BUSA 3000 Exam 1
An Ethical Dilemma (moral dilemmas) - ✔️✔️Imagine you are a manager and visit a
factory owned by an affiliate in Colombia, and discover the use of child labor in the
plant; You are told that without the children's income, their families might go hungry. If
the children are dismissed from the plant, they will likely turn to other income sources,
including prostitution or street crime; What should you do? Make a fuss about the
immorality of child labor, or look the other way?; situations in which there is a choice to
be made between two options, neither of which resolves the situation in an ethically
acceptable fashion.
Pyramid of Ethical Behavior (top to bottom) - ✔️✔️Corporate social responsibility
(social); ethical behavior (ethical); complying with laws and regulations (legal)
Intellectual Property (IP) - ✔️✔️refers to ideas or works created by individuals or firms
and includes a variety of proprietary, intangible assets: discoveries and inventions;
artistic, musical, and literary works; and words, phrases, symbols, and designs.
Intellectual property rights - ✔️✔️the legal claim through which proprietary assets are
protected from unauthorized use by other parties, via trademarks, copyrights, and
patents.
Inappropriate Corporate Conduct Abroad: Firms may: - ✔️✔️Falsify or misrepresent
contracts or official documents; Pay or accept bribes, kickbacks, or inappropriate gifts;
Tolerate sweatshop conditions or abuse employees; Do false advertising or other
deceptive marketing; Engage in deceptive or discriminatory pricing; Deceive or abuse
intermediaries in the channel; activities that harm the natural environment.
Improper Ethical Behavior May Result When: - ✔️✔️Top management sets goals and
incentives aimed at promoting good outcomes (e.g., profits) that instead encourage bad
behaviors; Employees overlook unethical behavior in others because of peer pressure
or self-interest; Managers tolerate lower ethical standards in value-chain activities
performed by suppliers or third-party firms; Unethical practices are allowed to
accumulate in the firm slowly over time.
Ethics - ✔️✔️the moral principles and values that govern the behavior of people, firms,
and governments, regarding right and wrong
Corruption - ✔️✔️the practice of obtaining power, personal gain, or influence through
illegitimate means, usually at others' expense; a major or severe concern in the global
activities of a large proportion of MNEs.
,Bribery - ✔️✔️common and may take the form of grease payments, small inducements
intended to expedite decisions and transactions, or gain favors; the offering, giving,
soliciting, or receiving of any item of value as a means of influencing the actions of an
individual holding a public or legal duty
The Value of Ethical Behavior - ✔️✔️Ethical behavior is simply the right thing to do;
Often prescribed within laws and regulations; Demanded by customers, governments,
and the news media. Unethical firms risk attracting unwanted attention; Ethical behavior
is good business, leading to enhanced corporate image and selling prospects. The firm
with a strong reputation is advantaged in hiring and motivating employees, partnering,
and dealing with foreign governments.
Variation in Ethical Standards - ✔️✔️Ethical standards vary from country to country;
relativism; normativism
Variation in Ethical Standards examples - ✔️✔️In China, counterfeiters may publish
translated versions of imported books without compensating the original publisher or
authors; In parts of Africa, accepting expensive gifts from suppliers is acceptable; In the
United States, C E O compensation is often 100 times greater than that of low-ranking
subordinates; Finland and Sweden ban advertising aimed at children, but the practice is
accepted in other parts of Europe.
Relativism - ✔️✔️belief that ethical truths are not absolute but differ from group to
group; according to this perspective, a good rule is, "When in Rome, do as the Romans
do"
Normativism - ✔️✔️a belief that ethical behavioral standards are universal, and firms
and individuals should seek to uphold them consistently around the world.
Counterfeit commodities (United States Borders) - ✔️✔️Wearing Apparel/Accessories
(20%), Consumer Electronics (16%), Footwear (12%), Watches/Jewelry (11%),
Handbags/Wallets (10%), Pharmaceuticals/Personal Care (8%), Optical media (3%),
Computers/Accessories (2%), Labels/Tags (2%), Automotive/Aerospace (2%)
Piracy and Counterfeiting Affect - ✔️✔️International trade; Direct investment; Company
performance; Innovation; Tax revenues; Criminal activity; The natural environment;
National prosperity and wellbeing
international trade - ✔️✔️exports of legitimate products must compete with trade in
counterfeit goods
direct investment - ✔️✔️firms avoid countries known for widespread intellectual
property violations
,company performance - ✔️✔️sales, profits, and strategies are harmed
innovation - ✔️✔️companies avoid doing research and development where piracy is
common
Tax revenues - ✔️✔️pirates usually don't pay taxes
criminal activity - ✔️✔️often linked to organized crime
the natural environment - ✔️✔️intellectual property violators disregard environmental
standards
national prosperity and wellbeing - ✔️✔️ultimately, job prospects, prosperity, and moral
standards in affected nations are harmed
Corporate social responsibility (CSR) - ✔️✔️Operating a business to meet or exceed
the ethical, legal, commercial, and public expectations of customers, shareholders,
employees, and communities; Helps recruit and keep good employees; Can help
differentiate the firm and enhance its brands; Cuts costs, as when the firm reduces
packaging, recycles, cuts energy usage, and minimizes waste in operations; Helps the
firm avoid increased taxation, regulation, or other legal actions by local government
authorities.
Settings for CSR - ✔️✔️workplace, marketplace, environment, and community
Workplace CSR - ✔️✔️focuses on the firm's employees and implies a thoughtful
approach to diversity, recruitment, salary, safety, health, and working conditions.
market CSR - ✔️✔️emphasizes company interactions with customers, competitors,
suppliers, and distributors. It implies appropriate behavior regarding product
development, marketing, and advertising as well as approaches that suppliers and
distributors follow.
Environmental CSR - ✔️✔️refers to the firm's activities to minimize or eliminate the
creation of pollutants as well as efforts to improve the natural environment.
Community CSR - ✔️✔️accounts for the firm's activities aimed at benefiting the
community and society. It includes employee volunteering programs and philanthropy.
Indeed, research reveals that companies which support employee volunteer programs,
such as charity work and community service, tend to increase employee engagement,
loyalty, skills, and personal growth.
MNE Accomplishments examples - ✔️✔️A B N A M R O (Netherlands); S C Johnson
(United States); GlaxoSmithKline (United Kingdom); Hindustan Unilever (India); Nokia
, (Finland); Norsk Hydro (Norway); Philips Electronics (Netherlands); Toyota (Japan);
Tesla (United States)
A B N A M R O (Netherlands) - ✔️✔️Financial services; Finances various socially
responsible projects, including biomass fuels and micro enterprises
S C Johnson (United States) - ✔️✔️Consumer products; Shifted packaging to
lightweight bottles, saving millions of kilograms of consumer waste annually
GlaxoSmithKline (United Kingdom) - ✔️✔️Pharmaceuticals; Devotes substantial R & D
to poor-country ailments, such as malaria and tuberculosis; was first to offer A I D S
medication at cost
Hindustan Unilever (India) - ✔️✔️Consumer products; Provided microfinance and
training to 65,000 poor women to start their own wholesale firms, doubling their incomes
Nokia (Finland) - ✔️✔️Telecommunications; Makes telephones for low-income
consumers; has been a leader in environmental practices such as phasing out toxic
materials
Norsk Hydro (Norway) - ✔️✔️Oil and gas; Cut greenhouse gas emissions by 32
percent; consistently measures the social and environmental impact of its projects
Philips Electronics (Netherlands) - ✔️✔️Consumer electronics; Top innovator of
energy-saving appliances and lighting products as well as medical devices for
developing economies
Toyota (Japan) - ✔️✔️Automobiles; The world leader in developing efficient gas-
electric vehicles such as the top-selling Prius
Tesla (United States) - ✔️✔️Automobiles; A world leader in developing electric vehicles
Sustainability - ✔️✔️Meeting humanity's needs without harming future generations.
The sustainable firm pursues three types of interests: Economic interests, Social
interests, and Environmental interests
Economic interests - ✔️✔️the firm's economic impact on the localities where it does
business, such as regarding job creation, wages, and public works
Social Interests - ✔️✔️how the firm performs relative to social justice, such as avoiding
the use of child labor, sweatshops, as well as providing employee benefits.
Environmental interests - ✔️✔️the extent of the firm's impact and harm to the natural
environment.
