COMSATS Institute of Information Technology, Islamabad.

Ethical Dilemmas
The ethical obligations of MNCs towards employment conditions, human rights, corruption,
environment pollution and use of power are not always clear cut. From an international business
perspective, some argue that what is ethical depends upon ones cultural perspective.
E.g. consider the practice of gift giving between the parties to business negotiations. While this
is considered right and proper behavior in many Asian cultures, some western view the practice
as a form of bribery, and therefore considered unethical, particularly if gifts are substantial.
Example of Ethical dilemma
Assume GM open a production plant in Karachi after operation started a German engineer
visit the plant he saw 17 year old boy cleaning the factory floor acting ethical he issued
order for his dismissal and ask for replacement with adult one the boy was the only bread
earner for the family of 6 person two young brothers, two elder sister and his mother. His father
died in a road accident the boy did not found another job so he joined local drug dealer to sell
his product in a location later after some year he got arrested by police and got in prison for 1
year and after he was out of jail he was trying setup his own gang as competition to his boss who
did not help him at in jail.
Roots of Unethical Behavior
Why do manager behave unethically? Answer to the question is not straight forward, but we can
generalize it.
Personal Ethics
Personal Ethics are the generally accepted principles of right & wrong governing the conduct of
individuals. The personal ethical code that guide our behavior comes from number of sources
including parents, schools, religion and media. Our personal ethical code exerts a profound
influence on the way we behave as businesspeople. An individual with strong sense of personal
ethics is less likely to behave in an unethical manner in a business setting.
Unrealistic Goals
The parent company may assign expatriate managers to meet unrealistic goals that can be
fulfilled only by cutting corners or acting unethically. E.g. to meet centrally mandated
performance goals, expatriate manager might give bribe to win contracts or might implement
working conditions and environmental control that are below minimal acceptable standards.
Local environment might encourage the expatriate manager to adopt such behavior and because
the parent company is geographically at distance, may unable to see expatriate managers are
meeting goals or may know but still choose not to see.
Organization Culture
Just as societies have cultures, so do business organization have. Together values & norms shape
the culture of a business organization and that culture has an important influence on ethics. E.g.
take the case of an organization culture of Islamabad Traffic Police. Five year before, if someone
tries to get driving license legally, it was very difficult. One has to pay money even if the case is
genuine. But nowadays any one can get license as per rules and regulations without paying extra
money. The reason is change in organization culture.

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Leadership
If upper level management of a company is corrupt and behave unethically, middle & lower level
management will follow the upper level management. E.g. If district Nazim ask for money on
approval of every public project from the contractors, lower level staff in Nazims office will
also ask for favor as per there requirement.
Decision making process
The process of making decisions in an organization can be source of conduct of unethical
behavior. E.g. if decision are related to end results/bottom line of the business. Any thing leads to
profit can be acceptable. But if the decision making process is fully uncovered, mentioning each
are every detail of the process, organization will try to make money but unethical behavior will
not be acceptable. E.g. if we at CIIT take decision that H-8 Campus should be crystal clear, but
fail to mentioned that cleaner should take care of students, faculty members, and other
supporting staff and also dressed properly etc. In the example if decision are take without paying
due consideration to details, our cleaner supervisor may appoint a younger, orphan, poorly
dressed, ready to make trouble with students, faculty members, etc.
Ethical Decision Making
We focus on five things that an international business and its manager can do to make sure
ethical issues are Considered in business decisions.
Favor Hiring & Promoting people with well-grounded sense of personal ethics
Business should strive to hire people with strong sense of personal ethics. People with strong
sense of personal ethics would not engage in unethical or illegal behavior. Similarly, you would
rightly expect a business to not promote people, as a matter of fact should fire them, whose
behavior does not match generally accepted ethical standards.
But actually avoiding people with poor sense of personal ethics is very difficult. How do we
know that someone has poor sense of personal ethics? People hide a lack of personal ethics from
public view because unethical people are not trust worthy. To solve the problem we can ask for
reference letters and try to talk to people with whom our potential employee had worked with.
Build an organization culture that place a high value on ethical behavior
Three things are particularly important in building such a culture.
Business must explicitly articulate values that emphasize ethical behavior. E.g. we can draft a
code of ethics, which is formal statement of the ethical priorities of a company.
Leaders/Top management in the business must give life and meaning to those words by
repeatedly emphasizing their importance and then acting on them.
Building organization culture that places a high value on ethical behavior requires incentive
and benefits system.
Implement decision-making process that requires people to consider the ethical dimension
of business decision
In addition to establishing the right kind of ethical culture, business people must be able to think
through the ethical implementations of decision in a systematic way. A decision is accepted on
ethical ground if a business person can answer YES to each of following questions:
Does my decision fall within the accepted values or standards that typically apply in the
organization environment as articulated in code of ethics or any other similar statements?
Am I willing to see the decision communicated to all stakeholders affected by it?
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Would the people with whom I have a significant personal relationship (family members,
friends, manager in other organizations) approve of the decision?
Some researcher have divided the process into five steps
Identify which stakeholders a decision would affect and in what ways.
Judge the ethical dimensions of the proposed strategic decision.
Manager/Business must put forward moral concerns ahead of other concerns. At this stage
inputs from top management might be particularly valuable. Without the proactive
encouragement of top manager, middle level managers might tend to place the narrow
economic interest of the company before the interest of stakeholders.
Require the company to engage in ethical behavior only.
To audit its decision to make sure they were consistent with ethical principles.
Make sure that leaders within the business not only articulate the rhetoric of ethical
behavior, but also act in a manner that is consistent with that rhetoric
For the purpose mentioned above leaders/top managers can appoint Ethics Officer. Ethics
officers are responsible for making sure that all employees are trained to be ethically aware, that
ethical considerations enter the business decision-making process and that the companys code of
ethics is adhered to. The officer may also be responsible for auditing decisions to make sure they
are consistent with code.
Develop Moral Courage
Employees in an organization may need significant moral courage. Moral courage enables
managers to walk away from a decision that is profit but unethical.
Political System
A political system integrates the parts of a society into a viable, functioning unit. A major
challenge for a political system is to bring together people of different background and allow
them to work together to govern themselves.
The Impact of the political system on Management Decision
Political Risk
A risk that occur because of political instability. MNCs fear that political environment in
foreign country will change in such a way that their operating position will change.
Political risk is high in Marsha laws as compare to Democracy.
Political leaders change, often lead to business environment. Why? Because people of the
country change leadership for change.
Type of Political Risks
Political Risk can be divided into two categories, as follows:
Micro Political Risk
Micro Political Risk is risk effecting some specific business e.g. to a particular foreign co.
(KFC), to all US companies, to a particular industry (all oil companies) etc.
Macro Political Risk
Macro Political Risk is risk effecting all foreign organization irrespective of their origin,
nationality etc.
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Political risk can be change in opinion of political leadership, civil disorder or external relation to
origin of the firm.
Government intervention in the economy
There are two ideological paradigms of government intervention in the economy, as follows:
Individualistic paradigms
Individualistic paradigms refer to minimum intervention of the government. More free economy.
Government limits its role like a watchman. Develop Check and balance, reduce trade barrier,
etc. Government give best business environment, result in more profit, which lad to more tax to
the Government, that can be used for welfare of people of the country.
Communitarian paradigm
Communitarian paradigm refer to too much of government. Government decides what to
produce, why to produce, for whom to produce etc.
Important: Individualistic or Communitarian paradigm is good for Businessman?
Formulating and Implementing political strategies
Formulating and implementation of political strategy is easy then formulating & implementing a
competitive marketplace strategy? True / False.
The statement is not true because political strategies involve wide range of participants in the
decision-making process, different logic and institutional power.
Steps in formulating and implementing political strategies
Identify the issue- whether is trade barriers, labor right or environmental standards
Define the political aspect of the issue- is the issue political or non-political?
Identify individuals/institutions involve
Formulate strategies- define objective, identify major alternative strategies and evaluate the
effect of alternative choices
Select the most appropriate strategy
Implement the strategy

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