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Implication of business ethics in global business environment

The dawn of a global knowledge society with information-driven economies and expansion of cross-border trade as consequences of liberalization and globalization policy is placing new demands on business organizations for more innovative approaches in business ethics at both local as well as global business environment. Many research scholars today share this view and indicate that what they took for granted, assumed, believed and worked towards has been upended by those who argue that in order to get it right in a global business environment, organizations must rethink their business ethics approach. The acceptance of law-like generalizations has to be, as they suggest, Either enhanced or modified. In the economic sense it can be broadly defined as a process relating to the integration of economies worldwide where world economy is viewed as a single market and production area with regional sub-sectors rather than a set of national economies linked by trade and investment. With globalization we see cross-border operations of economic activities such as production, investment financing, technology utilization and marketing. This scenario has resulted into optimal utilization of global resources including competitive sourcing of inputs for achieving cost competitiveness in productive economies of scale in operations and efficient technology utilization. Thus, competitive production and markets have become global in nature and goods and services become less distinguishable or identifiable with their country of origin.


Dilemma comes from the Greek word Di-lemma, two propositions, which mean a situation in which a choice has to be made to gain or avoid between two equally urgent, yet cunningly incompatible alternatives. It is true that decision-making is about choosing between two unpleasant alternatives and quite often that is a dilemma. In a global business environment, responsible marketers discover what consumers want and respond with marketing offers that create value for buyers in order to capture value in return. Some marketing companies use questionable practices and some marketing actions that seem innocent in them but strongly affect the larger society

Ethical system to global framework

Deriving Business Ethics from the Profit Motive. Some businesspeople argue that there is a symbiotic relation between ethics and business in which ethics naturally emerges from a profit-oriented business. There are both weak and strong versions of this approach. The weak version is often expressed in the dictum that good ethics results in good business, which simply means that moral businesses practices are profitable. For example, it is profitable to make safe products since this will reduce product liability lawsuits. Similarly, it may be in the best financial interests of businesses to respect employee privacy, since this will improve morale and thus improve work efficiency. Robert F. Hartley's book, Business Ethics, takes this approach. Using 20 case studies as illustrations,. First, many moral business practices will have an economic advantage only in the long run. This provides little incentive for businesses that are designed to exclusively to seek short-term profits. As more and more businesses compete for the same market, short-term profits will dictate the decisions of many companies simply as a matter of survival. Second, some moral business practices may not be economically viable even in the long run. For example, this might be the case with retaining older workers who are inefficient, as opposed to replacing them with younger and more efficient workers. Third, and most importantly, those moral business practices that are good for business depend upon what at that time will produce a profit. In a different market, the same practices might not be economically viable. Thus, any overlap that exists between morality and profit is both limited and incidental. Business Ethics Restricted to Following the Law. A second approach to business ethics is that moral obligations in business are restricted to what the law requires. The most universal aspects of Western morality have already been put into our legal system, such as with laws against killing, stealing, fraud, harassment, or reckless endangerment. Moral principles beyond what the law requires or supra-legal principles -- appear to be optional since philosophers dispute about their validity and society wavers about its acceptance. For any specific issue under consideration, such as determining what counts as responsible marketing or adequate privacy in the workplace, we will find opposing positions on our supra-legal moral obligations. It is, therefore, unreasonable to expect businesses to perform duties about which there is so much disagreement and which appear to be optional. The unreasonableness of such a moral requirement in our society becomes all the more evident when we consider societies that do have a strong external source of morality., In our culturally pluralistic society, the only business-related moral obligations that are majority-endorsed by our national social group are those obligations that are already contained in the law. These include a range of guidelines for

honesty in advertising, product safety, safe working conditions, and fair hiring and firing practices. In fact, the unifying moral force of businesses within our diverse society is the law itself.Corporations that assume an obligation beyond the law, either in their corporate codes or in practice, take on responsibilities that most outsiders would designate as optional. Deriving Business Ethics from General Moral Obligations. The third approach to business ethics is that morality must be introduced as a factor that is external from both the profit motive and the law. This is the approach taken by most philosophers who write on business ethics, and is expressed most clearly in the following from a well known business ethics essay: Proper ethical behavior exists on a plane above the law. The law merely specifies the lowest common denominator of acceptable behavior. (Gene Laczniak, "Business Ethics: A Manager's Primer," 1983) The most convenient way to explore this approach is to consider the supra-legal moral principles that philosophers commonly offer. Five fairly broad moral principles suggested by philosophers are as follows: Harm principle: businesses should avoid causing unwarranted harm. Fairness principle: business should be fair in all of their practices. Human rights principle: businesses should respect human rights. Autonomy principle: businesses should not infringe on the rationally reflective choices of people. Veracity principle: businesses should not be deceptive in their practices.

Adapting Ethical Systems to a Global Framework

1. Cultural relativism When in Rome, do as the Romans do or You must adapt to the cultural practices of the country you are in are rationalizations businesspeople sometimes offer for straying from their own ethical values when doing business abroad. By defending the payment of bribes or greasing the wheels of business and other questionable practices in this fashion, they are resorting to cultural relativism, the concept that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures. Effective Global Code of Conduct 1. Form an international advisory group. The group needs to provide content expertise and become local champions for the code. It should be a functionally diverse group that is geographically representative of the target markets as well as the company and management structure.

2. Set clear objectives for the code. It is important to establish some clear and realistic objectives for the document. Some of the most common objectives for codes of conduct are compliance, corporate social responsibility, suppliers, and partners or a values-based code. 3. Draft content. This stage includes determining the issues, developing standards, and reviewing the preliminary draft of the code.. 4. Have knowledge about graphic design. Cultural sensitivity plays a key role in graphic design and is required especially for the following areas: (1) the use of colorcompanies should be aware that color can have different meanings in different cultures; (2) use of symbolsthe document should not rely on country-specific symbols such as the dollar symbol to represent currency; (3) use of photosit is important to ensure that the photos represent the international character of the company and not one or two particular geographies. 5. Hold focus groups and finalize content. It is best to conduct focus groups in the native language and if possible with a translated code of conduct 6. Translate the code. It is important that companies understand when to translate the code and how to select translators. When there are fewer than twenty-five employees, it is best to provide a translation, but it is not necessary to reprint the code with graphics or in color. With more than one hundred employees, it is important to invest in translation and color reprinting of the code. Cross cultural ethical issue

Express our support for universal human rights and, particularly, those of our employees, the communities within which we operate, and parties with whom we do business. Promote equal opportunity for our employees at all levels of the company with respect to issues such as color, race, gender, age, ethnicity or religious beliefs, and operate without unacceptable worker treatment such as the exploitation of children, physical punishment, female abuse, involuntary servitude, or other forms of abuse. Respect our employees voluntary freedom of association. Compensate our employees to enable them to meet at least their basic needs and provide the opportunity to improve their skill and capability in order to raise their social and economic opportunities. Provide a safe and healthy workplace; protect human health and the environment; and promote sustainable development. Promote fair competition including respect for intellectual and other property rights, and not offer, pay or accept bribes. Work with government and communities in which we do business to improve the quality of life in those communitiestheir educational, cultural, economic and social well-beingand seek to provide training and opportunities for workers from disadvantaged backgrounds. Promote the application of these principles by those with whom we do business 2. Sexual and Ratial discrimination Business women remain a rarity in many Middle Eastern nations. In some Middle Eastern countries, for example, women are required to wear special clothing and cover their faces; in public, they may be physically separated from men. Because these countries prescribe only nonbusiness roles for women, companies negotiating with Middle Eastern firms have encountered problems when they use female sales representatives. Indeed, a Middle Eastern company may simply refuse to negotiate with saleswomen or may take an unfavorable view of the foreign organizations that employ them. The ethical issue in such cases is whether foreign businesses should respect Middle Eastern values and

send only men to negotiate sales transactions, thus denying women employees the opportunity to further their careers and contribute to organizational objectives. The alternative would be for these firms to try to maintain their own ideas of social equality, knowing that female sales representatives will probably be unsuccessful because of the cultural norms in those societies. Businesses around the world benefit by acknowledging and attempting to curb discrimination, including a decrease in employee turnover; people who believe they are hired, promoted, and treated according to their skills and abilities rather than their personal characteristics or beliefs are more likely to remain loyal. In turn, this can reduce the costs of hiring and training new employees because productivity naturally improves when jobs are filled with the most qualified persons. Additionally, when companies hire a diverse local work force, they are more likely to enjoy the goodwill and support of the communities surrounding their facilities. Finally, companies that take steps to eliminate discrimination may receive favorable attention from such stakeholders as labor and womens rights groups, enhancing the reputation of the firm overall as well as its brands. 3. Human rights Although concern about human rights issues is increasing, abuses still occur. Many believe that MNCs should view the law as constituting the floor of acceptable behaviour and strive to improve workers quality of life in every country. Understanding each countrys culture can help MNCs make valuable improvements. At an annual Human Rights Survey meeting, the executive director of Human Rights Watch introduced three guidelines that managers should consider to advance human rights: (1) Companies need to establish an open dialogue between workers and management. (2) Businesses should be aware of the human rights issues and concerns in each country in which they do business, information which can be found through Amnesty International, an international nonprofit devoted to human rights issues. (3) Companies should adopt the prevailing legal standard but work to improve and embrace a best practices approach Several organizations observe and report on corporate behavior: Global Compact: Developed by the UN Secretary-General, this organization asks businesses to adhere to human rights and labor standards as defined in international treaties.

Amnesty International: The business unit of this London-based human rights group has established Human Rights Guidelines for Companies, a set of principles concerning the link between business and human rights. Fair Labor Association: A nonprofit organization whose members include manufacturers, universities, and groups promoting human, consumer, religious, shareholder, and labor rights. Participating firms agree to have their facilities and those of their contractors monitored by both internal and independent external organizations. The Council on Economic Priorities Accreditation Agency: This organization has established standards for assessing labor conditions in global manufacturing operations 4. Price discrimination A major ethical issue in international business is how products sold in other countries are priced. When a firm charges different prices to different groups of customers, it may be accused of price discrimination. Differential pricing is legal if it does not substantially reduce competition or if it can be justified on the basis of costsfor example, the costs of taxes and import fees associated with bringing products into another country Price differentials, gouging, and dumping create ethical issues because some groups of consumers have to pay more than a fair price for products. Pricing is certainly a complicated issue in international marketing because of the additional costs imposed by tariffs, taxes, customs fees, and paperwork, as well as the political desire to protect home markets. Nonetheless, businesses should take care to price their products so that they recover legitimate expenses and earn a reasonable profit while still competing fairly. . In other cases, technologically obsolete products that are no longer salable in the country of origin may be dumped overseas. Dumping is unethical if it interferes with competition or hurts firms and workers in other countries. Furthermore, if it substantially reduces competition, it is illegal under many international laws. Dumping is difficult to prove, however, but even the suspicion of dumping can lead to the imposition of import quotas, which can hurt innocent firms 5. Bribery In February 2007, health products giant Johnson & Johnson disclosed that some of its foreign units might have made improper payments related to the sale of medical devices. By voluntarily disclosing the information to the Justice Department and the Securities and Exchange

Commission, pledging full cooperation with the agency investigations, and accepting the early retirement of the executive responsible for the business units involved, the company may face lighter penalties and limit damage to its reputation. The bad news is that even a company with a longstanding reputation for ethical conduct and responsible behavior can get mixed up in the bribery and corruption maze. Because of its reputation and strong response, Johnson & Johnson may be able to weather this storm. And that should serve as a reminder to every organization involved in international commerce that, along with legal, financial and societal considerations, ethical culture counts. Addressing the risks associated with foreign activities is certainly not new territory for most multinational organizations. There are many resources that discuss the legal, financial, and societal ramifications of corruption and bribery. But there is another dimension that is often overlooked: the risks of corrupt behavior on an organizations ethical culture. 6. Environmental issue Whereas many legal and ethical violations have limited impacts, in the case of environmental issues, the effects of abuses can be far reaching and long term. For example, public concern over global warming has increased pressure on companies to dramatically increase energy efficiency. Pressure from environmentalists is also encouraging ompanies to scrutinize suppliers of wood and paper products to ensure that the trees are not endangered species and that companies are harvesting products using sustainable practices. Many companies are therefore working to create standards for environmental responsibility For organizations to thrive globally, their governments should form joint agreements, such as the North American Free Trade Agreement between the United States, Canada, and Mexico, that set reasonable standards for emissions for members. Many pollutioncontrol efforts have relatively short payback periods and have a long-term positive effect on profitability. In contrast, violating environmental initiatives has both human and financial costs, with the human cost being the health hazards associated with pollution. 7. Telecommunication issue With the advent of satellites, e-mail, and the Internet, information can be accessed in a matter of seconds instead of weeks; as a result businesses can become the victims as well as the perpetrators of unethical actions. The ease of information access poses ethical issues, particularly with regard to privacy, that can differ by country. Some Internetbased firms have responded to privacy issues responsibly, whereas others have not. Yahoo!, for example, revised its privacy policy to expand its ability to market its own products to Yahoo!

users unless they expressly ask it not to. News of the policy change quickly circulated via the Web, and consumers exchanged ideas on how to change their personal preferences on Yahoo! to avoid getting Spam, junk mail, or telemarketing calls. The animosity was highlighted by a survey that reported that 75 percent of respondents described the new policy as awful while only 3 percent said it was good. The relevant ethical issues here relate to access, information mining, and monopolies. Information access gives Internet companies a revenue stream from charging companies to advertise on their server, and many websites collect various levels of personal information about their users that they subsequently sell to advertisers, a process that has exploded in the last ten years. One questionable technique that websites use is to link or connect one user to others, a tactic that involves sending a Web user an e-mail suggesting that if he or she gives them a friends name, then the company will give him or her discounts on promoted products. The friend then receives the same e-mail and increasingly the amount of consumer information. Thus, companies are exploiting the human desire to obtain something for nothing Information overload and Internet slowdowns are becoming more common, and sometimes they are intentionally caused. For example, the number of online attempts to criticize or disrupt corporate operations is increasing. Perpetrators have sent mass e-mail messages, used distributed denial of service tools to interrupt company website operations, and attempted to deflate stock prices by posting negative comments on online message boards 8. Intellectual property issue Intellectual property refers to the ideas and creative materials that individuals develop to solve problems, to carry out applications, and to educate or entertain others. It is generally protected through patents, copyrights, and trademarks. A patent is a legal document issued to an inventor that grants him or her the right to exclude any other person from making, using, or selling the invention anywhere for a certain number of years (seventeen years in the United States). The patent document describes the invention in detail, including how to make or use it, and provides protection rights against infringers. India, for example, won a legal battle against Texas-based RiceTecInc. over the name basmati, a particular rice that has been trademarked in India. Pharmaceuticals raise other patent issues, especially concerning the rights of multinational corporations to protect their patents on drugs so that they

can recover their research costs and hinder the introduction of cheaper generic drugs. Future patent issues may relate to whether the human genome that identifies each gene in the human body should be patented. If this is permitted, people will no longer have the rights to their own genes. A copyright is a protection that covers published and unpublished literary, scientific, and artistic works, in any form of expression, provided that the works are in a tangible or material form. Copyright laws were established to protect the originators of goods such as books and records.

Case study-1
Started in 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world.Starbucks Coffee Company (NASDAQ: SBUX) has been voted as the Most Ethical Company in the coffee industry in Europe by the coffee research experts Allegra Strategies, following nominations by leading industry figures. Starbucks also won the award for the Most Admired Coffee Chain Brand in France. In May of 2009, Starbucks VIA Ready Brew was named Most Innovative New Product of the Year by Allegra Strategies, which positioned Starbucks VIA to be a leader in the instant coffee market. Fair Trade Certified coffee empowers small-scale farmers organized in cooperatives to invest in their farms and communities, protect the environment, and develop the business skills necessary to compete in the global marketplace. Starbucks began purchasing Fair Trade Certified coffee in 2000, helping grow the market for Fair Trade Certified coffee in the U.S. It is already the worlds largest purchaser of Fairtrade coffee, and the switch to Fairtrade Certified espresso in Europe contributed to a total global annual payment to small-scale coffee farmers estimated at EUR 2,800,000. This move expanded the reach of Fairtrade and deepen its impact on tens of thousands of farmers. In addition to increased purchases of Fairtrade Certified coffee, Starbucks, FLO, CI and AWF worked with Fairtrade farmers to enhance coffee quality and profitability through improved environmental and agricultural practices, to specifically expand the number of small-scale farmers producing crops under the ethical coffee buying guidelines for Starbucks Shared Planet and the Fairtrade Certified system.

Case study 2 Exxon Valdez 1989

On March 24, 1989, the tanker Exxon Valdez, en route from Valdez, Alaska to Los Angeles, California, ran aground on Bligh Reef in Prince William Sound, Alaska. The vessel was traveling outside normal shipping lanes in an attempt to avoid ice. Within six hours of the grounding, the Exxon Valdez spilled approximately 10.9 million gallons of its 53 million gallon cargo of Prudhoe Bay crude oil. Eight of the eleven tanks on board were damaged. The oil would eventually impact over 1,100 miles of non-continuous coastline in Alaska, making the Exxon Valdez the largest oil spill to date in U.S. waters. The response to the Exxon Valdez involved more personnel and equipment over a longer period of time than did any other spill in U.S. history. Logistical problems in providing fuel, meals, berthing, response equipment, waste management and other resources were one of the largest challenges to response management. At the height of the response, more than 11,000 personnel, 1,400 vessels and 85 aircraft were involved in the cleanup. Shoreline cleanup began in April of 1989 and continued until September of 1989 for the first year of the response. The response effort continued in 1990 and 1991 with cleanup in the summer months, and limited shoreline monitoring in the winter months. Fate and effects monitoring by state and Federal agencies are ongoing. The images that the world saw on television and descriptions they heard on the radio that spring were of heavily oiled shorelines, dead and dying wildlife, and thousands of workers mobilized to clean beaches. These images reflected what many people felt was a severe environmental insult to a relatively pristine, ecologically important area that was home to many species of wildlife endangered elsewhere. In the weeks and months that followed, the oil spread over a wide area in Prince William Sound and beyond, resulting in an unprecedented response and cleanupin fact, the largest oil spill cleanup ever mobilized; however, the scale of this spill will likely be eclipsed by the 2010 Deepwater Horizon oil spill originating in the bathypelagic zone of the Gulf of Mexico. Many local, state, federal, and private agencies and groups took part in the effort. Even today, scientists continue to study the affected shorelines to understand how an ecosystem like Prince William Sound responds to, and recovers from, an incident like the Exxon Valdez oil spill.

One person alone cant change the whole world. So what we can do? We are the future managers in this corporate world. So be ethical in everywhere. Be a person of justice and ethics. Always be in the part of true and justice. We must have good values in our lives. So stand for that values , then success will automatically comes to you.

Try not to become as man of success but rather try to become a man of value

Albert Einstein