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Principles of International Business (IB) (exam), includes questions.
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Discuss some of the typical ethical dilemmas that firms encounter in internationalbusiness
When a company decides to expand itself on the international level, it is important to
understand that different countries might have different varieties of ethical standards that
could potentially lead to ethical dilemmas. Differentiation of values and national principles
could become a major factor of misguiding the company, and result in breaching of the
“Code of Conduct” law. For example, Nike has been known for using sweatshops in
Indonesia, in order to produce its sneakers and activewear. Toleration of low ethical
standards in value-chain activities is absolutely unacceptable. Such is considered to be one
of the ethical dilemmas, as despite the compliance of the national minimum wage within the
country of subcontractors, Nike, has been reported for poor working conditions. Although
there is a clear distinction between the economic forces of both countries: US and Indonesia,
it shall never become the reason why one of them must go through tough process of
production of goods within unethical workplace for the benefit of other. Due to the outside
pressure accumulation, the company has been forced to improve its monitoring procedure
and labour standards across the factories within different countries, as it will result in
regaining of face of the company. Nike also has to establish ethical code for subcontractors
and seek for relativism, due to the fact that ethical standards might differ in other countries.
Therefore, it is important to adapt and comply with the local beliefs and moral principles,
especially when dealing with countries of a diverse cultural beliefs on an international level.
However, suddenly in 2017, Nike remained in disadvantage when they have decided “to
neglect the Worker Rights Consortium (WRC), that usually would grand an opportunity for
labour rights authorities to perform independent observing and monitoring (1)” of Nike’s
supplier factories. Such act is unethical, as by doing so they are losing people’s trust and
believe in an ethical practice of the company.
Another firm that has encountered a typical ethical dilemma was Primark. The company is
yet mainly focused on a fast fashion production, which in fact, became a popular trend.
However, little did they know about its harmful sourcing and outsourcing process that emits
greenhouse gases upon production that affect the atmosphere and overheat the Earth.
Namely that became an environmental issue that had led to many boycotts on an
international level. Therefore, whilst being criticized, Primark had to implement an
appropriate plan of action to find an alternative source for production of clothes, but also
comply with corporate governance by undertaking CSR and sustainability. To avoid this
ethical dilemma, Primark started using eco-friendly materials that would help them to
balance production of goods with mixed, or rather sceptic views on the firm. Such is
considerate to be a sustainable business practice that can potentially improve work
processes in terms of reduction of costs and maintaining a natural environment in good
condition. However, due to lack in management and control, Primark has been involved in a
case where three of its Indian suppliers were reported for using child labour. Initially, Primark
was not aware of the case, until was informed by authorities. The company not only fired
those suppliers, but also updated their “Code of Conduct”; outlining the restriction on a
workforce age. Even when, usually, implementation of an appropriate conduct can be a
challenge; taking into consideration a differentiation in law systems, ethical standards and
moral principles, it remains essential for Primark to adapt relativism, as an approach to
different cultural and moral insights of a country. Therefore, in relation to employment age,
Primark have compromised to let “children above 15 years old to work in its supply factories
(2)”. It is still CSR of Primark to ensure that its sub-contractors comply with the regulations
and do not breach Code of Conduct.
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