Ethics in International Business

Question 1

_________, or subcontracting work to outside companies, is a common staffing strategy by companies that lack specialized resources internally.

Answer 1

Outsourcing

Explanation

Although outsourcing might give a company increased flexibility and additional expertise, it can also result in a loss of control over the work and a greater dependence on suppliers.

Question 2

The key advantages to outsourcing are the ability to find competitive and highly skilled specialists, cost benefits from external management and maintenance of information systems, as well as ___________ when an organization’s needs are variable.

Answer 2

flexibility

Explanation

Some organizations needs are not static but change regularly. By outsourcing, organizations can pay for what they need rather than invest heavily in the necessary labor, hardware and software.

Question 3

In 1994 the NAFTA treaty went into effect linking the economies of the US, Mexico and ______.

Answer 3

Canada

Explanation

The North American Free Trade Agreement (NAFTA) simplified export procedures and lowered tariffs on US goods entering Mexico. It also provided protection for US investment in Canada and Mexico.

Question 4

The United Nations includes the _______, which provides loans and technology assistance to member countries.

Answer 4

World Bank

Explanation

This describes the World Bank. The World Bank and the International Monetary Fund (IMF)are two of the major world economic institutions.

Question 5

The International Monetary Fund (IMF), under the United Nations, was created to promote ________ stability and international trade.

Answer 5

currency

Question 6

Many recent international trade agreements and organizations have supported the basic principles of ____ trade, a theory that each nation will ultimately benefit the most if they freely trade with each other without restrictive measures.fr

Answer 6

free

Explanation

The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) are both famous examples of organizations founded to support free trade. The WTO, in particular, has been a target for American protesters who feel that it leaves certain U.S. industries vulnerable to foreign competition.

Question 7

In 1995 the WTO was formed with the power to govern world trade and determine whether a member country’s environmental, health and worker ______ laws are a restrictive trade practice as defined by their rules.

Answer 7

safety

Explanation

This was when the World Trade Organization (WTO) was formed. In 1994, 120 nations agreed to regulate world trade in this manner.

Question 8

In 1919, unions from different countries developed the ___________________ Organization in an effort to coordinate labor relations activities and raise the standards of work and life through the adoption of uniform values.

Answer 8

International Labor

Explanation

The president of the American Federation of Labor was responsible for founding the ILO, which sought to establish global standards with regards to the eight hour work day, limitations on child labor, and the freedom of union formation.

Question 9

The _______________ Practices Act of 1977 prohibits any person or firm in the United States from making a corrupt payment to a foreign official to obtain or keep business.

Answer 9

Foreign Corrupt

Question 10

Under the Foreign Corrupt Practices Act, _______ to foreign officials are illegal.

Answer 10

bribes

Question 11

______ payments are small bribes paid to government officials to facilitate routine bureaucratic decisions.

Answer 11

Grease

Explanation

For example, an international businessman going through customs might have to make a grease payment to a foreign customs officer in order to get his passport stamped to enter or leave the country. In many cases these small bribes are silently condoned by the governments these officials work for.

Question 12

A ______________ corporation is one which operates in more than one country.

Answer 12

multi-national

Explanation

A multi-national corporation (MNC) usually has a parent company, and component companies which operate in different countries.

Question 13

Because ___s operate across national borders they commonly experience cultural differences concerning what is defined as ethical behavior.

Answer 13

MNC

Explanation

A couple of prominent examples of ethical challenges faced by multi-national corporations include methods of payment and employment practices. In some cultures it is ethically acceptable to give and take bribes and to employ children as workers.

Question 14

Even while doing business in a foreign country, American businesses are subject to American anti-corruption and anti-_________ laws.

Answer 14

terrorism

Explanation

One of the most common mistakes made by American businesses operating internationally is following the local custom of paying under the table bribes.

Question 15

Enacted in 1977, the Foreign Corrupt Practices Act prohibits companies from _______ foreign officials.

Answer 15

bribing

Explanation

Violations of the Foreign Corrupt Practices Act (FCPA) are subject to both fines and imprisonment.

Question 16

One negative side effect of the ____ is the estimated billions of dollars lost to American companies resulting from compliance with the act.

Answer 16

FCPA

Explanation

Many countries do not adhere to the rigorous ethical standards mandated by the Foreign Corrupt Practices Act and gained a competitive advantage over US companies in foreign markets.

Question 17

The EU __________ on Corruption passed in 1997 makes it a criminal act to pay bribes inside and outside the European Union.

Answer 17

Convention

Explanation

Civil servants from the EU can be prosecuted for bribery under this legislation.

Question 18

A _____ is a relatively large amount of money paid to someone to do something they would not ordinarily do.

Answer 18

bribe

Explanation

Unlike grease payments, which are small amounts of money paid to someone to do something theyre supposed to do anyway, bribes can be distinguished by the fact that the payment is large and the bribed individual is paid to do something they otherwise would not do. For example, paying an official to get a friend released from jail is a bribe. Paying another official a small amount to speed up the processing of your exit visa would be considered a grease payment.

Question 19

An accident In 1984 resulted in over 500,000 people being exposed to a deadly poison gas which leaked from the Union Carbide pesticide plant in Bhopal _____.

Answer 19

India

Explanation

At the time it was called the worst industrial accident in history. Responsibility for the accident fell both on the company and the government of India.

Question 20

The terms hypernorms and moral free space are both associated with Integrative _______________ Theory (ISCT).

Answer 20

Social Contract

Explanation

ISCT is a theory of business ethics developed by Donaldson and Dunfee and concerns cross-national cultural differences. ISCT consists of four different categories of norms: hypernorms, consistent norms, moral free space, and illegitimate norms.

Question 21

__________ are values acceptable to all cultures and organizations.

Answer 21

Hypernorms

Explanation

Hypernorms are principles so fundamental to human existence that we would expect them to be reflected in religious, philosophical, and cultural beliefs. Examples of hypernorms include prohibitions against murder, theft, torture, rape, etc.

Question 22

__________ norms cannot conflict with hypernorms but are more culturally specific.

Answer 22

Consistent

Explanation

According to Donaldson and Dunfee most corporations’ codes of ethics fall under this category.

Question 23

The concept of ________________ allows managers to adapt where the norms of a particular country conflict with consistent norms in the home country.

Answer 23

moral free space

Explanation

Moral free space is defined as the freedom of individuals to form or join communities and to act jointly to establish moral rules which apply to community members.

Question 24

Norms which are incompatible with hypernorms are called __________ norms.

Answer 24

illegitimate

Explanation

The illegitimate norm lacks moral authority. Exposing workers to deadly chemicals would be an example of an illegitimate norm.

Question 25

__________ are characterized by low pay, poor working conditions, safety and health violations and the use of child labor.

Answer 25

Sweatshops

Explanation

Sweatshops are often found in countries like Pakistan, Vietnam, Thailand, Honduras, Indonesia and the Philippines etc.

Question 26

The _________ initiative approved a set of labor standards that include the right to a safe working environment, a moratorium on child labor, a living wage, the right for workers to unionize, and a 48 hour work week.

Answer 26

SA8000

Explanation

Companies that want to comply with SA8000 standards apply for certification through an outside auditor.

Question 27

To meet the challenges of global competition, companies can become an international corporation with leveraged capabilities in foreign markets, or a multinational organization with independent units in other countries to deal with local issues, or a global corporation with international offices controlled from the local headquarters, or a fully _____________ organization with a network managing both local and global operations.

Answer 27

transnational

Explanation

A transnational organization successfully manages both local and global concerns in an integrated plan that offers them the most flexibility.

Question 28

A complicating factor associated with transnational _________ is the cultural differences that exist between countries, especially in the areas of ideology and religion.

Answer 28

bargaining

Explanation

Cultural differences, such as differences in ideology and religion, can create barriers that impede effective bargaining. Such differences can make it very difficult for unions from the free world to collaborate with unions from elsewhere.

Question 29

The transnational _________ is defined as the international movement of labor, trade in goods and services, and international flows of information and capital.

Answer 29

economy

Question 30

The _________________ Act (ATCA) allows noncitizens to sue individuals present in the US who committed acts of torture.

Answer 30

Alien Tort Claims

Explanation

The ATCA and the Torture Victim Protection Act (TVPA) allow US federal courts to hear civil claims against persons allegedly responsible for severe human rights abuses.