GM - Chapter 3 - Ethics and Social Responsibility

Question 1

Ethics:

Answer 1

• Study of morality and standards of conduct
• Dilemmas arising from conflicts between ethical standards between countries most evident in employment practices
• Inferring right vs. wrong in legal sense

Question 2

Corporate Social Responsibility (CSR):

Answer 2

• Closely related to ethics
• Actions of a firm to benefit society beyond requirements of law and direct interests of firm
• CSR involves taking voluntary action
• CSR concerns include working conditions in factories and service centers as well as environmental impacts of corporate activities

Question 3

Employment and business practices

Answer 3

• Difficult to establish a universal foundation of employment practices
• Difficult dilemmas in deciding working conditions, expected consecutive work hours, and labor regulations.
• Offshoring due to differences in labor costs

Question 4

Human Rights

Answer 4

• Currently no universally adopted standard
• A great deal of subjectivity and culturally biased viewpoints exist
• Some basic rights: life, freedom from slavery or torture, freedom of opinion and expression, general ambiance of nondiscriminatory practices
• Human rights violations still rampant globally

Question 5

Corruption

Answer 5

• Government corruption pervasive element in international business environment
• Scandals in Russia, China, Pakistan, Lesotho, South Africa, Costa Rica, Egypt and elsewhere

Question 6

Sustainability:

Answer 6

Development that meets humanity’s needs without harming future generations

Question 7

NGO:

Answer 7

• Non-governmental organization; private, not-for-profit organization that seeks to serve society’s interests by focusing on social, political, and economic issues such as poverty, social justice, education, health and the environment.
• NGOs have urged MNCs to be more responsive to range of social needs in developing countries
• NGOs have grown in number, power, influence
• NGO activism has caused major changes in corporate behavior
• NGO leaders are the most trusted of eight leadership categories

Question 8

Rise of Civil Society and NGOs

Answer 8

Major criticisms
-Exploitation of low-wage workers
-Environmental abuses
-Intolerable workplace standards
Response to social obligations:
-Agreements and codes of conduct
-Maintenance of standards in domestic and global operations
-Cooperation with NGOs regarding certain social issues
Corporations receiving heavy criticism
-Nike
-Levi’s
-Chiquita

Question 9

Ethics and Social Responsibility Around the World: CHINA

Answer 9

• Workers not well paid
• Often forced to work 12 hours a day, 7 days a week
• Piracy, counterfeiting, industrial spying
• Human rights violations
• —-Use of prisoner and child labor

Question 10

Ethics and Social Responsibility Around the World: JAPAN

Answer 10

Political and business scandals:
-Japanese cabinet member have accepted questionable payments and favors
-Japanese banking system has failed to take corrective actions when dispersing loans
-Some Japanese firms systematically concealed customer complaints
Equal opportunity issues
-Refusal to hire women or promote them into management positions
-Hostile work environment
-Traditional role of females and female employees
-Sexual harassment may not be considered a moral issue

Question 11

Ethics and Social Responsibility Around the World: EUROPE

Answer 11

Equal employment opportunity:
-Glass ceiling pervasive throughout the world
France, Germany, Great Britain have seen increase in number of women in management, but tend to represent only lower levels

Question 12

Corporate Response to Social Obligations

Answer 12

• Agreements and codes of conduct committing MNCs to maintain certain standards
• Codes help offset real or perceived concern that companies move jobs to avoid higher labor or environmental standards in their home markets
• Contribute to raising of standard in developing world by exporting higher standard to local firms in these countries

Question 13

Principles of Global Compact

Answer 13

• Human Rights
• Labor
• Environment
• Anti-Corruption

Question 14

Corporate Governance

Answer 14

The System by which business corporations are directed and controlled:
-Distribution of rights and responsibilities
-Stakeholder management
-Spells out rules and procedures
-Makes decisions
—-Objective setting
—-Means of attaining objectives
—-Monitors performance
Many continental European countries are “insider” systems
-Ownership more concentrated
-Shares owned by holding companies, families or banks
Rules and regulations differ among countries and regions
-U.K. and U.S. systems are “outsider” systems
-Dispersed ownership of equity
-Large number of outside investors

Question 15

Global Initiatives to Increase Accountability and Limit Corruption

Answer 15

• Foreign Corrupt Practices Act

- International Assistance Partnerships

Question 16

Corruption and Foreign Corrupt Practices Act (FCPA)

Answer 16

• Some evidence that discontinuing bribes does not reduce sales of the firm’s products or services in that country
• Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials
• Illegal for U.S. firms and their managers to attempt to influence foreign officials through personal payments of political contributions, including such tactics as
• –“Entertainment” expenses
• –“Consulting” fees
• Recent formal agreement by many industrialized nations to outlaw the practice of bribing foreign government officials
• Organization for Economic Cooperation and Development
• 29 members plus several other countries have signed on
• Fails to outlaw most payments to political party leaders
• Does indicate growing support for anti-bribery initiatives

Question 17

International Assistance

Answer 17

• Governments and corporations increase collaboration to provide assistance to communities and locales through global partnerships
• Best “investments”
• —Controlling and preventing AIDS
• —Fighting malnutrition
• —Reducing subsidies and trade restrictions
• —Controlling malaria