Ethical issues In International Business

Submitted by:
Shikha Sharma, Sukram, Sunil, Varun Chadha, Vikas Maingi, Vikas Saini, Bikram Singh MBA(Exec)-V Sem.

Todays Presentation includes

Definition and Concept

Major ethical issues and terms Factors affecting ethics Ethical dilemmas

Ethics in different management practice

Ethics

Ethics is derived from Greek word 'ethos It is defined as science of morals.

It is a branch of philosophy which is concerned with human character and conduct.

The word ethics refers to morals and rules of behaviour.

Webster defines the word 'ethics' as the discipline dealing with which is good and bad and with moral duty and obligations.

What is ethical and what is unethical in general society may not be same in business

Ethics in international business

Definition:
Business ethics are the accepted principles of right or wrong governing the conduct of business people To be more specific , business ethics is the study of good and evil, right and wrong, and just and unjust actions of businesses. It is also defined as Business managers integrity so far as his conduct or behaviour is concerned in all fields of business as well as towards the society and all stakeholders of the business. An ethical strategy is a strategy or course of action that does not violate these accepted principles

Social Orientations of Business

Responsibilities of Business

The extent of social orientations of company varies very widely.

The extent of social orientation or social involvement of a company may change over time Social responsibility models: there are some models to describe the evolution and extent of social orientation of companies Notable one includes: Carrolls model Halals Model Ackermans model

Archie B. Carroll defines social responsibility as the entire range of obligations business has to society, proposed 3-d conceptual model of corporate performance.
Firm has 4 categories of obligations of corporate performance.

Economic i.e . Efficient operations of firm to satisfy economic

needs of society and generation of surplus

Legal responsibilities : that is to obey the laws of the land Ethical responsibilities: these are certain norms which society
expects the business to observe though they are not mandatory

Discretionary responsibilities: It refers to the voluntary

contribution of the business to the social cause

Nature of ethics
The theory of moral unity: It advocates the principle that business actions should be judged by the general ethical standards of society. There exists only one ethical standards that applies to business and to non-business. Theory of amorality: which argues that business can be amoral, and the actions of businesses need not be guided by general ethical standards. Managers may act selfishly because the market mechanism distills their actions into benefits to shareholders and society at large.

The theory of amorality is not accepted to anybody. Everyone agrees that business actions should be subject to the same ethical standards as the one applicable to the society in general.

Why Ethics Important

1.Ethics Corresponds to basic human needs: It is a human trait that man desires to be ethical, not only in his private life but also in his business affairs, where being a manager he knows his decisions may affect the lives of thousand of employees Most people want to be the part of an organizations, which they can respect and be publicly proud of, because they perceive its purpose and activities to be honest and beneficial to the society

Why Ethics Important

2.Values create credibility with the public: A company perceived by the public to be ethically and socially responsive will be honored and respected even by those who have no intimate knowledge of the actual working.

Why Ethics Important

3. Values give Management Credibility with Employees: Values are supposed to be common language to bring leaderships and its people together. Organisational ethics , when perceived by employees as genuine, create common goals, values and language.

Why Ethics Important

4.Values help Better Decision-making: Another point of great importance is that ethical attitude helps the management make better decisions, that is decisions that are in the interest of the public, their employees and companys own long-term goals , even though decision-making is slower

Why Ethics Important

5. Ethics and profit: Ethics and profit go together. A company which is inspired by ethical conduct is also a profitable one. Value-driven companies are sure to be successful in the longrun .

6. Law cannot Protect Society, Ethics can :Ethics is important because the govt, law and lawers cannot do everything to protect society. Wherever law fails ethics can succeed.

Why Ethical issues should be studied?

- Because it is concerned activity within or outside the organization - Study of ethics allows us to reflect on our own behaviour - Social consequences - Affect not only "international" business but also "domestic" business

Some unethical practices

1. Lie to an employee/ employer 2. Favoritism, nepotism 3. Taking credit for others work 4. Stealing from company 5. Firing employee without notice 6. Diverging/stealing confidential matter of office

Ethics of accounting information

misleading financial analysis. securities fraud, bucket shops, forex scams: concerns (criminal) manipulation of the financial markets. Executive compensation: concerns excessive payments made to corporate CEO's and top management. Bribery, kickbacks, facilitation payments: while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society.

Ethics of human resource management

The ethics of human resource management (HRM) covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee. Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness. sexual harassment. Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment. Issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking. Issues affecting the privacy of the employee: workplace surveillance, drug testing. Issues affecting the privacy of the employer: whistle-blowing. Issues relating to the fairness of the employment contract and the balance of power between employer and employee:

Ethics of sales and marketing

Marketing, which goes beyond the mere provision of information about (and access to) a product, may seek to manipulate our values and behavior. To some extent society regards this as acceptable, but where is the ethical line to be drawn? Marketing ethics overlaps strongly with media ethics, because marketing makes heavy use of media. However, media ethics is a much larger topic and extends outside business ethics. Pricing: price fixing, price discrimination, price skimming. Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. Specific marketing strategies:

Ethics of production
This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk. Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing. Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading

Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health.
Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects.

Ethics of intellectual property, knowledge and skills

Knowledge and skills are valuable but not easily "ownable" as objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee, or the employee themselves? The country in which the plant grew, or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise. Patent infringement, copyright infringement, trademark infringement. Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent. Even the notion of intellectual property itself has been criticised on ethical grounds: see intellectual property. Employee raiding: the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess. The practice of employing all the most talented people in a specific field, regardless of need, in order to prevent any competitors employing them.

Tatas code of conduct

FOR THE COMPANY To supply goods and services of the highest quality standards to ensure the total satisfaction of customers. To engage only in activities beneficial to the national interests of the country they operate in. To be fully transparent in accounting and financial reporting standards. To fully strive for the establishment and support of a competitive open market economy and to abhor unfair trade practices. To neither give nor take any illegal payment, remuneration, gift, donation or comparable benefit to obtain business or favours. To comply with all regulations regarding the preservation of the environment. To be a good corporate citizen and to actively assist in the improvement of the quality. life of the community with the objective of making it self-reliant. These social activities are regarded as an integral part of their business plans and not as an optional part To cooperate and shape physical, human, and management resources with other Tata companies so long as this does not adversely affect its business interests and shareholders value.

FOR THE EMPLOYEES Conduct themselves professionally with honesty, integrity, as well as high moral and ethical standards and to be fair and transparent and to be seen so by third parties. Not derive any benefit from any information about the company or group which constitutes inside information. Report to the management any actual or possible violation of the Code or an event that the employee becomes aware of that could affect the business or reputation of the employees company or any other Tata company. Permit employees to pursue an active role in civic or political affairs as long as it does not affect the business or interests of the company or the group.

The 3Cs of business ethics?

Compliance Laws Principle of morality Policy of the company Contribution (Business can make to the society): The core values Quality of products/services Employment Usefulness of activities to surrounding activities Consequences of business activity: Toward environment inside and outside the organization Social responsibility toward shareholders, bankers, customers and employees of organization. Good public image, sound activity- good image.

Important terms

Corruption Environmental regulations Human rights

: Making payments to officials : Different for host nations and home nation

: Freedom of association, speech, movement and from political repression : Working conditions, Wages, Forced labor or child labor : Use of power to enhance social welfare in the communities where they do business

Employment practices

Moral obligation

Ethical dimensions
Globalization -Different languages, different cultures, and different tax procedures
Technology
-Risks, social and ethical issues

Intangible assets -Customer, employee, leadership, culture, strategy, brand, innovation, knowledge, intellectual property rights War for talent - Recruitment and retaining strategy

Factors causing unethical issues

Competition Increasing pressure to earn more profit Ethical dilemma to the manager and selection of an alternative Political corruption Social values and customs not followed by new generation. Money and success becomes the important motivator behind any activity. People neglect the social responsibility, lack of integrity and discipline in the social values

The Roots of Unethical issues

Organizational culture

Personal Ethics

Ethical Behavior
Unrealistic Performance goals Leadership Decision-making process

Ethical Dilemmas

If employment practices in a host nation are inconsistent with home country standards, which standards should a multinational company apply? If workers in a host nation do not enjoy freedom of association, should a multinational invest there because wages will be lower or not invest because there is a lack of protection of basic human rights? Is it acceptable for a multinational to use dirtier technologies in a country with weak environmental regulations than it would use at home?

Perspectives on Ethics
Utilitarianism: the moral worth of actions are determined by their consequences (Hume, Bentham, Mill)
Kantian Ethics: human dignity demands that people be treated as ends in themselves and not as means to an end (Immanuel Kant) Rights Theories: Human beings are born equal in dignity with both rights and duties (UDHR) Justice Theories: inequality justified only if it is to everyones benefit (impartiality guaranteed by the veil of ignorance) (John Rawls)

Ethics in different management practice

Ethics in marketing
Product development Distribution Pricing Promotion Sales

Ethics in Finance Ethics in HRM Ethics in Information Technology Environmental ethics

Summary
Political, economic, legal, and cultural differences can give rise to ethical issues and dilemmas in international business, and necessitates ethical strategies. Moral philosophers argue that with power comes the responsibility to give back, to be an agent of world benefit

Organizations are collections of individuals; ultimately it is up to us to look at our own personal ethics and to help create the organizations and the world in which we want to work, live, and prosper

Thank you