International Business Strategy301LON

Ethics and International

Business

Unit: 9 Knowledgecast: 2

• 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

Module Learning Outcomes

Ethics

Ethics Are moral principles and

values that govern the behavior of people,

firms, and governments.?

ETHICS

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.

Variation in Ethical Standards• 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.”• Bribery is common and can take the form of grease

payments, small inducements intended to expedite decisions and transactions or gain favors.

• 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.

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.

An Ethical Dilemma• 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.

• 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.

•What should you do? Make a fuss about the immorality of child labor or look

the other way?

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

The Pyramid of Ethical Behavior

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.

Sustainability

Completing Social, Economic and Environmental

Integration

3

Achieving Competitive Advantage

2

Managing Regulatory Compliance

1

Sustainability

Stages of sustainability strategy – the determinant

The Triple Bottom LineThe 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.

Framework for implementing sustainability Strategy

Economic viability• Corporate profitability & growth• Social economics

Social responsibility• Employee• Customer• Community

Environmental Soundness Biodiversity Climate

Company

Sustainability

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

• 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

Knowledgecast Summary

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

Seminar

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 draftwith your module tutor and ensure all your questions are answered as youfinalize 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 theworkplace.

Be prepared to provide constructive feedback on other’s work and receivefeedback which can inform your progress.

Group Activity