CH15 - Globalization and Business Responsibilities

Question 1

Globalization

Answer 1

process of decreasing constraints on the interactions among the nations and people of the world (money and goods flowing around the world)

Question 2

economic globalization def

Answer 2

integration of fragmented markets into a global economy (expansion of trade networks around the world)

Question 3

political globalization def

Answer 3

process by which world power relationships change, and there is a loss of sovereignty by the states

Question 4

transnational corporations

Answer 4

operate in many countries around the world, and are aided by trade agreements between different countries (McDonalds, Shell, H&M)

Question 5

social or cultural globalization

Answer 5

emergence of a worldwide culture system

Question 6

arguments for globalization

Answer 6

• leads to the most efficient production of g&s from which all gain
• private corps and open markets provide better goods and services to society
• opportunities for employment and higher incomes are enhances in developing countries
• standard of living has increased in most developing countries
• transfer of capital, tech, intellectual property, and skilled labour occurs
• several stakeholders benefits (owners, consumers, supplier, employees)

Question 7

arguments against globalization

Answer 7

• expansion of global corp is undesirable as decisions are based on profit-making or greed
• conspiracies exist between corps and govs resulting in any benefit being received by a few
• unemployment created in developed economies
• periodic financial crises in the developing economies
• destruction of local environments
• cultures of societies are lost or changed
• human rights violated (sweatshops)
• intellectual property rights no respected
• sovereignty of nations is undermined (WTO has too much influence)

Question 8

World Trade Organization (WTO)

Answer 8

only global international organization dealing with the rules of trade between nations

Question 9

3 major trade agreements signed by Canada

Answer 9

• North American Free Trade Agreement (NAFTA)
• Comprehensive Economic and Trade Agreement (CETA) - Can/Euro
• Comprehensive and Progressive Agreement for Trans-Pacific Trade Partnership (CPTPP) America/East-Asia

Question 10

International Non-Governmental Organizations (INGOs)

Answer 10

groups that hold shared values and attitudes about the issues relating to globalization and advocate for changes to improve conditions in developing countries
- pressure on corps and gov
- often opposed to globalization and excessive influence of multinational corporations
- also reffered to as TNGOs (transnational) or TSMOs (transnational social movement orgs)

ex. Save the Children, Action against hunger, Oxford committee for famine relief

Question 11

supranational institution

Answer 11

international org that transcends national boundaries where the member states share in decision-making on particular issues pertaining to the members
- usually viewed as economic agencies, but they can also have an impact on the social, ethical and environmental responsibilities of the corp
- INGOs often critical of such institutions as they promote globalization

ex. NAFTA, EU, Mercosur

Question 12

5 important supranational institutions

Answer 12

1. World Bank -> provides financial and technological assistance to developing countries
2. International Monetary Fund (IMF) -> fosters financial stability, international trade, employment, and reduction of poverty
3. International Labour Organization (ILO) -> seeks to promote social justice and internationally recognized human and labour rights
4. World Trade Organization (WTO) -> coordinates agreements reducing trade barriers
5. World Economic Forum (WEF) -> independent International institution for Public-Private cooperation

Question 13

International Monetary Fund

Answer 13

-> works to achieve sustainable growth and prosperity for all of its 190 member countries:
- supports economic policies that promote financial stability and monetary cooperation
-> governed by and accountable to its member countries

Question 14

How Canadian business is influenced by globalization

Answer 14

• pressure to forge international links
• must meet the challenges of global market restructuring as governments complete new trading agreements
• must attract more investment in plants that further process our natural resources
• must be competitive with those from other countries in order to also behave as responsible corporate citizens
• more direct investment abroad

Question 15

global standards of conduct developed by international organizations

Answer 15

• caux round table: caux principles of business
• OECD “guidelines for multinational enterprises”
• Equator Principles (EPs)
• United Nations’ Principles for Responsible Investment (PRI)
• Global Reporting Initiative (GRI)
• Principles for Global Corporate Responsibility: Benchmarks for Measuring Business Performance

Question 16

Caux round table: Caux principles of business

Answer 16

• principles cover responsibilities of all stakeholders, economic and social impact of business, business behaviour, respect for rules, support for multilateral trade, respect for the environment and avoidance of illicit operations

Question 17

OECD “guidelines for multinational enterprises”

Answer 17

one of the oldest guidelines and has influenced corporate behaviour around the world
- clauses include disclosure, employment and industrial relations, environment, combatting bribery, consumer interests, science and technology, competition and taxation

Question 18

Principles for Global Corporate Responsibility: Benchmarks for Measuring Business Performance

Answer 18

• comprehensive set of more than 100 principles, 129 criteria and 118 benchmarks to measure business’ social and environmental performance. developed by interfaith orgs from several countries

Question 19

Equator Principles (EP)

Answer 19

system for determining, assessing, and managing environmental and social risk in projects; its is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making

Question 20

UN principles for responsible investment (PRI)

Answer 20

formulated in partnership with the UNEP finance initiative and the UN global compact and developed by an international group of institution investors.
- prompted as environmental, social and corporate governance (ESG) issues that can affect the performance of investment portfolios

Question 21

United Nations Global Compact Network

Answer 21

developed by the World Economic Forum
- set of principles referred to as the Global Compact
- call to companies to align their strategies and operations with ten universal principles related to human rights, labour, environment and anti-corruption, and take actions that advance societal goals and the implementation of the SDGs.

Question 22

Global Reporting Initiative (GRI) Standards

Answer 22

GRI guidelines cover all aspects of economic, social, and environmental reporting and apply to multinationals corporations

Question 23

Challenges that confront Canadian Business as it participates in the global economy

Answer 23

• presence of corruption
• respect for human rights
• use of sweatshop production
• reduction of poverty

Question 24

corruption def

Answer 24

abuse of entrusted power for private gain
-> corruption perception index - measures perceived level of public sector corruption in countries and territories around the world

Question 25

bribery def

Answer 25

making questionable payments, or bribes, to government officials to influence their decisions
- several orgs monitor and measure bribery practices (e.g. OECD)
- Canada doing a poor job at enforcing bribery practices (has prosecuted and convicted only one case)

Question 26

Least and most corrupt countries

Answer 26

according to CPI score (corruption perceptions index):
Least - Denmark, new Zealand, Finland, Singapore, Sweden
Most - North Korea, Yemen, South Sudan, Syria, Somalia

Question 27

human rights def (+ 2 significant human rights codes)

Answer 27

fundamental rights and freedoms to which all individuals, groups, and societies are entitled
1. United Nations’ “Guiding Principles on Business and Human Rights”
2. “Voluntary Principles on Security and Human Rights”

Question 28

Voluntary Principles on Security and Human Rights

Answer 28

• Risk Assessment: in a corp’s environment, risks associated with political, economic, social factors; potential for violence
• Interactions Between Companies and Public Security: corps have an interest in ensuring that actions taken by public security providers are consistent with the protection of human rights
• Interactions Between Companies and Private Security: the latter should act consistently with the law and international guidelines

Question 29

sweatshop production and human rights abuses

Answer 29

issue with most retailers
- child labour
- low pay
- poor working conditions
- poor health and safety
- mistreatment of workers

Question 30

“bottom of the pyramid”

Answer 30

corporations should not ignore - as potential customers - the segment of the world’s population living in poverty
-> empowers those at the bottom by providing new options for improving their state
-> commercial infrastructure necessary at the “bottom”

Question 31

2 other business approaches to addressing globalization issue

Answer 31

fair trade => trading partnership with aims at sustainable development for excluded and disadvantaged producers
microfinance => provision of financial products, such as micro-credit, micro-insurance, and savings accounts, to persons living in areas of poverty without access to baking services

Question 32

driver behind creating a favorable environment to engage the poor

Answer 32

• break out of mature market
• framework conditions in many developing countries are improving
• communications are faster and cheaper, making the world smaller place
• public expectations of corporations are changing
• new and better partners are available
• aid and investment are beginning to reinforce one another