1. Ethics & International Management
Chapter 4
Ethics & International Management

2. Ethics & International Management
Study of decision making within a framework of a system of moral standards.
Study of morality and standards of conduct.

3. Managerial Ethics-Issues
Can there be one fixed moral framework that can provide standards to guide managers every time they face ethical decisions?
If a single set of standard is to guide managerial behavior, which is the right set among the conflicting definitions of good and bad behavior?

4. Ethical Issues Ethical Dilemmas
Ethical Dilemmas (ED) Ethical Lapses (EL)
Managers facing ethical issues fall into two broad categories-ED and EL.
The issue has two conflicting but arguably
valid sides.
Ethical Dilemmas

5. Ethical Dilemma Not Allowing to advertise
Permitting or not tobacco companies to advertise.
Not Allowing to advertise
Restricts their
freedom
of speech
Obstructs their ability
to do business

6. Ethical Lapse
Occurs when a manager makes an unethical decision
Unresolved interpretations of ethical issues lead to-ethical dilemmas.
Ethical lapse is associated with cases of unethical behavior.
Desire of a tobacco company to advertise is an ethical dilemma.
Decision of a top manager to earn profit from inside information is an act of ethical lapse.
Example

7. Approaches to Ethical Management
Ethical management practices
Must be a proactive stance
Must be pursued with diligence
Must be pursued with persistence
> For achieving the aim, the need is to recognize various ethical pressures on managers lead to ethical dilemmas

8. Ethical Pressure on Managers
Organizational Goals
Ethical Pressure
Personal
Goals
Fear
Competition

9. Organization. Goals. Target sale Pressure. Adopting less ethical
Organization Goals Target sale Pressure Adopting less ethical course of action Benefit Better short-term performance

10. Ethical organization recognize
Managers should ask ethical questions while taking decisions.
Decision making should consider factors beyond immediate goals.

11. Personal Goals Compensation & Promotion
Pressure Unethical behavior (overstate a products benefit to increase the sales volume)
Pressure (Other employees work as his own)
Pressure (Other employees to lower their performance)

12. To beat the competitors
Competition Market Success
Pressure Unethical Practices
(To announce product well before they exist)
Benefit
To beat the competitors
Danger
Mislead customers
Cause financial damages to firms
Late or no arrival of products

13. Fear To loose job
Pressure Unethical decisions
(Using of sub-standard material on the instruction of boss)
Cheating Customers

14. Ethical issues:
Country differences give rise to some interesting ethical issues
One major ethical dilemma facing firms from the Western democracies (U.S) whether they should do business in totalitarian countries that violates the human rights of their citizens (e.g.: China)

15. One ethical concern regards whether firms should invest in countries where the government represses its citizens in political and/or economic freedom
A second ethical concern regards whether an international firm should adopt consistent and high levels of product safety, worker safety, and environmental protection worldwide, or whether they should focus only on meeting local regulations.

16. Another ethical concern regards whether firms should pay bribes to governmental officials or business partners in exchange for business access.

17. Four Actions for Improving International Business Ethics
Create global codes of conduct
Global codes and standards set by corporations
Global Codes and standards set by international organizations
Integrate ethics into a global strategy
Suspend activities in host country
Create ethical impact statements

18. Global Codes and Standards Developed by International Organizations
Caux Principles
Global Reporting Initiative
Global Sullivan Principles
OECD Guidelines for Multinational Enterprises
Principles for Global Corporate Responsibility: Benchmarks
UN Global Compact

19. Code of Ethics
Need to respect laws & regulations of the host countries
Do nothing to compromise with the health & safety of consumers
Should not exploit the weakness in legislation in host countries
Be proactive & assist the government in preventing marketing of unsafe products
Should not misuse the close relationship developed by firm & government.

20. MNCs Marketing Practices –Issues of Ethical Nature
Selling products in LDC, less in demand in Home countries- (Tobacco)
Selling prohibited products in LDC markets-(DDT)
Selling products likely to be misused-(Milk Power)
Dumping
Counterfeiting-violating patent & copyright
Grey marketing

21. Fundamental International Rights:
The right to physical movement
The right to ownership of property
The right to freedom from torture
The right to a fair trial
The right to nondiscriminatory treatment
The right to physical security
The right to freedom of speech and association
The right to minimal education
The right to political participation
The right to subsistence

22. Seven Moral Guidelines for MNCs
Inflict no intentional or direct harm
Produce more good than bad for the host country
Contribute to host country’s development
Respect the human rights of their employees
Pay their fair share of taxes
Respect local cultural beliefs that do not violate moral norms
Cooperate with the government to develop and enforce background institutions