Major Legal and Ethical Issues Facing International Business in the World Today - Essay Example

International Business Name Institution Date Major legal and ethical issues facing international business in the world today Introduction During the 20th century’s second half, international business has turned out to be a significant economic force. Currently few, countries are self-sufficient economic wise. Even China, regardless of its massive natural and human resources, has failed to remain distant from the economy world. International business in the United States (US) touches the lives of people on a daily basis. Common services and goods, frequently connected with the US, are, actually, foreign owned. Some of the examples include and not limited to Pillsbury, Burger King, Citgo and Shell gasoline stations, and hardware stores like Scotty (Hamilton & Webster, 2009). Questions arise regarding the major issues that face this international business. As a result, this paper seeks to address some of the major issues with respect to legal and ethical issues in the international business. Ethical issues facing international business International business involves trade in not less than one nation (Morrison, 2009). It entails selling and buying services and goods within foreign nations. Other activities involved in international business include manufacturing, marketing, farming, and mining. In general, international business is about the activities dealing in a distinct country does, however, at the global level. Global business cannot operate within a vacuum. The business functions in the framework of international and, occasionally, regional regulations and rules designed by suitable organizations (Hill, 2005). Even though every organization is separate, a number of their general features are supporting trade amongst countries that are members, establishing universal regulations and rules, encouraging trade practice. Regardless of the booming of international business, some ethical dilemmas still face this industry (Morrison, 2009). Significance of ethics within the world of business is exceptional and global. Latest trends in addition to issues come up on a day to day basis which might bring about a considerable burden to companies and consumers. These days, the call for appropriate ethical behavior in companies has turned out to be fundamental so as to avert possible lawsuits (Cavusgil et al, 2012). The present expansion of international business and trade barriers’ fall worldwide has further underscored the concern in the subject of ethical behavior. The global codes of conduct are designed from: the International Chamber of Commerce (ICC), concerned with just treatment amongst multinational corporations; the Organization for Economic Cooperation and Development (OECD), entitled with making policy for industrialized countries; the International Labor Organization (ILO), deals with express investment within developing nations; and the Center for Transnational Corporations (CTC), concerned with maximizing the transnational corporations’ contributions to economic growth and development and to reduce the unhelpful effects of corporations’ activities (Griffin & Pustay, 2010). These several codes were devised so as to institute order amongst multinational corporations; however, a number of organizations do not comply with these codes, principally because they are not completely sanctioned by the national governments. Without consistent and complete enforcement, organizations that are multinational may possibly have uncontrolled choice in global ethical issues. Behind this absence of agreement is the subject of national together with corporate culture. According to Cavusgil et al, (2012), each country is different, just like each organization that is multinational is by some means different in the manner they conduct business, specifically in other nations. Additional to the above codes, Moral Corporation needs to deal with human rights. Issues of human rights arise within global business since fundamental human rights are not yet respected fully in various countries (Griffin & Pustay, 2010). Other issues within the ethical domain in international business include corruption, environmental regulations and employment practices. Every nation and culture possesses its own history, customs, traditions, and values; hence it has devised tailored values in addition to understanding of ethical standards (Prasnikar et al, 2008). Additionally, there exists no global code of conduct in terms of ethics acknowledged and abide by all nations. Lack of initiative by the government to develop ethical framework of corporation enhances issues of ethics within international business. International corporations ought to appreciate the obligation for a standard code of ethics in business because without these codes in place, behavior of participants within this field remains unpredictable (Bucar et al, 2003). Moreover, national governments need to realize that most likely the most successful way of protecting national interests, citizens, and the international environment from the damage of the overstretching international business rest within the development, acceptance and enforcement of the code. So far, it is unrealistic to expect any global agreement to be implemented. Legal issues in international business The legal feature is very essential in international business. International law is defined as principles and rules that nations and states consider connecting upon themselves. Most legal issues in the international business include and not limited to corruption, property rights, taxation, recourse, and movement of expropriation threats and equity (Govindarajan & Gupta, 2000). Endeavors to control the global legal scheme include individual nation efforts, such as the General Agreement on Tariffs and Trade (GATT) system and the USA International Trade Commission. The system of GATT is a category of procedures and norms which member states are willing to devise order and predictability within international business relations (Morrison, 2009). Some of the fundamental principles include: nondiscrimination whereby every member nation ought to treat the business of every member state with equality; open markets that are supported by GATT via a prevention of every kind of protection apart from custom tariffs; lastly, fair trade that forbids export grants on manufactured commodities and restricts the usage of export grants on basic products (Cavusgil et al, 2012). However, not even one of these rules is completely realized, basically because it seems not possible to regulate every independent government and order what tariff discriminating is or is not. In Australia, there is need to comply with state sanctions as well as regulations. Exporters need to know that Australia upholds United Nations Security Council sanctions in addition to bilateral sanctions with regards to a number of nations (Morrison, 2009). These sanctions dictate that organizations in Australia and individuals abide by a variety of measures and, generally, affect extraterritorially to nationals who are Australian overseas. Sanctions might entail import and export limitations, prohibitions of industrial aid, financing and training, travel sanctions, and economic sanctions against particular individuals and bodies (McGee, 2002). During the past, international investors experienced a lot of legal issues when trying the acquisition of business and companies in Korea (Morrison, 2009). Nevertheless, the business together with the legal climate concerning foreign business within Korea has undergone a massive transformation in the present years. While foreign investment as well as global business transactions rise, the regulatory Korea’s infrastructure is quickly becoming more complicated and sophisticated, and, in some situations, occasionally provides for rigid penalties for infringements of relevant laws. For that reason, it is vital for every investor who is foreign to seek lawful advice in advance prior to trying to obtain either a personal Korean business or a group. According to Prasnikar et al, (2008), diverse corporate cultures, legal settings and languages raise the possibility of confusion when a person trades globally. This is why it is imperative for someone to have contracts that are clear. Corruption is one of the major legal issues in the international business (Govindarajan & Gupta, 2000). In various countries, officials in political arena are intensely engaged in international business. A country that the state is greatly corrupted, the political officials expect bribe. International trade may possibly gain benefits by providing bribes to officials in the government; on the other hand, it places other businesses at a shortcoming, making it both an ethical and legal issue in business (Eicher, 2009). Polluting the nation’s environment, evading taxes, and not abiding by principles of employment practices are all issues that affect international business both ethically and legally. After appreciating that ethics and law are very fundamental in global business, the issue is how some of the countries decline to abide by the set regulations in global business (Cavusgil et al, 2012). It is actually true that when organizations are involved in activities that are multinational, a range of significant issues like corruption come up that may not have similar simple answers like those provided by running a business within one region or nation. Conclusion In conclusion, the paper has discussed the major ethical and legal issue affecting international business. Regardless of culture of business in various countries, when a country gets involved in the international business, it is very imperative that a common rule governs the business. Some of the recommendations regarding global business ethics are that: every corporate entity and every person needs to outline its appropriate ethical values; workers of each organization ought to take part in developing a business code of conduct; and each individual and corporate entity should monitor obedience with the established values always. This way, the moment foreign entities with distinct moral codes of conduct get together; they manage to develop an effective general ethical business framework, maintaining strict values unaffected and adjusting flexible ethical principles. This approach can guarantee each concerned party’s agreement and approval with the developed framework of Ethical Corporation for that specific business without infringing personal beliefs. Reference list Hill, C.W.L. (2005). International business: competing in the global marketplace, 2nd edition. Irwin. Griffin, R. W., & Pustay, M. W. (2010). International business. Upper Saddle River, NJ: Prentice Hall. Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2012). International business: The new realities. Upper Saddle River, N.J: Prentice Hall/Pearson. Hamilton, L., & Webster, P. (2009). The international business environment. New York: Oxford University Press. Morrison, J. (2009). International business: Challenges in a changing world. Basingstoke [England: Palgrave Macmillan. Eicher, S. (2009). What Corruption is and Why it matters: Introduction. Corruption in International Business : the Challenge of Cultural and Legal Diversity, 1-14. Prašnikar, J., Pahor, M., & Vidmar, S. J. (2008). Are national cultures still important in international business?: Russia, Serbia and Slovenia in comparison. Management, 13, 2, 1-26. Bučar, B., Glas, M., & Hisrich, R. D. (2003). Ethics and entrepreneurs: An international comparative study. Journal of Business Venturing, 18, 2, 261-281. McGee, R. (2002). 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