Chapter 10: Global Business Ethics and Social Responsibility
10.2 Ethical Issues Affecting Business Conduct of International
Business
Pg 312-320
When a Canadian company does business internationally, it must deal with many
ethical issues related to its different stakeholders:
* the host country and its society
* consumers
* investors or stockholders.
The company must learn about areas of dispute and determine ethical guidelines
for handling such disputes. Because many business people are paid according to
performance, some may be tempted to bypass difficult ethical issues. While
successful risk management can lead to the enhancement of a company’s
reputation, mismanagement of ethical issues may lead to business failure.
Societal Issues
Pollution of the natural environment is a universal concern, because clean air,
water, and soil are necessary for human and animal life. One major source of
global concern about the environment is global warming. Other environmental
issues focus on environmental waste, and on the possible wholesale export of
Canada’s fresh water to other countries. Trying to sustain a resource by keeping
it renewed is often difficult if demand for the resource outpaces regeneration.
Consumer Issues
Product safety standards are very important consumer issues, whether the
product is a child’s toy, a car tire, or a medication. When a company finds itself
on the front page of the newspaper in a negative light, its public relations experts
work overtime to minimize the social and financial damage to itself and to its
customers.
Employee Issues
Workplace Health and Safety
It is the employer’s responsibility to place safety standards for their workers.
Depending on the country these standards can vary. In first world countries the
safety standards are very strict whereas in third world countries the standards
are very laid back causing many work related casualties and deaths.
Multinational companies will open up factories to produce their products in
developing countries because it is more cost efficient. In a developing country
labor laws are not enforced and health and safety regulations are not met. This
can save a corporation a lot of money in the production of their products,
therefore lowering the retail value which will in turn increase sales.
Equality Issues
Since different countries have different views on the way they treat women and
minorities multinational companies can run into problems with the treatment of
their female or minority employees in a host country.
Although the fair treatment of women, minority groups and disabled people is still
a topic of discussion in Canada, these groups are treated a lot better and enjoy a
lot more freedoms and rights than these groups on foreign countries. Talented
women who wish to advance in their career in business or politics are still held
back in other countries. When governments, citizens and multinational
companies work together, equality in the workplace will increase worldwide.
Human Rights Issues
The Canadian company Mountain Equipment CO. (MEC) is a large company that
sells climbing and camping gear. Their policy states that they deal with individual
production companies and not with countries. So while they may receive
products from a company in China, MEC will do business with a company that
has high health and safety standards, does not violate any human rights and is a
company that will positively influence other companies to do the same.
China’s standards of living have increased over the last 15 years due to
increased trade with multinational companies but there is still a problem with
sweat shops and companies that violate environmental standards among other
things.
Labour issues
Changes that accompanying free trade, a company can face conflicting points of
view where its workers’ way of life is threatened. When labour feels powerless
about job security, disruptions tend to occur. Loss of job usually occurs after a
company fails to be competitive. Non union workers are more vulnerable to job
loss then unionized workers. Businesses that compete in free market still have to
take control of risk to provide their shareholders with a fair return on their
investments. But businesses that take a social responsibility need to look after
their workers as well as their shareholders.
Stockholder issues
Stockholders are owners of a company. As an owner they have the right to earn
fair dividends based on the company’s performance, they also have the right to
vote on company policies and company directors. They also expect fair return
and that the company managers will act on behalf of them and their interests. For
stockholders to vote fairly they need to know about all the dealing in honesty that
is happening in the company.
Corruption and dumping
When discussing about sales, It is quite common to present a foreign trade
partner with a gift. However when trying to bribe your trade partner it is unethical
and illegal. Canadian companies are subject to criminal charges if they are found
guilty of bribery. Although in other countries payments are common and in fact a
cost of doing business. A company who does not make a “special payments”
may not even be in the running for new contracts.
In the 2002 corruption perceptions index, 102 countries were ranked according to
the corruption seen by business people as academics and risk analysts. Scores
ranging from 10 as highly clean to 0 and highly corrupt. Russia is a great
example of this. Due to Russia’s ongoing changes from the soviet union Russia
scored 2.7 out of 10. The company has tried to change itself into a capitalist state
but it economy has been infiltrated by criminal groups. From what there once was
35 Alberta based company’s in Russia, now in 2002 there are two. This has
included seizure of bank accounts and takeovers of company offices at gunpoint.
Dumping is the practice of selling goods in foreign country at a price that is lower
than in the country in which they were manufactured. Dumping is another
business issue that is controversial and is considered unethical.