1. Chapter 10 Ethical Issues in the Global Arena © 2012 South-Western, a part of Cengage Learning 1

2. Backlash Against Globalization  Outsourcing/Offshoring of jobs to less- developed nations  Tenth anniversary of NAFTA in 2004 2 © 2012 South-Western, a part of Cengage Learning

3. Globalists and Antiglobalists 3 © 2012 South-Western, a part of Cengage Learning

4. Pros and Cons of Globalization 4 © 2012 South-Western, a part of Cengage Learning IMPACTONIMPACTON GlobalistsAntiglobalists ConsumersFree trade promotes lower costs, etc. Benefits the wealth at the expense of the poor EmployeesFaster economic growth Higher wages Improved working conditions Places profits above people EnvironmentCreates resources needed to address environmental issues Exploits and destroys ecosystems More pollution Developing Nations Promotes national economic development, higher standard of living, better working conditions, cleaner environments. World financial institutions conspire to keep poor nations in debt Human RightsCreates cultures that support law and free expression. Spreads economic / political freedom to far corners Corporations pursing profits ignore human rights violations, abuse of workers, free speech, etc.

5. Underlying Challenges in a Multinational Environment Two major challenges 1.Achieving corporate legitimacy in an unfamiliar society. 2.Differing philosophies between MNCs and host countries. 5 © 2012 South-Western, a part of Cengage Learning

6. The Dilemma of the Multinational Corporation 6 © 2012 South-Western, a part of Cengage Learning Home Country Stakeholder Pressures Host Country Stakeholder Pressures Standards Practices Ethics Laws Culture Customs System of Government Socioeconomic System Standards Practices Ethics Laws Culture Customs System of Government Socioeconomic System Standards Practices Ethics Laws Culture Customs System of Government Socioeconomic System Standards Practices Ethics Laws Culture Customs System of Government Socioeconomic System The Multinational Corporation

7. The Infant Formula Controversy Classic illustration of ethical questions that arise when conducting business abroad. Health risks from using formula: No refrigeration Unsanitary conditions Unclean water Using diluted concentration Bottle feeding led to increases in malnourished babies. Nestlé marketed formula to mothers who did not know how to use it properly. Protestors caused Nestlé to change its marketing practices. 7 © 2012 South-Western, a part of Cengage Learning

8. Plant Safety and the Bhopal Tragedy A leak of methyl isocyanate gas at a Union Carbide Plan in Bhopal, India killed over 2,000 and injured 200,000. Raised many ethical questions: Should MNCs have the same standards at home and abroad? Is it acceptable to locate a dangerous plant where the workforce is unskilled and uneducated, and where the populace is unaware of the risks? How wise are laws that require plants to be staffed entirely by local employees? What is the responsibility of corporations and governments in allowing the use of safe products that become dangerous because of local conditions? 8 © 2012 South-Western, a part of Cengage Learning

9. Sweatshops, Human Rights, and Labor Abuses MNC’s use of women and children to cheaply staff factories. Many major corporations and many countries have been involved. Sweatshops Characterized by child labor, low pay, poor working conditions, worker exploitation, and health and safety violations.  Increased scrutiny of sweatshop practices in recent years. 9 © 2012 South-Western, a part of Cengage Learning

10. Social Accountability 8000 An effort to improve sweatshop conditions created by Social Accountability International (SAI) 1.Child Labor 2.Forced Labor 3.Health and Safety 4.Freedom of Association and Right to Collective Bargaining 5.Discrimination 6.Discipline 7.Working Hours 8.Compensation 9.Management Systems 10 © 2012 South-Western, a part of Cengage Learning

11. Corruption Attempts to influence the outcomes of decisions wherein the nature and extent of the influence are not made public. Instances of corruption Bribery of government officials Giving of questionable political contributions Misuse of company assets for political favors Kickbacks and protection money for police Free junkets for government officials Secret price-fixing agreements Insider dealing 11 © 2012 South-Western, a part of Cengage Learning

12. Arguments For and Against Bribery 12 © 2012 South-Western, a part of Cengage Learning

13. Bribes versus Grease Payments Grease Payments Money given to minor officials to expedite processes. Relatively small sums of money given for the purpose of getting minor officials to: Do what they are supposed to be doing Do what they are supposed to be doing faster Do what they are supposed to be doing better Bribes Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might not take. Money given, often to high-ranking officials, to get them to purchase goods or services. 13 © 2012 South-Western, a part of Cengage Learning

14. Balancing and Reconciling Ethics Traditions The Challenge of the Multinational Corporation 14 © 2012 South-Western, a part of Cengage Learning Home Country Ethical Standards Host Country Ethical Standards OR

15. Ethical Choices in Home versus Host Country Situations 15 © 2012 South-Western, a part of Cengage Learning International Law Global Codes of Conduct BROAD MIDDLE GROUND Mix of Home and Host Country Standards CULTURAL RELATIVISM ETHICAL IMPERIALISM Cultural standards Ethical/moral standards of home country Home Country Host Country Cultural standards Ethical/moral standards of host country Application of Ethical Principles