Globalization of Ethical Decision Making

1. Globalization of Ethical Decision Making Ethical Decision Making for Business 8eFraedrich/ Ferrell/ Ferrell CHAPTER 10

2. Chapter Objectives • To understand the role of capitalism and economics as factors in business ethics • To discuss global values, goals, and business practices within ethics • To explore and question common global business practices • To gain awareness of global ethical issues

3. Chapter Objectives (cont.) • To assess the role of the international monetary fund • To assess the role of the world trade organization in business ethics • To assess the role of multinational corporations in business ethics

4. Chapter Outline • Capitalism, Economics, and Business Ethics • Common Values, Goals, and Business Practices • Global Business Practices • Sustainable Development • International Monetary Fund (IMF) • World Trade Organization (WTO) • The Multinational Corporation (MNC)

5. Capitalism, Economics and Business Ethics The first decade of the 21st century was a turbulent one Ethical misconduct and excessive risk-taking seemed rampant Many stakeholders lost confidence in businesses Lack of fairness, trust and honesty made stakeholders question the stability of major institutions, as well as the intentions of executives Even the competence of governmental regulatory institutions was called into question

6. Key Figures in Modern Economics • Adam Smith • John Maynard Keynes • Milton Friedman

7. Capitalism, Economics and Business Ethics Socialism: Advocates that wealth and power be shared equally across society based on the amount of work expended in production Social democracy formed in the 1940s as an offshoot of socialism Current global economic system has created bimodal wealth distribution: The middle class shrinks so that there are many poor and a few very wealthy

8. Common Values, Goals, and Business Practices Global common values: Shared across most cultures Country cultural values: Specific to certain groups that express actions, behavior and intent Culture: Everything in our surroundings that is made by people

9. Global Business Dumping: The practice of charging high prices for products sold in domestic markets while selling the same products in foreign markets at low prices, often below the costs of exporting them

10. Cultural Relativism The concept that morality varies from one culture to another There is a continuum of cultural relativism

11. Sustainable Development Is a systematic approach to achieving development in such a way that the earth’s resources are preserved for future generations Some companies conduct their own sustainability performance reports

12. The International Monetary Fund The IMF emerged from the Bretton Woods agreement of 1944 The IMF assumed a major role in the 1980s in the management of the less developed countries (LDC) debt crisis An ethical issue surrounding the IMF has to do with the increased inequality in LDCs

13. The World Trade Organization The WTO was established in 1995 and now includes 133 member nations and 33 others with observer status Administers its own trade agreements, facilitates future trading negotiations, settles trade disputes and monitors the trade policies of member nations

14. The Multinational Corporation Are public companies that operate on a global scale without significant ties to any one nation or region MNCs are subject to ethical criticism over their impact on the countries in which they do business Because of increased scrutiny and pressure to be socially responsible, many corporations belong to Business for Social Responsibility