International Business Chapter 2 Quiz

Questions and Answers

Why is it important for firms to do business with integrity and earn the public’s trust in international business today?

It helps build lasting relationships, enhances reputation, and minimizes legal risks.

Which theory says that an ethical action is one that brings the greatest good to the greatest number of people?

Utilitarianism.

What is the rights theory of ethics and what kinds of rights does it cover?

Rights theory states that every human has rights that governments must protect. It covers human rights.

What type of justice is the focus of the ethics theory of justice?

Equitable and fair solutions for all parties involved. Signup and view all the answers

What concepts can managers use to resolve ethical dilemmas between the home and host countries?

Cultural relativism and utilitarianism. Signup and view all the answers

What is a code of ethics and why is it important for an international business to have one?

A code of ethics is a formal statement of ethical values and guidelines for conduct, ensuring consistency in decision-making. Signup and view all the answers

What are the principal sources of unethical behavior?

The moral integrity of individuals and a firm's managerial setting or policies. Signup and view all the answers

How did Adam Smith and Milton Friedman believe companies best served their responsibilities to society?

Smith believed in maximizing societal well-being through competitive markets, while Friedman advocated solely for profit maximization. Signup and view all the answers

What are the four categories of responsibility identified in the CSR pyramid of corporate social responsibilities?

Economic, legal, ethical, and philanthropic responsibilities. Signup and view all the answers

Which parties are important stakeholders for an average company?

Employees, customers, suppliers, investors, and the community. Signup and view all the answers

What do we mean by the term carbon footprint and what are its two components?

The carbon footprint measures the total greenhouse gas emissions caused by an individual or organization, consisting of primary and secondary footprints. Signup and view all the answers

What are the main differences between a linear economy and a circular economy?

A linear economy follows a 'take-make-dispose' model, while a circular economy emphasizes reuse, recycling, and minimizing waste. Signup and view all the answers

Why might companies and investment funds engage in greenwashing?

To mislead consumers about the environmental benefits of their products or practices. Signup and view all the answers

What individuals and types of businesses can be charged under the Foreign Corrupt Practices Act (FCPA)?

US companies, subsidiaries, or citizens involved in bribing foreign officials. Signup and view all the answers

What consequences might a firm face if it provides poor working conditions or violates human rights?

Legal action, reputational damage, loss of customers, and reduced employee morale. Signup and view all the answers

Why is it important for businesses to promote a diverse, equitable, and inclusive workforce in their operations at home and abroad?

It enhances creativity, innovation, improves employee satisfaction, and reflects broader societal values. Signup and view all the answers

Study Notes

Ethics and International Business

Key ethical theories include Utilitarianism, Rights Theory, Justice Theory, and Cultural Relativism, essential for guiding international business practices.
Utilitarianism aims to maximize happiness and promote actions with the best overall outcomes, exemplified by Unilever’s climate transition action plan.
Rights Theory emphasizes every individual's inherent rights, as detailed in the UN's Universal Declaration of Human Rights.
Justice Theory focuses on fair and equitable solutions in a society where all citizens have equal rights.
Cultural Relativism posits that ethical behaviour is context-dependent, varying between cultures.

CSR suggests that businesses should integrate social goals into their core objectives, positively impacting society.
Stakeholder Theory emphasizes the importance of recognizing and valuing internal and external stakeholders.
Benefit Corporations legally incorporate stakeholder interest alongside profit maximization, with notable examples like Patagonia and Danone North America.

Sustainability in Business

Sustainability involves meeting present needs without compromising future generations, encompassing climate change initiatives and net-zero emissions goals.
Carbon footprints calculate a business's greenhouse gas emissions, divided into primary and secondary footprints.
The concept of a circular economy promotes product designs that minimize waste and enhance reuse and recycling practices.

Global Business Challenges

Businesses face ethical dilemmas, often requiring the application of ethical theories to find resolutions.
Ethical behavior creates a competitive advantage through trustworthiness, leading to improved brand loyalty and reduced risk of legal challenges.
The Foreign Corrupt Practices Act prohibits bribing foreign officials and emphasizes ethical practices globally.

Diversity, Equity, and Inclusion (DEI)

DEI encompasses creating diverse workplaces that foster inclusivity and equitable opportunities for all employees.
Companies like Apple and Nike highlight the importance of official DEI statements and initiatives to commit to these values.
Impact sourcing brings marginalized groups into the global workforce, enhancing diversity and social responsibility.

Importance of Ethical Conduct

A strong ethical framework benefits companies through heightened brand loyalty, employee morale, community goodwill, and reduced litigation risks.
Managers must navigate the complexities of ethical decisions, balancing local customs with universal ethical standards.

Challenges in Global Operations

Ethical dilemmas often arise concerning local labor standards, necessitating thoughtful application of ethical theories such as utilitarianism and justice.
Unethical behavior stems from individual moral integrity and corporate culture, highlighting the need for strong leadership examples within organizations.

Conclusion

Ethical business practices, CSR, sustainability, and DEI initiatives are critical to thriving in a competitive international landscape.
Companies must commit to social responsibility not only for compliance but to establish long-term relationships with stakeholders and enhance overall business success.

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Description

Test your understanding of the key concepts in Chapter 2 of 'International Business: The Challenges of Globalization'. This chapter focuses on ethics, social responsibility, and sustainability in global business practices. Challenge yourself with questions that reinforce your learning objectives.