Ethics in Global Business
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Questions and Answers

What ethical challenge may arise when businesses expand into other countries?

  • Adapting solely to their own ethical standards
  • Evaluating local laws instead of moral principles
  • Imposing their cultural values on local businesses
  • Reconciling differing moral standards between nations (correct)
  • What is a key consideration for businesses when dealing with ethical relativism globally?

  • The universality of their own ethical standards
  • The dominance of local business ethics over global standards
  • The potential for cultural conflicts in moral perceptions (correct)
  • The legal framework of the host country only
  • What is one of the primary challenges in developing a global code of ethics?

  • Addressing the diversity of ethical practices and beliefs (correct)
  • Incorporating only developed country standards
  • Ensuring stricter regulation than local laws
  • Standardizing ethics without considering local customs
  • What initiative outlines guidelines for ethical business practices on a global scale?

    <p>The UN Global Compact</p> Signup and view all the answers

    What is a significance of the OECD Guidelines for multinational enterprises?

    <p>They encourage responsible business conduct across borders</p> Signup and view all the answers

    What is one responsibility of businesses regarding environmental practices?

    <p>They should promote environmentally friendly technologies.</p> Signup and view all the answers

    Which principle is included in both the UN Global Compact and OECD guidelines?

    <p>Combating bribery.</p> Signup and view all the answers

    How is the credibility of the OECD guidelines enhanced?

    <p>They are supported by governmental initiatives.</p> Signup and view all the answers

    What distinguishes the OECD guidelines from legally binding regulations?

    <p>They do not carry any criminal or civil enforcement.</p> Signup and view all the answers

    What is a main goal of the UN Global Compact for multinational companies?

    <p>To commit to core ethical values.</p> Signup and view all the answers

    Which of the following is NOT one of the ten chapters of the OECD guidelines?

    <p>International trade agreements</p> Signup and view all the answers

    What type of approach does the OECD take regarding issues related to business ethics?

    <p>A governmental approach.</p> Signup and view all the answers

    What demographic is primarily involved in the Global Compact initiative?

    <p>Over 2,000 companies from various countries.</p> Signup and view all the answers

    What characterizes a multinational corporation (MNC)?

    <p>Headquarters located in one country and activities in two or more countries</p> Signup and view all the answers

    What is a potential risk of the 'safety in numbers' approach to ethical decision making?

    <p>Submitting to peer pressure to conform</p> Signup and view all the answers

    What challenge do multinational corporations face in less developed nations regarding ethical practices?

    <p>Comparability of local and Western ethical standards</p> Signup and view all the answers

    Which is an argument against globalization?

    <p>Promoting the exploitation of developing countries</p> Signup and view all the answers

    What does ethical relativism allow for in terms of ethical principles?

    <p>Adapting ethical practices based on situational context</p> Signup and view all the answers

    In what way might an MNC choose to act in less developed countries when faced with ethical dilemmas?

    <p>Engage in bribery to expedite processes</p> Signup and view all the answers

    What is a significant advantage of globalization for developing countries?

    <p>Increased access to natural resources and investment</p> Signup and view all the answers

    Which of the following best describes the 'dark side' of capitalism as mentioned in the context of globalization?

    <p>Exploitation of labor and resources in disadvantaged regions</p> Signup and view all the answers

    What does the principle of voluntary character emphasize in global ethics?

    <p>Willingness of enterprises to adopt ethical practices</p> Signup and view all the answers

    Which of the following is specifically recommended under the general policies section?

    <p>Provision on human rights</p> Signup and view all the answers

    What is encouraged regarding environmental practices?

    <p>Protection of the environment and health</p> Signup and view all the answers

    What major issue in employment and industrial relations is addressed?

    <p>Child and forced labour</p> Signup and view all the answers

    How does OECD recommend businesses should handle consumer interests?

    <p>Respect customer privacy and provide safe products</p> Signup and view all the answers

    What aspect of competition does OECD promote for businesses?

    <p>Open and competitive business environment</p> Signup and view all the answers

    What do businesses need to disclose according to the OECD guidelines?

    <p>Material matters pertaining to performance and ownership</p> Signup and view all the answers

    What is emphasized in the combating bribery section of the OECD guidelines?

    <p>Addressing bribery in both public and private sectors</p> Signup and view all the answers

    What is a primary argument in favor of globalization?

    <p>Improves wealth and living standards in less developed countries</p> Signup and view all the answers

    What do the OECD Guidelines aim to promote?

    <p>Principles of ethical behavior for multinational enterprises</p> Signup and view all the answers

    Which of the following is NOT one of Richard DeGeorge's guidelines for multinationals?

    <p>Prioritize shareholder profits above all</p> Signup and view all the answers

    Which organization is noted for the UN Global Compact initiative?

    <p>United Nations</p> Signup and view all the answers

    Who played a key role in promoting global ethics within organizations?

    <p>Kofi Annan</p> Signup and view all the answers

    What is a major criticism of globalization?

    <p>Exploits developing countries for cheap labor</p> Signup and view all the answers

    What aspect of multinational corporations does Richard DeGeorge emphasize for ethical responsibility?

    <p>Majority control and accountability for actions</p> Signup and view all the answers

    What is a primary challenge of globalisation concerning ethical standards?

    <p>Enforcing a company's culture as the global ethical standard</p> Signup and view all the answers

    Which principle is a focus of the UN Global Compact?

    <p>Respecting human rights</p> Signup and view all the answers

    Why is business ethics easier to understand in a domestic environment compared to a global context?

    <p>Local codes of ethics are clearly defined</p> Signup and view all the answers

    What is expected of multinational corporations (MNCs) regarding ethics when operating in host countries?

    <p>To incorporate local ethical principles into their practices</p> Signup and view all the answers

    What misconception is often held by businesses expanding into new markets?

    <p>The same ethical practices apply in every culture</p> Signup and view all the answers

    How do economic disparities impact the ethical considerations in business transactions?

    <p>Developed nations often hold different ethical expectations towards developing nations</p> Signup and view all the answers

    What major factor complicates business operations in a global environment?

    <p>Cultural differences and languages</p> Signup and view all the answers

    What should multinational corporations do to adapt their ethical practices in foreign markets?

    <p>Evaluate and modify their code of ethics according to local standards</p> Signup and view all the answers

    In the context of globalisation, what is crucial for businesses when they operate internationally?

    <p>To engage with local stakeholders and understand their ethical framework</p> Signup and view all the answers

    Study Notes

    Learning Objectives

    • Understand ethical issues in global business
    • Compare ethical challenges in developed and developing nations
    • Explain ethical relativism in a global context
    • Explain challenges in developing a global code of ethics (including DeGeorge guidelines)
    • Analyze ramifications of the UN Global Compact
    • Explain OECD Guidelines for multinational enterprises

    Introduction

    • Expanding firms face ethical issues doing business with foreign customers/firms.
    • Companies often want to apply their own ethical standards universally, but other countries have different moral standards and ethical principles.
    • This creates differences in culture, language, and moral standards.
    • Conflicts can arise in ethical standards.

    Ethics and Globalization

    • Businesses expanding globally face new ethical considerations.
    • Businesses may be accustomed to their own culture and practices, but these may not be appropriate globally.
    • Globalization is the expansion of international trade leading to a global market.

    Challenge of Globalization

    • Enforcing a company's culture as the universal standard of ethics vs. firms and customers in other countries having their own moral standards and ethical principles.

    Ethics and Globalization (continued)

    • Business ethics in domestic environments are clearer and more straightforward.
    • Ethical considerations become more challenging when crossing borders.

    Ethics and Globalization (continued)

    • When operating internationally, adherence to the host country's ethical principles and policies is expected.
    • Redefining company code of ethics.
    • Multinational corporations are expected to adopt global ethical standards and responsibility towards host countries.

    Ethics and Globalization (continued)

    • The debate on business ethics considers different standards for developed and less-developed nations.
    • Business transactions differ in languages and cultures.
    • Assumptions that "what works here works there" are often incorrect.

    Expanding into new Markets

    • Multinational corporation (MNC) definition: Companies operating in multiple countries.
    • MNCs have headquarters in one country and conduct business across multiple countries.
    • MNCs often have productive activities in more countries.
    • Common examples of MNCs: Nike, Reebok, VW

    Ethical Relativism

    • Ethical relativism is based on individual opinions, traditions of society, and circumstances.
    • It emphasizes flexibility in ethical standards rather than rigid rules.
    • A safety in numbers approach considers the comfort of being part of the ethical majority, but there is risk of bowing to peer pressure.
    • Decisions driven by local circumstances.

    Ethical Relativism (continued)

    • Policies and procedures can be challenging in less-developed nations since those nations often do not have comparable policies to foreign firms.
    • MNCs often face tough decisions about whether to adhere to Western ethical principles or adapt to local practices, potentially including bribery and corruption.

    Ethics and Globalization (arguments)

    • Arguments for globalization improve wealth and living standards, provide access to resources, and reduce costs in less-developed nations.
    • Arguments against globalization highlight the exploitation of developing countries, cheap labor, and lack of concern for economic viability of those nations.

    Enforcing Global Ethics (UN Global Compact)

    • The UN Global Compact is a voluntary initiative committed to promoting good corporate citizenship.
    • Initiatives were launched in January 1999 and became operational in July 2000.
    • Areas of concern include: human rights, labor standards, environment, and anticorruption.

    Enforcing Global Ethics (UN Global Compact) (Continued)

    • The 10 key principles of the UN Global Compact (not listed in the slides): businesses should respect human rights, have no complicity in abuses, uphold freedom of association, eliminate forced labor and child labor, eliminate discrimination, support a precautionary approach to environmental changes, promote responsibility, encourage development and diffusion of environmentally friendly technologies, work against corruption.

    Enforcing Global Ethics (OECD)

    • The OECD Guidelines are a governmental initiative that promotes ethical conduct.
    • It provides principles and standards of behavior with more credibility than voluntary standards.
    • However, guidelines for OECD are not legally binding.

    Enforcing Global Ethics (OECD) (Continued)

    • Covers 10 chapters including: Concepts and Principles, General Policies, Disclosure, Employment relations, Environment, Combating bribery, Consumer Interests, Science and Technology, Competition, and Taxation.

    OECD (Continued)

    • The OECD has ten chapters outlining the guidelines.
    • The guidelines aim to provide principles that form the basis for voluntary conduct and Worldwide application.
    • Reflect good practices for all enterprises.

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    Description

    This quiz explores the various ethical issues encountered by firms as they expand globally. Participants will analyze the differences in ethical standards across developed and developing nations, and understand the challenges of forming a universal code of ethics. Key concepts include ethical relativism, the UN Global Compact, and OECD guidelines for multinational enterprises.

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