12 globalization and business ethics

8/12/2019 12 Globalization and Business Ethics

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Business Ethics

Globalization and BusinessEthics


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Globalization

Commerce has become global since noeconomy fulfils all its needs on its own

Globalization facilitated byFalling trade barriersPolitical reforms have opened new frontiersMore developing nations joining globalizationEmergence of new technologies


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Globalized Business

Ethnocentric ViewpointFormerly the home country laws were viewed asdominant but now the entire world is home

Geocentric ViewpointFirms develop managers from a worldwide pool oftalent


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Role of MNCs

International CorporationCompany with strong national identification withthe main focus being the home market

Multinational CorporationBusiness operates in more than one countrySo big that it is beyond the control of a single

government


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Big MNCs

Worlds top 2000 corporations have combined sales thatare greater than 25% of world GDPThey are bigger than the combined GDP of 182

countries, i.e., except the biggest nine countriesOf the 100 largest economies in the world, 51 are globalcorporations and only 49 are countriesThey exert enormous political and economic clout

They are regarded as exploiters of national wealthThey are considered to be an extension of colonialismsince most of them are Western


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International Business Issues

Promotion of free trade while protectingdomestic industry

Intellectual property rightsIssue of exploitation of natural resources indeveloping countries


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Benefits of MNCs

Better access to worldwide marketsBest access to capital investmentTransfer of advanced technology

Encouragement of local supplier developmentNew jobs for labor

Advanced training for laborBetter access to management talentNew products for consumersLow cost products and better productsExports contribution to the host nation


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Disadvantages of MNCs

Loss of sovereigntyPolitical interests of MNCs may mirror homenationHost nation may lose control of its economyNegative impact on balance of paymentsbecause of heavy imports of spares, etc.

Exploitation of non-renewable resourcesExploitation of host country labor when hostcountry needs them

Indulgence in harmful environmental acts


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International Codes ofConduct

ILO covenantsUN Commission on TransnationalCorporationsOECD statutesCaux Round Table

Social Accountability International SA8000Global Reporting Initiative Account Ability

Global Compact


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Limits of Voluntary Approach

Voluntary codes since they do not attractpenaltiesVery few firms have adopted them and theydo not cover all areasFirms may adopt only some codes but not allof themMost of the codes set standards that arebelow national standardsMultiplicity of codes work at cross purposes


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Caux Round Table

Towards worldwide businessStakeholders

EmployeesOwners/InvestorsSuppliers

Community


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Towards Woldwide Business

Business responsibilities are beyondshareholders and towards stakeholdersEconomic and social impact of business toworld communityBeyond the law and towards a spirit of trustRespect for rulesSupport for multinational tradeRespect for environment

Avoidance of illicit operations like bribery,mone launderin , etc.


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Stakeholders

Provide highest quality products arereasonable pricesRemedy customer dissatisfactionHealth and safety of customer and quality ofhis life not impaired by the workEnsure human dignity in goods offeredRespect the integrity and culture ofcustomers


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Employees

Working conditions to be fair and improved constantlyHealth and dignity of worker to be bourn in mindOpen in dealings, share all but classified information

Listen to and act on employee suggestionsIn conflicts, engage in good faith negotiationNo discrimination on any groundPut principle of ergonomics in practiceUpdate skills and knowledge of employeesSensitive employee problems to be tackled amicably


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Owners/Investors

Fair and competitive return on capital byefficient managementDisclose all relevant information except thosein classified listConserve, protects and increase ownersassetsRespect their complaints for solutions


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Suppliers

Pricing to be fairNo coercion or litigation

Long term stability


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Community

Human rights respected and maintainedGood corporate citizen through charitabledonations


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Global Compact

Human rightsLabor standards

Environment Anti-corruption


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Human rights

Businesses should support and respect theprotection of internationally proclaimedhuman rightsMake sure they are not complicit in humanrights abuses


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Labor standards

Uphold freedom of association and theeffective recognition of right to collectivebargainingElimination of all forms of forced andcompulsory laborEffective abolition of child laborElimination of discrimination in employmentand occupation


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Environment

Support precautionary approach toenvironmental challengesUndertake initiatives to promote greaterenvironmental responsibilityEncourage development and diffusion ofenvironmentally friendly technologies


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Anti-corruption

Work against corruption in all its forms,including extortion and bribery


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The End

12 globalization and business ethics

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