ETHICS IN GLOBAL BUSINESS

BUSINESS ETHICS

• Business ethics are moral principles that define right and wrong behaviour in the world of business.

• Business ethics is the evaluation of business activities and behaviour as right and wrong.

• It is the study of morals and moral choices focuses on standards rules, and code of conduct that govern the behavior of individual.

GLOBAL BUSINESS

• Global business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organization.

ETHICAL PROBLEMS IN GLOBAL BUSINESS

• PROBLEMS are arising due to diversity of business standards.

• Hence, companies are experiencing difficulties. THEREFORE, they are paying low wages , unsafe working conditions , violation of human rights

PRINCIPLES

• Donaldson’s and Dnfee’s proposed two code of conduct

1. US Model business principles2. Caux round table principles

MODEL BUSINESS PRINCIPLES OF USA

• The US department of commerce (DOC) to codify the expectations of the US market issued its Model Business Principles in 1995 as guidelines for business conduct in the US and abroad. The principle comprise a voluntary code of conduct . DOC hopes that they will encourage appropriate behaviour.

Cont.

• the Administration encourages all businesses to adopt and implement voluntary codes of conduct for doing business around the world that cover at least the following areas:

Provision of a safe and healthy workplace.Fair employment practices, including

avoidance of child and forced labor and avoidance of discrimination based on race, gender, national origin, or religious beliefs; and respect for the right of association and the right to organize and bargain collectively.

Cont.Responsible environmental protection

and environmental practices.Compliance with U.S. and local laws

promoting good business practices, including laws prohibiting illicit payments and ensuring fair competition.

Maintenance, through leadership of all levels.

CAUX ROUND TABLE PRINCIPLE

• The Caux Round Table believes that the world business community should play an important role in improving economic and social conditions. Through an extensive and collaborative process in 1994, business leaders developed the CRT Principles for Business to embody the aspiration of principled business leadership.

• International ethics standards for business are :

1. NAFTA2. CAUX principles NAFTA- the implementation of the

multilateral international trade agreement which addresses the mean issues of multilateral trade environment protection, intellectual property and employment, among others is known as NAFTA .

• It is executed on 1st January 1974 among among the US canada and mexico to promote free trade by eliminating tariff and non- tariff barriers was the creation of the caux principles.

CAUX principles: It promotes action to strengthen the two main concepts of fairness and respect for others.

PRINCIPLE 1 - RESPECT STAKEHOLDERS BEYOND SHAREHOLDERS

• A responsible business acknowledges its duty to contribute value to society through the wealth and employment it creates and the products and services it provides to consumers.

• A responsible business maintains its economic health and viability not just for shareholders, but also for other stakeholders.

• A responsible business respects the interests of, and acts with honesty and fairness towards, its customers, employees, suppliers, competitors, and the broader community.

PRINCIPLE 2 – CONTRIBUTE TO ECONOMIC, SOCIAL AND ENVIRONMENTAL DEVELOPMENT

• A responsible business recognizes that business cannot sustainably prosper in societies that are failing or lacking in economic development.

• A responsible business therefore contributes to the economic, social and environmental development of the communities in which it operates, in order to sustain its essential ‘operating’ capital – financial, social, environmental, and all forms of goodwill.

• A responsible business enhances society through effective and prudent use of resources, free and fair competition, and innovation in technology and business practices.

PRINCIPLE 3 – BUILD TRUST BY GOING BEYOND THE LETTER OF THE LAW

• A responsible business recognizes that some business behaviors, although legal, can nevertheless have adverse consequences for stakeholders.

• A responsible business therefore adheres to the spirit and intent behind the law, as well as the letter of the law, which requires conduct that goes beyond minimum legal obligations.

• A responsible business always operates with candor, truthfulness, and transparency, and keeps its promises.

PRINCIPLE 4 –RESPECT RULES AND CONVENTIONS

• A responsible business respects the local cultures and traditions in the communities in which it operates, consistent with fundamental principles of fairness and equality.

• A responsible business, everywhere it operates, respects all applicable national and international laws, regulations and conventions, while trading fairly and competitively.

PRINCIPLE 5 – SUPPORT RESPONSIBLE GLOBALISATION

• A responsible business, as a participant in the global marketplace, supports open and fair multilateral trade.

• A responsible business supports reform of domestic rules and regulations where they unreasonably hinder global commerce.

PRINCIPLE 6 – RESPECT THE ENVIRONMENT

• A responsible business protects and, where possible, improves the environment, and avoids wasteful use of resources.

• A responsible business ensures that its operations comply with best environmental management practices consistent with meeting the needs of today without compromising the needs of future generations.

PRINCIPLE 7 – AVOID ILLICIT ACTIVITIES

• A responsible business does not participate in, or condone, corrupt practices, bribery, money laundering, or other illicit activities.

• A responsible business does not participate in or facilitate transactions linked to or supporting terrorist activities, drug trafficking or any other illicit activity.

• A responsible business actively supports the reduction and prevention of all such illegal and illicit activities.

Guidelines For Global Business

• Three types of guidelines offered are as under :

1. Human rights2. Welfare 3. Justice

Human rights

• Donald’s suggestion for the fundamental rights:

The right to : Freedom of physical movement Ownership of property Freedom from torture A fair trail Nondiscriminatory treatment

Physical security Freedom of speech and association Minimal education Political participation Subsistence

WELFARE

• The guidelines offered by Richard DeGeorage are:

• Global companies should: Do no intentional direct harm More good than harm for the host company Contribute by their activity to host country’s

development Respect the human rights of their employees

To the extent that local culture does not violate ethical norms , respect the local culture and work with and not against it

Pay their fair share of taxes Cooperate with local government in

developing and enforcing just background institutions.

JUSTICE

• One kind of unfairness cited by critics is the often one-sided division of the benefits from foreign investment. The gap b/w the rich and poor countries is an urgent moral concern and MNC’s have much to offer.

• Another kind of unfairness in violating the rules of the market place, which is to say engaging in unfair competition and otherwise taking unfair advantage.

CONCLUSION

• By this we conclude that through global business, the countries economic conditions rises and is important for the growth of the country………