Ethics as a Contemporary International Business Issue - Essay Example

Name of school: Subject Code: Title of Your Report: Ethical Issues Your name(s): Student ID number(s): Lecturer: A report submitted in partial fulfillment of the requirements of the unit XXX1XX in the Bachelor of XXX Month, year Abstract The international business environment places international managers in great difficulty since it generates a wide range of ethical issues. In most international business environment, the central ethical issues relate to, Corruption employment practices human rights environmental regulations and The moral obligation of companies. These ethical issues also have some effects on countries where they take place. These effects include; Decline in number of investors An additional expense Lack of development and job opportunities Contents Abstract 1 Introduction 5 Discussion 5 Ethics as a contemporary international business issue 5 Employment practices 6 Human rights 7 Corruption 7 Environmental regulations 8 Moral obligation of companies 9 Impacts of ethical issues on Australia 9 Conclusion 11 References 12 Glossary of terms Business ethics- a form of ethics that scrutinize the ethical principles or ethical dilemmas that are likely to arise in a business environment. Ethical issues- a situation or problem that requires an individual to choose among alternatives that are later evaluated as being right or wrong. International business - commercial transactions that occur between two or more countries, and regions beyond their political boundaries. Introduction Ethics is usually found in almost all aspects of human activity, and people are typically concerned about the quality of behavior they portray to those around them. Ethics has been an essential part of the economic environment in this century. At present, pressure groups and consumers seem to be in the front line in demanding that organizations seek more ethical as well as ecologically sounder ways of conducting business. The media also seems to be playing an essential role in highlighting corporate malpractices and abuses. Even organizations have realized that, being ethical may be good for their business. Based on these, ethics has become an integrated part of the contemporary business environment. Business ethics is termed as the study of a business situation, decision and activities where issues that are right and wrong are addressed (Marcoux 2009). Based on the above definition, business ethics is the spectrum of interaction between individuals, firms, society as well as the state. Business ethics is not an optional accessory when conducting business nor is it a mere eagerness of moralist and philosophers; it entails how people do business from the basest deception to the highest levels of excellence. Discussion Ethics as a contemporary international business issue A great number of ethical dilemmas and issues in international business are mainly entrenched on the fact that laws, political systems, culture and economic development vary considerably from one country to another. As a result, what is considered as being a normal practice in one country is at times considered as unethical in another country. Leaders work for an institution that surpasses national cultures and borders, they need to be particularly sensitive about the various differences that exists and be able to choose the most appropriate in those circumstances when differences across the different cultures creates the impending for ethical problems (Boddy, Ladyshewsky & Galvin 2010). In most international business environment, the central ethical issues relate to corruption, employment practices, human rights, environmental regulations and the moral obligation of companies. Employment practices Employment practices raise the question of which standards should be adopted when work conditions of the host country are inferior to the standards of multinational company country. While some authors suggest that work and pay conditions ought to be similar across nations, there is also the question of how much divergence is mutually acceptable. For instance, in some developing countries employees work for 12 hour workdays, with low compensation and at times worker are not protected from toxic chemicals, these does not imply that international companies should apply the same when operating in the country (DeGeorge 2010). Thus, there is the need for establishment of the minimally acceptable standards that aims safeguarding the dignity and basic rights of employees. Host countries also carry out numerous audits on subsidiaries to ensure to ensure that standards are met. At times, companies may cut ties with companies that are not ethical in their business dealings. Levi Strauss, a clothing company, terminated their long term contract with Tan family. The Tans were alleged to be forcing about 1,200 Filipino and Chinese women to work for about 72 in one week in compounds that were heavily guarded. Human rights Besides the environmental issues, questions related to human rights also arise when companies are operating internationally. A number of the fundamental human rights are usually violated in a great number of nations. Rights that are often taken for granted in the developed countries such as freedom of speech, freedom of association, freedom of movement just to mention a few are not in any way universally acceptable (Weiss 2009). A superb example of such was during the apartheid period in South Africa which ended in 1994. In addition to many other things, the apartheid rule denied Africans among other things political rights, there was segregation between the whites and nonwhites, certain occupations were mainly reserved for whites and in reality no black was placed in a position where they were tasked with managing the whites. A great number of western businesses operated in the country by them. However with time they have begun to question the ethics of the above-stated actions. Companies such as General motors’ which had numerous business activities in South Africa implemented changes in policies. Corruption Corruption has been a problem in almost all societies and even currently it is still a major problem. There have been, and there will always be government officials who are corrupt in their dealings. A number of international business participants also believe that they can gain an economic advantage by offering some payments to the officials (Serenko & Bontis 2009b). Such payments are acceptable in some counties but not in others. For instance, in Japan they may be viewed as gifts. In a significant number of countries payoffs to government officials have been the order of the day. Some economists also argue that in the context of the cumbersome and pervasive regulation that are implemented in most developing countries, corruption may enhance growth and at the same time improve efficiency. On the contrary, other economists are of the opinion that corruption leads to slow economic growth and reduces the returns on investments. In countries where corruption is the order of the day, the unproductive bureaucrats to ask for bribes can siphon off profits made by the business. This reduces the business inducement to invest, and it may slow down the economic growth of the country. Environmental regulations Ethical environmental issues usually crop up when the environmental regulations that are in place in host nations are inferior when compared to the regulations in the home country. A great number of the already developed countries have a substantial law that governs the dumping of toxic substances, emission of pollutants as well as the use of toxic materials in the companies. A great number of the developing countries lack these regulations and in instances when they exist they are below the priority list (Velentzas, Savvidou & Broni 2009). Based on critics this can mainly result in higher levels of pollution than what is allowed in their home country. Ethical issues arise on whether multinational companies are free to pollute when they are operating in a developing nation. Another question that is usually raised in regard to pollution is whether there is a danger that amoral management may move their operations to the developing countries there are no costly pollution control and whether they are free to damage the environment and endanger the lives of the local people in the quest for low cost of production and them to gain a competitive advantage (Serenko & Bontis 2009b). Some multinational contribute to the global tragedy when their move their operations and production to locations where they feel free to thrust pollutants into the atmosphere or at times dumps then into rivers and oceans resulting in damage to global commons. Moral obligation of companies Multinational companies possess the power that is derived from their ability to move production from one country to another and their control over resources. Though the power is usually constrained by laws and regulations, it also constrained by the market and by the competitive process, it is nonetheless considerable. A great number of moral philosophers are of the opinion that with the power they have multinationals have a special responsibility to give back to the societies that have enabled them to grow and prosper. However, most multinational companies have abused the power for their personal gain (DeGeorge 2010). Power in itself is morally neutral all that matter is how the power is used. People can choose to use it in a positive way with the aim of increasing social welfare that is ethical to it can be used in a way that unethical. A number of companies with international presence have acknowledged that they have a moral obligation to play in using their power to enhance the social welfare of the societies in which they conduct business. A good example of as such a company is BP. BP policy states that they have to undertake social investments in the countries they operate in. There exist no economic reason as to why BP made the social investment, but they believe that it is morally right to use the power they have in a constructive way. Impacts of ethical issues on Australia Australians are exposed to various unethical business practices on the micro and macro level from pollution cover-ups, bribing of government officials to approve development projects that are not of any benefit to the locals and the preferences of foreign workers over Australian workers. A significant impact of ethical issues in Australia is that it has lead to the formulation and legislation of business ethics in the construction of preserving the environment and biodiversity. Both the state and local governments in Australia requires investors to engage in biodiversity impact statements and also in environmental management plans. Through these, the Australian government seeks to reduce the impact of certain social issues such as pollution of the environment by both the local and foreign investors in the country (Serenko & Bontis 2009a). The other impact of the ethical issues is that it will always be a source of an additional expense. This will be in a bid to hide the unethical issues from other partners who may be interested in the activity. When a company’s manifestations are known the more vulnerable they will be to their competitors in the market. The country may also lose a lot of money through corrupt officials and thus international companies may not be able to make any other investment in the country. Another major impact of ethical issues in Australia is that it is likely to lure away investors. There are certain international companies who believe in conducting fair business, and they also uphold highest ethical standards when conducting their business. When they encounter corrupt officials, they may choose to invest in other countries. In regard to these Australia may lose out on any possible revenue they would have gained is the company invested. Also through this the country may also lose put of any job opportunities that would have resulted from the investment and they may also lose out in any other development that the company would have done in the country (Serenko, Bontis & Grant 2009a). The ethical issues are also likely to have a major impact on a country since its credibility as a possible country to invest on is usually questioned. If a country condones unethical issues and they become known, it is bound to lose its credibility. Though they may survive the public knowledge through the use of PR, many of them lose potential investors (DeGeorge 2010). Even it at one time it can recover completely from the new about its involvement in unethical behavior, it always takes a considerable amount of time as well as money for them to be able to restore their image and investor confidence. Conclusion Based on the above discussion it is clearly evident that ethics is a contemporary international business issue that is facing a great number of companies operating globally. Te most common ethical issues in international business relate to corruption, employment practices, human rights, environmental regulations and the moral obligation of companies. The ethical issues tend to have some noteworthy impacts on the business as well as on the country as a whole. Thus, the government of host countries should ensure that all these ethical issues are addressed, and strict penalty imposed on those found to be engaging in these ethical issues. By so doing, they will be able to eradicate the effects of the ethical issues of the individuals, societies and the country. These effects include loss of finances, loss of possible investors and development from the investors and lack of job opportunities that would have been created by the investors. Moreover, it is clearly evident that no matter how strict the constraints from the government are and international actions related to unethical behavior, the only solution in recognizing and cultivating ethical business environment is through the creation of an ethical culture for investors, managers, and the consumers. References Boddy, C, Ladyshewsky, K & Galvin P 2010, ‘Leaders without ethics in global business: corporate psychopaths’, Journal of Public Affairs, Vol 10, pp. 121-138. DeGeorge, R 2010, Business Ethics, Seventh Edition. Prentice Hall, New Jersey. Marcoux, A 2009, Business-Focused Business Ethics. Normative Theory and Business Ethics. J. Smith. Plymouth Rowman & Littlefield. Serenko, A & Bontis, N 2009a, ‘Global ranking of knowledge management and intellectual capital academic journals’, Journal of Knowledge Management. Serenko, A, Bontis, N & Grant, J 2009, ‘A scientometric analysis of the proceedings of the McMaster World Congress on the Management of Intellectual Capital and Innovation for the 1996–2008 period’, Journal of Intellectual Capital, Vol. 10, No. 1, pp.8. Serenko, A & Bontis, N 2009b, ‘A citation-based ranking of the business ethics scholarly journals’, International Journal of Business Governance and Ethics vol. 4, no. 4, pp. 390–399. Velentzas, I, Savvidou, K & Broni, G 2009, 'Economic analysis of environmental law: pollution control and nuisance law', Journal of International Trade Law and Policy, Vol. 8, No. 3, 252-271. Weiss, J 2009, Business Ethics: a Stakeholder and Issues Management Approach with Cases, 5 edn, South-Western Cengage Learning Mason, OH. Read More