International Business and Ethics

1. International Business and Ethics

2. Multinational Corporation • A firm that operate on global basis, committing assets to operations in foreign countries • According to David W Ewing, “A company having production and marketing facilities in many countries, enjoying worldwide access to capital, depending on foreign income, and being managed with a worldwide point of view.” • Multinationals are corporations that operate extensively in more than one country, usually through branches or subsidiaries engaged in production, marketing or both.

3. Multinational Corporation • Examples- General Motors Corporations, General Electric Co, Johnson & Johnson, Coca-Cola, Nestle, Unilever, Telenor etc. • They pose special moral problems. • Their activities are not confined to a single nation, no one nation can effectively control them.

4. Misunderstandings about MNCs • Allegation by the home country: • Investible funds are transferred for higher profits ignoring the need for national investment. • Brain drainage to host countries. • Technology transfer made secretly for personal gains over national benefits • Creation of jobs in other countries while there is already unemployment problem in the country of origin.

5. Misunderstandings about MNCs • MNCs, often, bribe to secure their personal interest which, in turn, earn bad name for the country of origin. • MNCs reportedly do not submit actual profit and wealth position at the end of each financial year, in order to evade taxes payable to the country of origin. • People in the country of origin, often, complained about cultural aggression caused by large number trainees of the host countries taking training in the country of origin.

6. Misunderstandings about MNCs • Allegations by the host countries: • MNCs are giant companies. They make contracts with the government of the host country almost in equal status which affects sovereignty of the host country. • MNCs dictates terms of contract with the government of the host country as if they are donor agencies or agent of a sovereign country. • MNCs reduce the ability of the host country in controlling the movement of foreign currency to and from the host country.

7. Misunderstandings about MNCs • Inferior jobs are given to the people of the host country while the superior positions are given to the people of the country of origin. • The rate of pay/salary structure and fringe benefits are, often, found to be discriminating against the people of the host country • The tools and raw materials normally are procured from the parent country at a high price even though these are available at a very low price in the host countries

8. Misunderstandings about MNCs • MNCs, often, in neglect of local demand export goods elsewhere outside the country of production. • MNCs through the expatriate executives make cultural aggression on the host countries • MNCs, often, found dishonest in making financial disclosure. In the process, they avoid payment of taxes and duties payable to the host countries

9. Guidelines for Operations of MNCs • Employment Practices and Policies • Consumer Protection • Environmental Protection • Political Payments and Involvement • Basic Human Right and Fundamental Freedoms

10. Guidelines for operations of MNCs: Employment Practices and Policies • MNCs should not contravene the manpower policies of the host nations. • MNCs should develop nondiscriminatory employment policies and promote equal job opportunities. • MNCs should provide equal pay of equal work. • MNCs should give advance notice of changes in operations, especially plant closings, and mitigate adverse effects of these changes

11. Guidelines for operations of MNCs: Employment Practices and Policies • MNCs should provide favorable working conditions, limited work hours, holidays with pay etc. • MNCs should respect local host country job standards and upgrade the local labor force through training • MNCs operations should benefit lower-income groups of the host nation.

12. Guidelines for operations of MNCs: Consumer Protection • MNCs should respect host country laws and policies regarding consumer protection. • MNCs should safeguard the health and safety of consumers by safe packaging, proper labeling, an accurate advertising.

13. Guidelines for operations of MNCs: Environmental Protection • MNCs should respect host-country laws, goals, and priorities concerning protection of environment. • MNCs should preserve ecological balance, protect the environment, adopt preventive measure to avoid environmental harm • MNCs should control specific operations that contribute to pollution of air, water, and soils. • MNCs should develop and use technology that can monitor, protect, and enhance the environment

14. Guidelines for operations of MNCs: Political Payment and Involvement • MNCs should not pay bribes nor make improper payment to public officials • MNCs should avoid improper or illegal involvement in the internal policies of host countries. • MNCs should not interfere in intergovernmental relations

15. Guidelines for operations of MNCs: Basic Human Rights and Fundamental Freedoms • MNCs should respect the rights of all persons to life, liberty, security and privacy • MNCs should respect the rights of all persons to choice of job, favorable work condition, protection against unemployment and discrimination • MNCs should respect the rights of all persons freedom of thought, conscience, religion, opinion, expression etc. • MNCs should promote a standard of living to support the health, and well-being of workers and their family • MNCs should promote special care and assistance to motherhood.