenpressed,studentsmayagreethattheybenefitfromWal-Mart’slowprices,andalsofromthecompetitionthatWal-Martbringstothemarketplace.Studentsmayalsoinitiallyrespondthatofcoursetheywouldbewillingtopayhigherpricesinanefforttoeliminatesweatshopconditions.Inmostcasesthough,ifstudentsarebeingreallyhonestwiththemselves,theywillprobablyagreethattalkischeap–whenpushcomestoshove,theymaynotactuallyfollowthrough.

ChapterOutlinewithLectureNotes,VideoNotes,andTeachingTips

INTRODUCTION

A）Thischapterfocusesontheethicalissuesthatarisewhencompaniesdobusinessindifferentnations.Manyoftheseethicalissuesarisebecauseofdifferencesineconomicdevelopment,politics,legalsystems,andculture.

B）Thetermsethicsreferstoacceptedprinciplesofrightorwrongthatgoverntheconductofaperson,themembersofaprofession,ortheactionsofanorganization.Businessethicsaretheacceptedprinciplesofrightorwronggoverningtheconductofbusinesspeople,andanethicalstrategyisastrategy,orcourseofaction,thatdoesnotviolatetheseacceptedprinciples.

TeachingTip:

TheCarnegieCouncilonEthicsandInternationalAffairs’{http:

//www.cceia.org/}publicationsreflectonmanyethicalissuesininternationalbusiness.

ETHICALISSUESININTERNATIONALBUSINESS

A）Intheinternationalbusinesssetting,themostcommonethicalissuesinvolveemploymentpractices,humanrights,environmentalregulations,corruption,andthemoralobligationofmultinationalcompanies.

EmploymentPractices

B）Acriticalethicalissuefacingcompaniesdoingbusinessinaforeigncountryinvolvesemploymentpractices.Whenworkconditionsinahostnationareclearlyinferiortothoseinamultinational’shomenation,whatstandardsshouldbeapplied,thoseofthehomenation,thoseofthehostnation,orsomethinginbetween?

WhenhumanrightsactivistscomplainedaboutthesweatshopconditionsatNike’ssubcontractors’operations,Nike,eventhoughithadnotbrokenanylaws,wasforcedtoinstituteacodeofconductforitssubcontractors.Morerecently,Wal-Marthasfacedsimilarchallenges.

ManagementFocus:

MakingApple’siPOD

Summary

ThisfeatureexploresApple’sexperienceswithemploymentpracticesattheChinesefactorythatproducesitsiPOD.In2006,twoChinesejournalistsreportedthattheworkingconditionsatHongfujinPrecisionIndustrieswhereApple’siPODsareproduced,weresubstandard.Accordingtothereport,notonlywereworkersattheplantpoorlypaid,buttheywerealsoforcedtoworkovertime.Appleimmediatelyrespondedtotheallegationsandauditedthefactoryinquestion.However,managersatthefactoryfiledadefamationlawsuitagainstthetwojournalists.DespitethefactthatApple’sauditdidindeedshowsubstandardworkingconditionsatthefactory,Hongfujindidnotwithdrawthelawsuit.EventuallytheReportersWithoutBordersgrouptookupthecaseforthetworeportersandthelawsuitwasdropped.

SuggestedDiscussionQuestions

1.ShouldAppleberesponsibleforensuringthatitssuppliersaresafeguardingthebasicrightsanddignityoftheiremployees?

HowcanApplebesurethatitssuppliersdonotemploysweatshoplabor?

DiscussionPoints:

ManystudentswillprobablyagreethatAppleshouldberesponsibleatleasttosomedegreeforensuringthatthefactorieswhereitsourcesitsproductsaresafe.Somestudentsmaysuggestthattoknowinglybuyproductsfromacompanywithsubstandardworkingconditionsisaviolationofbasichumanethics.Otherstudentshowever,mayarguethatNikecannotforcesupplierstoadoptspecificpracticesandpoliciestowardlabor.StudentstakingthisperspectivemightfurthersuggestthatpushingAmericanpracticesonChinesecompaniesisethnocentric,andthatformanyChinesetheprospectofhavingajob,eveninpoorworkingconditions,isbetterthanhavingnojobatall.ManystudentsmaybesurprisedthatAppledidnotalreadyhaveanauditpolicyinplacepriortotheaccusationsbytheChinesereporters,butwillprobablyagreethatthecompanyhandledthesituationappropriately.

2.TheallegationsagainstHongfujinPrecisionIndustriesweremadebytwoChinesereporters.DiscusstheimplicationsofthisforotherChinesecompanies.

DiscussionPoints:

MoststudentswillprobablyagreethatthefactthattheallegationsagainstHongfujinPrecisionIndustriesweremadebyChinesereporterswhoworkforChinaBusinessNews,astaterunnewspaper,couldhaveinterestingimplicationsforothercompanies.Somestudentswillprobablysuggestthatitshouldserveasasignaltoothercompaniesthatpoorworkingconditionsareunacceptable,andthatwhileinthepast,itmayhavebeenpossibletohidethem,itisnolongerthecase.Otherstudentsmaysuggestthattheallegationsmayforcecompaniestorethinktheirproductionandlookfornewwaystoincreaseproductivity.Somestudentsmaynotethattheveryfactthatthereportwaspublishedisstartlinginsomeregards,andthatcompaniesshouldanticipatefurtherscrutiny.

LectureNote:

Applemaintainsthatitrequiresitssupplierstopracticeresponsiblemanufacturing.TolearnmoreaboutApple’spoliciesgo