Ehical Issues in International Business2

8/3/2019 Ehical Issues in International Business2

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Ethical issuesIn

International Business

Submitted by:Shikha Sharma, Sukram, Sunil,Varun Chadha, Vikas Maingi,

Vikas Saini, Bikram Singh

MBA(Exec)-V Sem.



Definition and Concept

Major ethical issues and terms

Factors affecting ethics

Ethical dilemmas

Ethics in different management practice

Today’s Presentation includes





Definition:

Ethics in international business

• Business ethics are the accepted principles of right or wronggoverning the conduct of business people

•To be more specific , business ethics is the study of good and evil,right and wrong, and just and unjust actions of businesses.

• It is also defined as “ Business manager‟s integrity so far as his

conduct or behaviour is concerned in all fields of business as wellas towards the society and all stakeholders of the business.”

•An ethical strategy is a strategy or course of action that does notviolate these accepted principles



Social Orientations of Business

Responsibilities of Business



The extent of social orientations of company varies very widely.

The extent of social orientation or social involvement of a companymay change over time

Social responsibility models: there are some models to describe theevolution and extent of social orientation of companies

Notable one includes:

•Carroll‟s model

•Halal‟s Model

•Ackerman‟s model



Archie B. Carroll defines social responsibility as the entire range ofobligations business has to society, proposed 3-d conceptual modelof corporate performance.

Firm has 4 categories of obligations of corporate performance.

Economic i.e . Efficient operations of firm to satisfy economicneeds of society and generation of surplus

Legal responsibilities : that is to obey the laws of the land

Ethical responsibilities: these are certain norms which societyexpects the business to observe though they are not mandatory

Discretionary responsibilities: It refers to the voluntarycontribution of the business to the social cause



Nature of ethics

The theory of moral unity: It advocates the principle that businessactions should be judged by the general ethical standards of society.There exists only one ethical standards that applies to business andto non-business.

Theory of amorality: which argues that business can be amoral, and

the actions of businesses need not be guided by general ethicalstandards. Managers may act selfishly because the marketmechanism distills their actions into benefits to shareholders andsociety at large.

The theory of amorality is not accepted to anybody. Everyone agrees that business actions should be subject to the same ethical standards as the one applicable to the society in general.



Why Ethics Important

1.Ethics Corresponds to basic human needs: It is a humantrait that man desires to be ethical, not only in his private life butalso in his business affairs, where being a manager he knowshis decisions may affect the lives of thousand of employees

Most people want to be the part of an organizations, which theycan respect and be publicly proud of, because they perceive itspurpose and activities to be honest and beneficial to the society



2.Values create credibility with the public: A companyperceived by the public to be ethically and socially responsivewill be honored and respected even by those who have nointimate knowledge of the actual working.




3. Values give Management Credibility with Employees:Values are supposed to be common language to bringleaderships and its people together. Organisational ethics ,when perceived by employees as genuine, create commongoals, values and language.




4.Values help Better Decision-making: Another point of great

importance is that ethical attitude helps the management makebetter decisions, that is decisions that are in the interest of thepublic, their employees and company‟s own long-term goals ,even though decision-making is slower




5. Ethics and profit: Ethics and profit go together. A company

which is inspired by ethical conduct is also a profitable one.Value-driven companies are sure to be successful in the long-run .

6. Law cannot Protect Society, Ethics can :Ethics is importantbecause the govt, law and lawers cannot do everything toprotect society. Wherever law fails ethics can succeed.




- Because it is concerned activity within or outside the organization

- Study of ethics allows us to reflect on our own behaviour

- Social consequences

- Affect not only "international" business but also "domestic" business

Why Ethical issues should be studied?



Some unethical practices

1. Lie to an employee/ employer

2. Favoritism, nepotism

3. Taking credit for other’s work

4. Stealing from company

5. Firing employee without notice6. Diverging/stealing confidential matter of office



Ethics of accounting information

misleading financial analysis.securities fraud, bucket shops, forex scams: concerns (criminal)manipulation of the financial markets.Executive compensation: concerns excessive payments made tocorporate CEO's and top management.Bribery, kickbacks, facilitation payments: while these may be in the

(short-term) interests of the company and its shareholders, thesepractices may be anti-competitive or offend against the values of society.

http://en.wikipedia.org/wiki/Misleading_financial_analysis

http://en.wikipedia.org/wiki/Securities_fraud

http://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

http://en.wikipedia.org/wiki/Forex_scam

http://en.wikipedia.org/wiki/Executive_compensation

http://en.wikipedia.org/wiki/Bribe

http://en.wikipedia.org/wiki/Kickback

http://en.wikipedia.org/wiki/Facilitation_payment

http://en.wikipedia.org/wiki/Facilitation_payment

http://en.wikipedia.org/wiki/Kickback

http://en.wikipedia.org/wiki/Bribe

http://en.wikipedia.org/wiki/Executive_compensation

http://en.wikipedia.org/wiki/Forex_scam

http://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

http://en.wikipedia.org/wiki/Securities_fraud

http://en.wikipedia.org/wiki/Misleading_financial_analysis



Ethics of human resource management

The ethics of human resource management (HRM) covers those

ethical issues arising around the employer-employee relationship,such as the rights and duties owed between employer andemployee.

Discrimination issues include discrimination on the bases of age(ageism), gender, race, religion, disabilities, weight and

attractiveness.sexual harassment.Issues arising from the traditional view of relationships betweenemployers and employees, also known as At-will employment.

Issues surrounding the representation of employees and thedemocratization of the workplace: union busting, strike breaking.

Issues affecting the privacy of the employee: workplace surveillance,drug testing.Issues affecting the privacy of the employer : whistle-blowing.

Issues relating to the fairness of the employment contract and the

balance of power between employer and employee:

http://en.wikipedia.org/wiki/Human_resource_management

http://en.wikipedia.org/wiki/Discrimination

http://en.wikipedia.org/wiki/Ageism

http://en.wikipedia.org/wiki/Disabilities

http://en.wikipedia.org/wiki/Sexual_harassment

http://en.wikipedia.org/wiki/At-will_employment

http://en.wikipedia.org/wiki/Union_busting

http://en.wikipedia.org/wiki/Strike_breaking

http://en.wikipedia.org/wiki/Privacy

http://en.wikipedia.org/wiki/Workplace_surveillance

http://en.wikipedia.org/wiki/Drug_testing

http://en.wikipedia.org/wiki/Whistle-blowing




http://en.wikipedia.org/wiki/Drug_testing

http://en.wikipedia.org/wiki/Workplace_surveillance

http://en.wikipedia.org/wiki/Privacy

http://en.wikipedia.org/wiki/Strike_breaking

http://en.wikipedia.org/wiki/Union_busting




http://en.wikipedia.org/wiki/Sexual_harassment

http://en.wikipedia.org/wiki/Disabilities

http://en.wikipedia.org/wiki/Ageism

http://en.wikipedia.org/wiki/Discrimination

http://en.wikipedia.org/wiki/Human_resource_management



Ethics of sales and marketing

Marketing, which goes beyond the mere provision of information about

(and access to) a product, may seek to manipulate our values andbehavior. To some extent society regards this as acceptable, but where isthe ethical line to be drawn? Marketing ethics overlaps strongly withmedia ethics, because marketing makes heavy use of media. However,media ethics is a much larger topic and extends outside business ethics.

Pricing: price fixing, price discrimination, price skimming.

Anti-competitive practices: these include but go beyond pricing tactics tocover issues such as manipulation of loyalty and supply chains. Specificmarketing strategies:

http://en.wikipedia.org/wiki/Media_ethics


http://en.wikipedia.org/wiki/Price_fixing

http://en.wikipedia.org/wiki/Price_discrimination

http://en.wikipedia.org/wiki/Price_skimming

http://en.wikipedia.org/wiki/Price_skimming

http://en.wikipedia.org/wiki/Price_discrimination

http://en.wikipedia.org/wiki/Price_fixing





Ethics of production

This area of business ethics usually deals with the duties of a company to

ensure that products and production processes do not cause harm. Someof the more acute dilemmas in this area arise out of the fact that there isusually a degree of danger in any product or production process and it isdifficult to define a degree of permissibility, or the degree of permissibilitymay depend on the changing state of preventative technologies orchanging social perceptions of acceptable risk.

Defective, addictive and inherently dangerous products and services (e.g.tobacco, alcohol, weapons, motor vehicles, chemical manufacturing.

Ethical relations between the company and the environment: pollution,environmental ethics, carbon emissions trading

Ethical problems arising out of new technologies: genetically modifiedfood, mobile phone radiation and health.

Product testing ethics: animal rights and animal testing, use ofeconomically disadvantaged groups (such as students) as test objects.

http://en.wikipedia.org/wiki/Pollution

http://en.wikipedia.org/wiki/Environmental_ethics

http://en.wikipedia.org/wiki/Carbon_emissions_trading

http://en.wikipedia.org/wiki/Genetically_modified_food


http://en.wikipedia.org/wiki/Mobile_phone_radiation_and_health

http://en.wikipedia.org/wiki/Animal_rights

http://en.wikipedia.org/wiki/Animal_testing

http://en.wikipedia.org/wiki/Animal_testing

http://en.wikipedia.org/wiki/Animal_rights

http://en.wikipedia.org/wiki/Mobile_phone_radiation_and_health



http://en.wikipedia.org/wiki/Carbon_emissions_trading

http://en.wikipedia.org/wiki/Environmental_ethics

http://en.wikipedia.org/wiki/Pollution



Ethics of intellectual property, knowledge and skills

Knowledge and skills are valuable but not easily "ownable" as objects.

Nor is it obvious who has the greater rights to an idea: the company whotrained the employee, or the employee themselves? The country in whichthe plant grew, or the company which discovered and developed theplant's medicinal potential? As a result, attempts to assert ownershipand ethical disputes over ownership arise.

Patent infringement, copyright infringement, trademark infringement.Misuse of the intellectual property systems to stifle competition: patentmisuse, copyright misuse, patent troll, submarine patent.

Even the notion of intellectual property itself has been criticised onethical grounds: see intellectual property.

Employee raiding: the practice of attracting key employees away from acompetitor to take unfair advantage of the knowledge or skills they maypossess.The practice of employing all the most talented people in a specific field,regardless of need, in order to prevent any competitors employing them.

http://en.wikipedia.org/wiki/Patent_infringement

http://en.wikipedia.org/wiki/Copyright_infringement

http://en.wikipedia.org/wiki/Trademark_infringement

http://en.wikipedia.org/wiki/Patent_misuse


http://en.wikipedia.org/wiki/Copyright_misuse

http://en.wikipedia.org/wiki/Patent_troll

http://en.wikipedia.org/wiki/Submarine_patent

http://en.wikipedia.org/wiki/Intellectual_property

http://en.wikipedia.org/wiki/Employee_raiding

http://en.wikipedia.org/wiki/Employee_raiding

http://en.wikipedia.org/wiki/Intellectual_property

http://en.wikipedia.org/wiki/Submarine_patent

http://en.wikipedia.org/wiki/Patent_troll

http://en.wikipedia.org/wiki/Copyright_misuse



http://en.wikipedia.org/wiki/Trademark_infringement

http://en.wikipedia.org/wiki/Copyright_infringement

http://en.wikipedia.org/wiki/Patent_infringement



FOR THE COMPANY

• To supply goods and services of the highest quality standards to ensure thetotal satisfaction of customers.• To engage only in activities beneficial to the national interests of the countrythey operate in.• To be fully transparent in accounting and financial reporting standards.• To fully strive for the establishment and support of a competitive open market

economy and to abhor unfair trade practices.• To neither give nor take any illegal payment, remuneration, gift, donation or comparable benefit to obtain business or favours.• To comply with all regulations regarding the preservation of the environment.• To be a good corporate citizen and to actively assist in the improvement of thequality. life of the community with the objective of making it self-reliant. Thesesocial activities are regarded as an integral part of their business plans and notas an optional partTo cooperate and shape physical, human, and management resources with otherTata companies so long as this does not adversely affect its business interestsand shareholders value.

Tata’s code of conduct



FOR THE EMPLOYEES

•Conduct themselves professionally with honesty, integrity, as well as

high moral and ethical standards and to be fair and transparent and to beseen so by third parties.

•Not derive any benefit from any information about the company or groupwhich constitutes inside information.

•Report to the management any actual or possible violation of the Codeor an event that the employee becomes aware of that could affect thebusiness or reputation of the employee‟s company or any other Tatacompany.

•Permit employees to pursue an active role in civic or political affairs as

long as it does not affect the business or interests of the company or thegroup.



Compliance

– Laws

– Principle of morality

– Policy of the company

Contribution (Business can make to the society):

– The core values

– Quality of products/services – Employment

– Usefulness of activities to surrounding activities

Consequences of business activity:

– Toward environment inside and outside the organization – Social responsibility toward shareholders, bankers, customers and

employees of organization.

– Good public image, sound activity- good image.

The 3C’s of business ethics?



Important terms

Corruption : Making payments to officials

Environmental : Different for host nations and home nation

regulations

Human rights : Freedom of association, speech, movement and frompolitical repression

Employment practices : Working conditions, Wages, Forced labor or childlabor

Moral obligation : Use of power to enhance social welfare in thecommunities where they do business





CompetitionIncreasing pressure to earn more profit

Ethical dilemma to the manager and selection of an alternative

Political corruption

Social values and customs not followed by new generation.

Money and success becomes the important motivator behind any activity.

People neglect the social responsibility, lack of integrity and discipline inthe social values

Factors causing unethical issues



The Roots of Unethical issues

Ethical Behavior

PersonalEthics

Decision-makingprocess

Organizationalculture

Unrealistic

Performance goals

Leadership



If employment practices in a host nation are inconsistent with homecountry standards, which standards should a multinational companyapply?

If workers in a host nation do not enjoy freedom of association,

should a multinational invest there because wages will be lower ornot invest because there is a lack of protection of basic humanrights?

Is it acceptable for a multinational to use “dirtier” technologies in a

country with weak environmental regulations than it would use at

home?

Ethical Dilemmas



Perspectives on Ethics

Utilitarianism: the moral worth of actions are determined by theirconsequences (Hume, Bentham, Mill)

Kantian Ethics: human dignity demands that people be treated asends in themselves and not as means to an end (Immanuel Kant)

Rights Theories: Human beings are born equal in dignity with bothrights and duties (UDHR)

Justice Theories: inequality justified only if it is to everyone‟s benefit

(impartiality guaranteed by the veil of ignorance ) (John Rawls)



Ethics in different management practice

Ethics in marketing – Product development

– Distribution

– Pricing

– Promotion

– Sales

Ethics in Finance

Ethics in HRM

Ethics in Information Technology

Environmental ethics



Summary

Political, economic, legal, and cultural differences can giverise to ethical issues and dilemmas in international business,and necessitates ethical strategies.

Moral philosophers argue that with power comes theresponsibility to give back, to be an agent of world benefit

Organizations are collections of individuals; ultimately it is upto us to look at our own personal ethics and to help create the

organizations and the world in which we want to work, live,and prosper



Thank you

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Ehical Issues in International Business2