Ethical issues in international business Essay

M any(prenominal) of the honorable issues and dilemmas in break throughside(a) handicraft be rooted in the incident that political systems, virtue, economic development, and culture vary signifi brooktly from Nation to nation. Consequently, what is considered frequent practice in whizz nation whitethorn be considered un honest in archeozoic(a)s. Beca occasion they work for an institution that transcends National borders and cultures, four-in-hands in a transnational firm need to be particularly sensitive to these differences and able to study the estimable action in those circumstances where variation across societies raises the authorization for respectable problems. In the world-wide c atomic number 18 setting, the most common ethical issues involve job practices, Human rights, surroundingsal regulations, corruption, and the moral obligation of transnational Corporations. consumption PRACTICESAs we saw in the opening sideslip, ethical issues whitethorn be asso ciated with employment practices in a nonher(prenominal) nations. When work conditions in a innkeeper nation argon clearly inferior to those in a multinationals home nation, what standards should be applied? Those of the home nation, those of the host nation, or something in amid? While few would suggest that lucre and work conditions should be the same across nations, how practic altogethery divergence is delicious? For example, while 12-hour workdays, extremely low redeem, and a failure to protect workers against cyanogenic chemicals may be common in some developing nations, does this repute that it is OK for a multinational to tolerate such working conditions in its subsidiaries thither, or to condone it by using local subcontractors?HUMAN RIGHTSbeyond employment issues, questions of human rights can arise in international byplay. radical human rights still atomic number 18 non respected in numerous nations. Rights that we take for granted in developed nations, suc h as independence of association, freedom of speech, freedom of assembly, freedom of assumement, freedom from political repression, and so on, are by no means univers exclusivelyy accept. One of the most straightforward examples was sulfur Africa during the days of white rule and apartheid, which did non end until 1994.Among another(prenominal) things, the apartheid system denied basic political rights to the majority nonwhite population of South Africa, mandated separatism between whites and nonwhites, reserved certain occupations exclusively for whites, and prohibited blacks from being put in positions where they would man period whites. Despite the odious nature of this system, Western straines operated in South Africa. By the 1980s, however, some questioned the ethics of doing so. They argued that inward investment by foreign multinationals, by boosting the South African economy, supported the repressive apartheid regime. clean-living OBLIGATIONSMultinational corpora tions book power that comes from their control over resources and their ability to regard proceedsion from country to country. Although that power is constrained non sole(prenominal) by laws and regulations, solely also by the discipline of the market and the competitive process, it is further substantial. Some moral philosophers argue that with power comes the affectionate accountability for multinationals to bound something back to the societies that enable them to prosper and grow.The concept of social responsibility refers to the intellection that occupationpeople should consider the social consequences of economic actions when making business decisions, and that there should be a presumption in favor of decisions that have twain good economic and social consequences. In its purest form, social responsibility can be supported for its own sake simply beca hire it is the right room for a business to behave. Advocates of this draw close argue that businesses, particul arly humongous thriving businesses, need to recognize their nob littlee oblige and give something back to the societies that have made their success possible. Noblesse oblige is a French full term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises. This has long been recognized by many businesspeople, resulting in a substantial and venerable history of corporate large-minded to society and in businesses making social investments designed to enhance the welfare of the communities in which they operate.EMPLOY custodyT PRACTICESWork conditions hot weather around toxic chemicals number of hours and pay salaries in developing countries.HUMAN RIGHTSFreedom is not univers eithery accepted. South Africa white rule until 1994 investment in China Nigeria and Shell purlieual POLLUTIONThe emission of pollutants, t he dumping of toxic chemicals Amoral management might move production to a developing nation precisely because costly befoulment controls are not begd. No one owns the atmosphere or the oceans, but polluting both, no matter where the pollution originates, harms allCORRUPTIONEconomic advantages by making payments to corrupted presidential term officials. $12.5 million payment to Japanese agents and giving medication officials MORAL OBLIGATIONSBP, one of oil companies, has made social investments in Algeria, the retire from town of Salah. it built two desalination plants to provide drinking pissing for the local Ethical DilemmasIn a poor nation, a 12-yearold young lady works in a factory.Philosophical Approaches to EthicsSTRAW MENThe Friedman DoctrineCultural RelativismThe Righteous MoralistThe Naive ImmoralistAsserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either utile AND KANTIAN ETHICSUtilitarian approaches to ethics the moral worth of actions or practices is determined by their consequences. Utilitarianism is committed to the maximization of good and the minimization of harm.Kantian ethics are based on the philosophy of Immanuel Kant (17241804). Kantian ethics hold that people should be treated as ends and never rigorously as means to the ends of others. People are not instruments, like a machine. People have dignity and need to be respected as suchEthical DilemmasThe ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, surroundingsal pollution, and the use of power are not perpetually clear cut. There may be no agreement to the highest degree accepted ethical principles. From an international business perspective, some argue that what is ethical depends upon ones cultural perspective.18 In the United States, it is considered acceptable to put through murderers, but in many cultures this is not acceptableexecution is viewed as an affront to human dignity and the death penalty is outlawed. legion(predicate) Americans bring this attitude very strange, but many Europeans find the American approach barbaric. For a more business-oriented example, consider the practice of gift giving between the parties to a business negotiation. While this is considered right and proper behavior in many Asian cultures, some Westerners view the practice as a form of requitery, and therefore unethical, particularly if the gifts are substantial.Bribery in world-wide BusinessTransnational graft consists in offering or giving of money, valuable goods or other benefits as favors, promises or advantages to foreign governments official for procuring that official do or omit any action careed to influence on economic or business transaction which has relationship with his public function. Most countries have in their home(prenominal) law stipulation that it is an offence to bribe their own p ublic officials. Notwithstanding, only in the Interamerican Convention Against Corruption, in 1996, and in the OECD Convention, in 1997, did nations assume the commitment to punish bribery of foreign officials.The point here is that until recently, it was against the law to bribe people in your own country, but there was nothing in Canadian law to collect it illegal to bribe someone in another country the only thing that stops you from bribing someone else in another country is the bad publicity you may receive if you are caught, and the media find out. Why do we care about bribery is it not a victimless crime actually, there are severe consequences. In the early 1990s, scandals involving extortion and bribery were a significant factor in toppling governments in many parts of the world. This situation, if allowed to continue, could undermine the most promising development of the post Cold-war era, i.e., the circularise of democratic governments and of market economies worldwide . Ethical Dilemmas and affable ResponsibilityThere are a number of examples we can look at to discuss ethical topics in International Business management we will consider the case of a dig beau monde in the Sudanan engineering firm in LesothoBeing in a leadership position, as mining and exploration grows worldwide, has put companies in an economically advantageous situation. This success in mining has helped economies, but the increasingly risky and challenging locations in which mining companies operate, create situations which necessarily include dealing with contentious ethical issues.Ethics, as make by the EnvironmentThe circumstances which effect Ethical considerations in the parvenu millennium are circumstances caused by drastic changes in the agonistical environment which is causing companies to make decisions in a international condition and resulting in actions which sometimes negatively effect their employees or customers Political environment (regional, nationa l and international) and the consequent laws and regulations that are establishedSocial-Cultural environment which has been influenced by in-migration patterns worldwide and a continued movement of populations from rural to urban areas proficient environment which has effected communications regionally and globally and also effected the work environment and productivityEconomic environment which sees currency fluctuations and international NGOs like the IMF and World Bank playing a more significant role in national and regional economies. melodic line to maintain corporate economic competitiveness also influences corporate objectives and has consequences for consumer priorities. Approaches to Social ResponsibilityA number of textbooks and websites discuss Social Responsibility, in the context of how companies are behaving ethically, in terms of Four general approaches impedimenta military capabilityDefensive military strengthAccommodative StanceProactive StanceObstructionist Stan ceoWhen a company places barriers to customers complaining about ethical situations, or makes it difficult for ethical circumstances to be resolved. Companies typically do this by requiring customers to fill out forms, or have certain versions of receipts or go through particular processes. Of they can make it difficult to tucker action from a complaint by taking to long to reply, or having no specific information on how to complain, or to whom. Defensive StanceoWhen a company avoids blame, or says it wasnt our fault, or tries to make the customer belief nothing can be done at all. Sometimes managers insist their job is to make money for the company and anything that takes apart from that objectives is not important. Companies are also defensive when they say we are obeying the law to the exact letter, and not taking into account fairness or being compassionate some recent examples include situations where travel agencies and airlines go crack and leave vacationing people strand ed overseas. Accommodative StanceoFirms who not only meet the standards expected, but go further, often receive the reward of repeat customer purchases and good PR which helps in branding in a competitive environment. Some examples include companies allowing customers to exchange items for products that are not exactly the same, but similar, or allowing customers to return items for warranty even if they do not have the original receipt. Proactive StanceoWhen companies reach out to customers to tell them, in advance, some information they need such as letting a customer know a warranty pointedness may expire several weeks in advance, or that a product will soon be withdrawn so they have the pick to buy spare parts. Preface to 1999 Edition of ICC Rules of Contract. ICC is extremely pleased to timbre that the 1996 revisions to the ICC rules were punished substantial progress has been made in addressing extortion and bribery in international business transactions.Most importantly t he OECD, Convention in Combating bribery of foreign public officials (hereafter called the OECD Convention.)Was signed by 34 countries in genus Paris in Dec 17, 1997 and entered into force on Feb 1999. The OECD has established a supervise programming to assure effective and consistent implementation and enforcement of the convention. The monitoring platform also concerns the compliance with the revised OECD Recommendations, which among other subjects, urges the OECD member countries to disallow tax income deductibility of bribes to foreign public officials.International price fixing DiamondsDeBeers, a goliath South African diamond supplier, which has vertical and horizontal monopoly over much of the diamond mining and diamond distribution industry, has hold to 1/4 of a billion dollars ($250 M) to settle an outstanding lawsuit in the U.S. Many years ago, DeBeers was sued by American jewellery retailers, manufactures, and other people in the business, who claimed that DeBeers had been dishonored of fixing prices thus artificially inflating the price of diamonds and diamond jewellery. DeBeers did not settle this giant lawsuit instead, they avoided it by refusing to do direct business in the U.S. Now that the U.S. diamond market has become very large (55% of global retail sales), DeBeers wants into the U.S. again and in order to do that they agreed to settle this old lawsuit.The U.S. judge reviewing the case approved the conditions based on DeBeers agreeing to comply with U.S. anti-trust laws. This lawsuit settlement follows an action in 2004 in which DeBeers pleaded guilty to fixing prices of industrial diamonds and agreed to a $10 M USD finely International Company and EthicsThe issue of business ethics is salty companies more and more both domestically and internationally. This trend is accentuated by high-profile examples of breaches of accepted standards of ethical behavior. For example, the recent Enron case where inadequate checks and balances wit hin the firm enabled unethical behavior to occur, a development made easier by the failure of the foreign auditor to fulfill its role properly. Assumptions about ethics and business are influenced inevitably by fundamental beliefs about the role of business in society. On the one hand, there are those who believe that the sole social responsibility of business is to generate profit. For some proponents of this view, profit generation itself takes on a moral dimension whereas others see profits as the divulge to wealth generation the main way of addressing social issues (Davies, 1997, p. 88).On the other hand, others believe that the role of business is much broader than that of profit generation and that all those who are affected by the way a company operates shareholders, employees, customers, suppliers, the local community, future generations (especially in relation to environmental issues) have a trustworthy interest and stake in the way a company conducts itself. Levi Str auss is one of the worlds largest brand-name clothes manufacturers and also one of the first international companies to adopt a corporate code of conduct to apply to all contractors who manufacture and finish its products and to aid packion of which countries in which to operate (DeGeorge, 1993, p. 118). The rule of Conduct has two parts. 1. Business partner terms of engagement Levi Strauss uses these to select business partners that follow workplace standards and practices consistent with its policies and to help identify likely problems.In addition to meeting acceptable general ethical standards, complying with all legal requirements and sharing Levi Strausss commitment to the environment and community involvement, Levi Strausss business partners must adhere to the following employment guidelines Wages and benefits business partners must comply with any applicable law and the prevailing manufacturing and coating industry practices.Working hours partners must respect local lega l limits on working hours and preference will be given to those who operate less than a 60-hour working week. Levi Strauss will not use partners that regularly require workers to work in excess of 60 hours. Employees should also have at least one day off per week. Child labor use of child labor is not permissible in any of the facilities of the business partner. Workers must not be below 15 years of age or below the compulsory school age. Disciplinary practices Levi Strauss will not use business partners who use corporal punishment or other forms of physical or mental coercion. Prison/forced labor no prison or forced labor is to be used by businessDiscrimination while respecting cultural differences, Levi Strauss believes workers should be employed on the basis of their ability to do their job Health and prophylactic Levi Strauss undertakes to use business partners who provide a safe and healthy working environment and, where appropriate residential facilities 2. Country assessment guidelines these are used to address broad issues beyond the control of individual business and are intend to help Levi Strauss assess the degree to which its global reputation and success may be exposed to unreasonable risk.It was an adverse country assessment that caused Levi Strauss to furlough its engagement in China in the early 1990s, largely on human rights grounds a decision that has subsequently been reversed. In particular, the company assesses whether the brand image will be adversely affected by the perception or image of a country among customersthe health and safety of employees and their families will be exposed to unreasonable risk the human rights environment prevents the company from conducting business activities in a manner consistent with the global guidelines and other company policies the legal system prevents the company from adequately defend trademarks, investments or other commercial InterestsLevi Strauss is the example of the company that successfully combines doing business and following ethical practices. The political, economic and social environment protects the companys commercial interests and brand corporateimage.