Ethical issues in international business Essay

galore(postnominal) of the estimable issues and dilemmas in international trade ar rooted in the position that political systems, law, economic development, and culture vary significantly from Nation to nation. Consequently, what is considered normal practice in mavin nation may be considered unethical in drawer(a)s. Because they work for an institution that transcends National borders and cultures, managers in a multinational firm need to be particularly sensitive to these differences and able to choose the ethical bring through in those circumstances w here variation across societies creates the potential for ethical problems. In the international business setting, the most common ethical issues involve practice practices, charitable rights, milieual regulations, corruption, and the moral obligation of multinational Corporations. function PRACTICESAs we saw in the opening case, ethical issues may be associated with employment practices in other nations. When work conditi ons in a host nation are clearly inferior to those in a multinationals home nation, what standards should be apply? Those of the home nation, those of the host nation, or something in between? While few would suggest that pay and work conditions should be the same across nations, how much distinction is acceptable? For example, while 12-hour workdays, extremely low pay, and a failure to protect workers against toxic chemicals may be common in some developing nations, does this stiff that it is OK for a multinational to tolerate such working conditions in its subsidiaries there, or to condone it by using local subcontractors?HUMAN RIGHTSBeyond employment issues, questions of human rights can arise in international business. Basic human rights still are not respected in many nations. Rights that we take for given in developed nations, such as freedom of association, freedom of speech, freedom of assembly, freedom of movement, freedom from political repression, and so on, are by no office universally accepted. One of the most obvious examples was South Africa during the days of ashen rule and apartheid, which did not end until 1994.Among other things, the apartheid system denied basic political rights to the mass nonwhite population of South Africa, mandated segregation between whites and nonwhites, reserved certain occupations exclusively for whites, and prohibited blacks from being placed in positions where they would manage whites. Despite the odious temper of this system, Western businesses operated in South Africa. By the 1980s, however, many questioned the morals of doing so. They argued that inward investment by foreign multinationals, by boosting the South African economy, supported the restrictive apartheid regime.MORAL OBLIGATIONSMultinational corporations have power that comes from their control over resources and their ability to move production from country to country. Although that power is constrained not only by laws and regulations, but also by the discipline of the food market and the competitive process, it is nevertheless considerable. Some moral philosophers argue that with power comes the social responsibility for multinationals to give something grit to the societies that enable them to prosper and grow.The concept of social responsibility refers to the idea that business battalion 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 both good economic and social consequences. In its purest form, social responsibility can be supported for its take sake simply because it is the right way for a business to behave. Advocates of this approach argue that businesses, particularly large successful businesses, need to recognize their noblesse harbor and give something back to the societies that have make their success possible. Noblesse oblige is a French term that refers to honorable and benevolent beh avior 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 giving to society and in businesses making social investments degestural to enhance the welfare of the communities in which they operate.EMPLOYMENT PRACTICESWork conditions hot weather around toxic chemicals number of hours and pay salaries in developing countries.HUMAN RIGHTSFreedom is not universally accepted. South Africa white rule until 1994 investment in China Nigeria and ShellENVIRONMENTAL POLLUTIONThe emission of pollutants, the dumping of toxic chemicals Amoral management might move production to a developing nation precisely because costly contaminant controls are not required. No one owns the atmosphere or the oceans, but polluting both, no matter where the pollution orig inates, harms allCORRUPTIONEconomic advantages by making payments to corrupted government officials. $12.5 million payment to Japanese agents and government officials MORAL OBLIGATIONSBP, one of oil companies, has made social investments in Algeria, the desert town of Salah. it built two desalination plants to provide drinking water for the local Ethical DilemmasIn a low nation, a 12-year old(a) girl 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 useful 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 (172418 04). Kantian ethics hold that people should be treated as ends and never purely as content 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, environmental pollution, and the use of power are not always clear cut. There may be no agreement about accepted ethical principles. From an international business perspective, some argue that what is ethical depends upon ones cultural perspective.18 In the unify States, it is considered acceptable to execute murderers, but in many cultures this is not acceptableexecution is viewed as an affront to human dignity and the death penalty is outlawed.Many Americans find 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 busi ness negotiation. While this is considered right and proper behavior in many Asian cultures, some Westerners view the practice as a form of yieldry, and therefore unethical, particularly if the gifts are substantial.Bribery in International creaseTransnational transplant 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 selled to model on economic or business transaction which has relationship with his public function. Most countries have in their domestic law stipulation that it is an offence to bribe their own public 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 make it illegal to bribe person 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 spread of democratic governments and of market economies oecumenic. Ethical Dilemmas and Social ResponsibilityThere are a number of examples we can look at to dispute ethical topics in International Business management we pull up stakes consider the case of a mining conjunction in the Sudanan engineering firm in LesothoBeing in a leading position, as mining and exploration grows worldwide, has put co mpanies in an economically advantageous situation. This success in mining has dish uped 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 effected by the EnvironmentThe circumstances which effect Ethical considerations in the new millennium are circumstances caused by drastic changes in the Competitive environment which is causing companies to make decisions in a global mise en scene and resulting in actions which sometimes negatively effect their employees or customers Political environment (regional, national and international) and the consequent laws and regulations that are establishedSocial-Cultural environment which has been influenced by immigration patterns worldwide and a continued movement of populations from rural to urban areasTechnological 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 contribution in national and regional economies.Stress 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 Obstructionist StanceDefensive StanceAccommodative Stanceproactive StanceObstructionist StanceoWhen 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 string action from a complaint by victorious 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 put forward their job is to make money for the company and anything that takes away 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 bankrupt and leave vacationing people marooned 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, o r allowing customers to return items for warranty notwithstanding 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 period may expire several weeks in advance, or that a product will soon be withdrawn so they have the option to buy spare parts. Preface to 1999 Edition of ICC Rules of Contract. ICC is extremely pleased to note 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 the OECD, Convention in Combating bribery of foreign public officials (hereafter called the OECD Convention.)Was signed by 34 countries in Paris in Dec 17, 1997 and entered into force on Feb 1999. The OECD has established a monitoring programming to assure effective and pursuant(predicate) implementation and enforcement of the convention. The monitoring programme also concerns the compliance with the revised OECD Recommendations, which among other subjects, urges the OECD member countries to disallow tax deductibility of bribes to foreign public officials.International price meliorate DiamondsDeBeers, a giant 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 guilty 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 fine International Company and EthicsThe issue of business ethics is engaging 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 within the firm enabled unethical behavior to occur, a development made easier by the failure of the external 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 deliberate that the sole social responsi bility 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 key 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 fraternity, future generations (especially in relation to environmental issues) have a legitimate interest and stake in the way a company conducts itself. Levi Strauss is one of the worlds largest brand-name costume 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 excerpt of which countries in which to operate (DeGeorge, 1993, p. 118). The Code of Conduct has two parts. 1. Busi ness 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 potential 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 culture industry practices.Working hours partners must respect local legal 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 b usiness 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 collective 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 safety device 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 intended 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 cease its engagement in China in the early 1990s, l argely on human rights reason a decision that has subsequently been reversed. In particular, the company assesses whether the brand control 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 protecting 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.