Business ethicsAnd

MNC’S

CONTENT

1. INTRODUCTION TO ETHICS AND BUSINESS ETHICS2. BUSINESS ETHICS A TOOL TO TAKE ORGANISATIONS

GLOBAL3. Components of a Company’s Ethics Policy4. STEPS THAT INDIAN COMPANIES MUST TAKE TO DEVELOP

AN ETHICS POLICY5. APPROACHES TO BUSINESS ETHICS 6. CHALLENGES OF DOING BUSINESS IN FOREIGN

COUNTRIES{THIRD WORLD COUNTRIES}7. Business ethics and mncs 8. CHALLENGES FOR MNCS9. EXAMPLES

Introduction

BUSINESS ETHICS A TOOL TO TAKE ORGANISATIONS

GLOBAL• Business ethics is now, more than ever, becoming an important

requirement for doing business in the global marketplace.

• In a global business scenario that is fast becoming very sensitive to ethical practices and conduct, a company can ignore business ethics only at its own peril.

• The shape of things to come can be understood by reviewing a recent survey of Global 2000 companies that found that more than 35 per cent of them have ethics officers to enforce ethics and compliance management and promote ethical behavior in their organizations. Most Fortune 500 companies have set up ethics offices.

Components of a Company’s Ethics Policy

• The code of ethics must have statements that are relevant and that define expectations regarding employees’ behaviour that is needed to guide them in their dayto-day decision-making

• Ethics statements must not be created solely as compliance documents, rulebooks or public relations material. Issues related to legal and regulatory matters need to be addressed, but more crucially, ethics statements must communicate the importance of ethical behaviour and the company’s core values such as integrity, trustworthiness, honesty, and transparency.

• Ethics statements must be in plain, easy to understand language.

• In matters where temptation to behave unethically is the strongest, the ethics codes must present specific direction about ethical behaviour.

• It must comprehensively describe situations that would be considered a violation of the code of ethics. Specifying what an employee must do when he confronts ethical uncertainties, encounters ethical misconduct, or when he is being pressured into committing ethical misconduct, are an essential part of the code of ethics.

• Finally, the code of ethics drawn up must be benchmarked with the codes of ethics of best practice companies in the world on a continual basis.

STEPS THAT INDIAN COMPANIES MUST TAKE TO DEVELOP AN ETHICS

POLICY

areas of moral concern for multinationals{THIRD WORLD

COUNTRIES}

• Bribery in Third World Countries.

• Endorsing, Influencing, and Opposing Foreign Governments.

• Exploiting Third World Countries.

• Cultural Relativism and Universal Moral Principles.

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Arguments For and Against Bribery

For Bribery Against Bribery

• Necessary for profits in order to do business

• Common practice• Accepted practice• Form of commission, tax, or

compensation

• Wrong and illegal in most developed nations

• Compromise personal beliefs• Managers should not deal with

corrupt governments• Once started, never stops• One should take a stand for

honesty, morality, ethics• Benefits recipient only• Creates dependence on corruption• Deceives stockholders and costs

customers

Bribes versus Grease Payments

BribesBribes

Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might nottake. If the officials considered the merits of the situation only, they might take some other action.

Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might nottake. If the officials considered the merits of the situation only, they might take some other action.

Grease Payments

Grease Payments

Relatively small sums of money given for the purpose of getting minor officials to:

Relatively small sums of money given for the purpose of getting minor officials to:• Do what they are supposed to be doing• Do what they are supposed to be doing faster• Do what they are supposed to be doing better

Business ethics and mncs

• Promoting a global corporate culture

• Establishing a corporate-wide code of conduct

• Involving local offices in local policies

• Engaging global employees in ethics and compliance

• Establishing a local presence by forming a corporate-wide ethics and compliance committee

• Educating all employees in their first language

• Building culturally responsive reporting systems

CHALLENGES FOR MNCS

• International Law

• The Market System and International Law

• MNCs and Human Rights

• MNCs and Environmental Integrity

Case on product dumping

Once the Consumer Product Safety Commission (CPSC) prohibits the sale of a particular product in the United States, a manufacturer can no longer sell the product to U.S. wholesalers or retailers. However, the product can be sold in other countries that have not prohibited its sale. The same is true of other countries' sales to the United States. For example, Great Britain outlawed the sale of the prescription sleeping pill, Halcion, but sales of the drug continue in the U.S. The British medical community reached conclusions regarding the pill's safety that differed from the conclusions reached by the medical community and the Food and Drug Administration in the U.S. Some researchers who conducted studies on the drug in the U.S. simply concluded that stronger warning labels were needed.

The CPSC outlawed the sale of three-wheeled all-terrain cycles in the U.S. in 1988. While some manufacturers had already turned to four-wheel models, other manufacturers still had inventories of three-wheel cycles. Testimony on the cycles ranged from contentions that the vehicles themselves were inherently dangerous, to arguments that the vehicles were safe but drivers were too young, too inexperienced, and more inclined to take risks. Still, the three-wheeled vehicle can be sold outside the U.S.For many companies, chaos follows a product recall because inventory of the recalled product may be high. Often, firms must decide whether to "dump" the product in other countries or take a write-off that could damage earnings, stock prices, and employment stability.If you were a manufacturer holding substantial inventory of a product that has been outlawed in the U.S., would you have any ethical concerns about selling the product in countries that do not [yet] prohibit its sale? To what extent will your decision be affected by the level of the write-down in income you must take.

bibliography

• Review of International Comparative Management

• utm.edu• enterpriseethics.org• vikalpa.com