Chapter 11: Globalization and Society (Textbook)

Question 1

What determines the complexity of doing business abroad? How is it measured?

Answer 1

• “Distance” from home country

- CAGE (Cultural, administrative, geographic, economic)

Question 2

Who must companies satisfy?

Answer 2

• Shareholders
• Employees
• Customers
• Society

Question 3

What are the three levels of moral development? (#tbt to psychology class)

Answer 3

• Pre-conventional: children learn right vs. wrong but don’t understand why
• Conventional: learn conformity
• Post-conventional/autonomous/principled: individuals internalize moral behavior

Question 4

What is the technical approach?

Answer 4

Decisions based on consequences of the action

Question 5

What is utilitarianism?

Answer 5

An action is right if it produces the greatest amount of good (Greater good? I am your wife! I am the greatest good you’re ever gonna get! Name that movie.)

Question 6

What is the Deontological Approach?

Answer 6

Moral judgements are made and moral reasoning occurs independent of consequences

Question 7

Why do companies care about ethical behavior?

Answer 7

Can be instrumental in achieving competitive advantage and avoiding being perceived as irresponsible

Question 8

What is relativism?

Answer 8

• Ethical truths depend on the groups holding them
• “When in Rome, do as the Romans do.”
• Used as justification for bribery and corruption

Question 9

What is normativism?

Answer 9

There are universal standards of behavior that all cultures should follow

Question 10

What are arguments against the idea that legal justification for ethical behavior is the only important standard?

Answer 10

• Some things that are unethical are not illegal
• The law is slow to develop in emerging areas
• Law is often based on imprecisely defined moral concepts that can’t be separated from legal concepts they underpin
• Law often need to undergo scrutiny but eh courts
• Law isn’t very efficient

Question 11

What are reasons the law should be used to justify ethical behavior?

Answer 11

• Law embodies many of country’s moral principles
• Law provides clearly defined set of rules
• Law contains enforceable rules that apply to everyone
• Law represents consensus derived from widely shared experience and deliberation; therefore, it reflects careful and wide-ranging discussions

Question 12

What is extraterrioriality?

Answer 12

Imposing domestic legal and ethical practices on the foreign subsidiaries of companies headquartered in their jurisdictions

Question 13

What is corruption?

Answer 13

The abuse of entrusted power for gain

Question 14

What organization created the Corruption Perceptions Index (CPI) to measure levels of corruption in a country?

Answer 14

Transparency International

Question 15

What legal action did the United States take to combat corruption? What does it include?

Answer 15

US Foreign Corrupt Practices Act

• Makes bribery illegal and applies to domestic or foreign operations and to company employees, as well as agents overseas
• Facilitating payments are allowed

Question 16

What are facilitating payments?

Answer 16

Payments to officials to expedite otherwise legitimate transactions

Question 17

What is sustainability?

Answer 17

Meeting the needs of the present without compromising the ability of future generations to meet their own needs

Question 18

What is the Kyoto Protocol?

Answer 18

international treaty signed in 1997 that requires countries to cut their greenhouse gas emissions to 5.2% below 1990 levels between 2008-2012

Question 19

What is tiered pricing?

Answer 19

Companies charge a market price for products sold in industrialized countries and a discounted price for products sold in developing countries (usually pharmaceuticals…shout out to G202!)

Question 20

What are 4 major issues that MNEs get involved in through FDI or purchasing from independent manufacturers in developing countries?

Answer 20

• Fair wages
• Child labor
• Working conditions
• Freedom of association

Question 21

What is the Ethical Trading Initiative?

Answer 21

Goal to get companies to adopt ethical employment policies and then monitor compliance with overseas suppliers

Question 22

What are main elements of ethical employment, as defined by the Ethical Trading Initiative?

Answer 22

- Employment is creel chosen
Freedom of association and rift to collective bargaining
- Clean and safe working conditions
- No child labor
- Living wages paid
- No excessive working hours
- No discrimination
- Regular employment provided
- No harsh or inhumane treatment

Question 23

How many children work worldwide?

Answer 23

Estimated 250 million between age 5-17, but only 5% of child labor is involved in export industries

Question 24

What is the United Nations Global Compact?

Answer 24

• Guide for global companies in determining code of ethics

- Includes ten broad principles in human rights, labor, environment, and anti-corruption

Question 25

What are a firm’s motivations for corporate responsibility?

Answer 25

• Avoid legal issues
• Avoid consumer action (boycotts)
• Improve employee morale
• Avoid bad publicity