Ethics and International Business

2. International Business Strategy 301LON Ethics and International Business Unit: 9 Knowledgecast: 2

3. Module Learning Outcomes • Integrate and apply strategic approaches to practical situations in various types of organisations • Assess current developments in the organisational environment and alternative responses related to strategy • Resolve management problems in the area of strategic management by evaluating alternative outcomes

4. ? Ethics Ethics Are moral principles and values that govern the behavior of people, firms, and governments. ETHICS

5. The Value of Ethical Behavior Ethical behavior is simply the right thing to do. It is often prescribed within laws and regulations. Ethical behavior is 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. Firms with strong reputations have an advantage when hiring and motivating employees, partnering, and dealing with foreign governments.

6. Variation in Ethical Standards • Bribery is common and can take the form of grease payments, small inducements intended to expedite decisions and transactions or gain favors. Ethical standards vary from country to country. Relativism is the belief that ethical truths are not absolute but, rather, differ from group to group. This perspective is summarized by the phrase, “When in Rome, do as the Romans do.” • Corruption is the abuse of power to achieve illegitimate personal gain. • More than 30 percent of MNEs believe corruption is a major or severe concern in their global activities.

7. Variation in Ethical Standards Normativism is the belief that ethical behavioral standards are universal and that firms and individuals should seek to uphold them consistently around the world.

8. An Ethical Dilemma • 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 and street crime. Imagine you are a manager and, during a visit to a factory owned by an affiliate in Colombia, you discover the use of child labor in the plant. • What should you do? • Make a fuss about the immorality of child labor or look the other way?

9. Corporate Social Responsibility Corporate social responsibility: Manner of operating a business that meets or exceeds the ethical, legal, commercial, and public expectations of customers, shareholders, employees, and communities A strong CSR can: Help recruit and retain good employees Help differentiate the firm and enhance its brands Help cut costs, such as minimizing packaging, recycling, economizing on energy usage, and reducing waste in operations Help the firm avoid increased taxation, regulation, or other legal actions by local government authorities

10. The Pyramid of Ethical Behavior

11. Sustainability Sustainability: Meeting humanity’s needs without harming future generations The sustainable firm pursues three types of interests: 1. Economic interests refer to the firm’s economic impact on the localities where it does business, such as job creation, wages, and public works. 2. Social interests refer to how the firm performs relative to social justice, such as avoiding the use of child labor, sweatshops, and providing employee benefits. 3. Environmental interests refer to the extent of the firm’s impact on and harm to the natural environment.

12. Stages of sustainability strategy – the determinant Sustainability Sustainability 3 Completing Social, Economic and Environmental Integration 2 Achieving Competitive Advantage 1 Managing Regulatory Compliance

13. Framework for implementing sustainability Strategy The Triple Bottom Line The triple bottom line exist currently as a kind balance score card that captures in number and words the degree to which any company is or is not creating value for its shareholders and for the society. Sustainability • Economic viability • Corporate profitability & growth • Social economics Company • Social responsibility • Employee • Customer • Community • Environmental Soundness • Biodiversity • Climate

14. Inappropriate Corporate Conduct Abroad Examples: Firms may: ▪ Falsify or misrepresent contracts or official documents ▪ Offer or accept bribes, kickbacks, or inappropriate gifts ▪ Tolerate sweatshop conditions or abuse employees ▪ Use false advertising or other deceptive marketing ▪ Engage in deceptive or discriminatory pricing ▪ Deceive or abuse intermediaries in the channel ▪ Undertake activities that harm the natural environment

15. Knowledgecast Summary • Integrate and apply strategic approaches to practical situations in various types of organisations • Assess current developments in the organisational environment and alternative responses related to strategy • Resolve management problems in the area of strategic management by evaluating alternative outcomes

17. Seminar Lessons of global sourcing Useful Video on Outsourcing (Benefits, costs, risk and impact of technology) http://www.youtube.com/watch?v=npJGgQunCLg http://www.youtube.com/watch?v=syicHUMj6fc http://www.youtube.com/watch?v=JrP4Xe7zceg

18. Group Activity End of Module Assessment – Evaluating Internationalization Strategy (Management Brief) (Unit 10) Preparation – Preparing the Final Draft This session will provide you with the opportunity to discuss your final draft with your module tutor and ensure all your questions are answered as you finalize your submission. Although this is an independent piece of work giving and receiving feedback from your peers is an essential skill, which will be of great value in the workplace. Be prepared to provide constructive feedback on other’s work and receive feedback which can inform your progress.