Ethics in International Business

Nethra Udayakumar 312312631068

Need for ethics

To safe guard the growth and wellbeing of the stakeholders Protect companies from unhealthy competitions Restricting the concentration of economic power in the hands few For the good of the Company itself.

what is business ethics

Business ethics is concerned primarily with the relationship of business, goals and techniques to specific human needs. It studies the impact of the good of the individual ,the firm ,the business community and the society as a whole. Studies the Special obligations that a man and a citizen accept when he becomes a part of the world of commerce.

Philosophical
Normative
Proper thought and conduct

es to Ethics

Utilitarianism(Teleological)
Moral worth-consequences of the behavior

Deontological(Reverse of Teleological)
Moral worth-intension of the person making decision.

Distributive justice(John Rawls)

Benefits to be distributed based on juctice

in International Business
Vary country to country Search for universal values Approaches to Corruption-based on distribution of income Understand the major religion in the host country. Understand the quality standards- quality price matrix ,use of child labour,salary levels Host countrys tradition and outlook with regard to licensing, etc

Unethical practices in International Business

Arise most often in the context of:
Corruption Money laundering Hawala Piracy Transfer pricing Tax heavens Others Employment practices Human rights Environmental policy

 Government officials may ask for bribes for an MNC to get things done
Reduces the attractiveness of the investment climate Increases the cost of the project.
International Transparency Index 2013
RANK 1 COUNTRY Denmark , Finland

4
5

Sweden
Singapore

6
7 94

Switzerland
Australia India

Money Laundering
Conversion of Illegal Money transactions into a legal asset. Inia is the 4th Largest Investor of illegal Money

Hawala
Known as Hundi Informal money transfer system from one countr y to another based on a huge network of money brokers. Broker Foreign country

Piracy
Stealing someone's work . Pirated MNC can Sell product at fewer prices does not involve R & D.

Transfer Pricing
Price used by related parties or two or more subsidiaries of an MNC in order to settle the transactions among themselves. Higher Prices in high tax countries-to show low profits-avoid tax payable.

 Are countries that levy less or nil corporate rates in order to attract MNCs for their economic development as well as creation of job opportunities. Leads to unhealthy competition. MNCs shift investments-to convert black money into clean money in heavens.

Employment Practices
What standards should be applied? Home nations Host nations Other Should the MNC adapt its policies? Standardize? Hiring practices, labor relations, diversity issues, employment conditions are some specific issues that require careful thought

Human Rights
A manager can assume as universal her/his views on freedom of:
Association Speech Assembly Movement Political repression

Repressive regimes
Is it ethical for MNCs to operate in countries with repressive regimes? Is inward investment an agent for change? What is the limit beyond which inward investment would not be justified under all circumstances? What if competitors from other nations invest and you dont?

MNC and Social Responsibility

Social responsibility: business decisions should be made after consideration of social consequences of economic actions

Ethical Decision Making

Hiring and promotion Organization culture and leadership Decision-making processes Stakeholder perspectives Ethics officers Codes of ethics Moral courage: walk away from profitable and unethical decision

THANK YOU