Download pptx - Ethical Standards Society Values Culture / Customs

Ethical Standar

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Values

Culture/

Customs

•Advances in communication, technology and transportation have minimised world’s borders, creating a global economy

•Countries are attempting to industrialise and compete internationally and hence do business outside home countries

•Transactions across national borders define global business

•Global business means people from different countries, different cultures, values, laws and ethical standards.

GLOBAL BUSINESS AND INTERNATIONAL BUSINESS ETHICS

•International business person must not only understand the values, culture and ethical standards of his own country but be sensitive to those of other countries.

• One of the most difficult concepts to understand and apply in global business is culture. WHY?

•Custom, values, ethical standards vary from person to person, company to company and even society to society

GLOBAL BUSINESS AND INTERNATIONAL BUSINESS ETHICS

•International business person must not only understand the values, culture and ethical standards of his own country but be sensitive to those of other countries.

• One of the most difficult concepts to understand and apply in global business is culture. WHY?

•Custom, values, ethical standards vary from person to person, company to company and even society to society

CULTURE & GLOBAL BUSINESS

•Culture is everything in our surrounding that is made up of people- both tangible and intagible

•Language, religion, law, politics, technology, social organisation, general values and ethical standards are all included in the definition.

•Each nation has a distinctive culture and consequently distinctive beliefs about what business activities are acceptable or unethical.


•Cultural differences include differences in speech. Problems of translation for example…

•Bacardi created a fruity drink for the French market. The beverage was marketed in both France and Germany under the name of PAVIAN. Unfortunately PAVIAN translates as Baboon in Germany.

•Baboon means large terrestrial monkeys

•Even within same language words can mean different things. • Example: In Puerto Rico Tropicanna brand orange juice was advertised as “Jugo de China” where china translates for orange. The same ad did not go well with Cuban population for whom it meant Chinese Juice.


•Body language can lead to misunderstandings. Americans nod their head up and down to indicate yes. Albanian up and down means NO. in Britain it means that the person has heard and not that he or she agrees.

•Pointing an index figure is a common gesture amongst Americans. In Asia and Africa it is considered rude.

•Personal Space?

• Customs of one country can be offensive or even dangerous. For example employees of Californian construction company presented a green baseball cap to top Taiwanese company executives in a meeting. In Taiwanese culture green caps symbolise adultery. Unknowingly, Americans accused their associates of having unfaithful wives.


•Religious values: Mc. Donald’s in India

• One of the critical ethical issues linked to cultural differences is the question of whose values and ethical standards take precedence during international negotiations and business transactions.

•While conducting business outside their own country, should business people:

•Impose their own values, ethical standards or even laws on members of other cultures?

•OR Should they adapt to the values of the country in which they are operating?


•When in Rome do like the ROMANS.

• Cultural relativism implies that the concept of morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures.

CULTURAL RELATIVISM

•For example:

• Exxon Mobile Corporation vs. Royal Dutch/ Shell Group have invested in developing the oil reserves if Sakhalin Island, a Russian territory. The company have invested $22 billion in oil and gas drilling equipment not only because there may as much as $13 billion barrels of oil in its water but because Russia’s environmental rules are almost non existent and seldom enforced. However, the blasting and toxic mud associated with developing the area’s oil fields are hazardous to the Western Pacific Grey Whales and in case of a spill or accident it is impractical to save salmon and other animal species from harm.

SO WHAT SHOULD WE DO TO AVOID CULTURAL BARRIERS AND PROBLEMS?

•Many theorists have tried to establish a set of global or universal ethical standards.

• pattern of shared values such as truthfulness, integrity, fairness, equality across the globe, when applied to global business, these values suggest a universal set of ethics.

•Countries like Japan and United States have created international code. E,g., International Code of Ethics for Canadian Business

GLOBAL VALUES

IF THERE IS A UNIVERSAL SET OF ETHICS, WHY BUSINESS PEOPLE HAVE TROUBLE UNDERSTANDING WHAT IS

ETHICAL AND UNETHICAL?

• to what extent are those practices like integrity, truthfulness practised..

• Differences surface when someone from another culture explains what these concepts mean from the perspective of his or her culture.

• Consider that honesty is valued in both Japan and US. Part of Honesty is operationalised by TRUST

GLOBAL VALUES

• In Japan’s banking industry, business people demonstrated that trust by hiring retired Japanese bureaucrats to become auditors, executives and president- a practice known as AMAKUDARI, or “descent from heaven”

• Because these men were so trusted, bankers felt that nothing bad or unethical could happen to the banks. However, because the regulators implicitly trusted their former superiors, the relationship between regulated and regulators became fuzzy. In US, business people may trust former superiors, but they believe there should be a separation between those who regulate and those who are regulated.

GLOBAL VALUES ILLUSTRATION

• Although honesty, charity, virtue and doing good to others may be universally desirable qualities, differences in implementing them can raise ethical issues.

•To address such problems, General Motors Corp., Procter & Gamble, The Shell Group and about 30 companies have agreed to abide by the Global Sullivan Principles.

•These principles seek to encourage social responsibility around the world.

•Fifty of the world’s largest corporations have signed the UN Global Compact.

GLOBAL SULLIVAN PRINCIPLES

• MNCS are public companies that operate on a global scale without significant ties to any nation or region.

•MNCs represent the highest level of international business commitment.

•Some of these firms have grown very large that they generate higher revenues of the GDP of some countries.

• Jack Welch, former CEO of General Electric personal assets are estimated to be about $456.2 million representing half the GDP of Monaco and nearly the total GDP of Grenada.

MNC’s AND INTERNATIONAL BUSINESS ETHICS

• MNCS are public companies that operate on a global scale without significant ties to any nation or region.

•MNCs represent the highest level of international business commitment.

•Some of these firms have grown very large that they generate higher revenues of the GDP of some countries.

• Jack Welch, former CEO of General Electric personal assets are estimated to be about $456.2 million representing half the GDP of Monaco and nearly the total GDP of Grenada.


• Because of their size and financial power, MNCs been the subject of much ethical criticism and their impact on countries in which they do business have been hotly debated.

• European Unions and Americal Labour Unions think it is unfair for MNCs to transfer job overseas where wage is LOW.

•MNCS use labor saving devices that increase unemployment in countries where they manufacture.

•MNCS increase gap between rich and poor nations

•Misuse and misallocation of scarce resources


• Size and power of MNCs create ethical issues through the exploitation of both natural and human resources.

•MNCS pay low price for removal of minerals, timber, oil and then sell products made from those sources at a higher price.

•MNCs may also raise issues of unfair competition.
