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Chapter Twenty-Three:
Ethics Issues in International Business
True/False Questions:
1) In an age of globalization, it is lucky that all ethical systems are compatible.
2) The World Bank (2004) reported that from 1980 to 2003, per capita real gross
domestic product in many countries in sub-Saharan Africa increased substantially.
3) Ethical systems are not intended to be universally applicable.
4) Interactions among nations and foreign firms are regulated by one set of
international law.
5) International law consists of several components, including national laws
pertaining to foreign persons and entities, intergovernmental treaties and actions
of international bodies such as the United Nations.
6) Examples of treaties and agreements include the Sarbanes-Oxley Act, and the
required government approval for the acquisition by a foreign firm of any U.S.
firm essential to national defense.
7) International law differs from domestic law because sanctions may not be credible
and enforcement is often left to individual nations.
8) Corruption is a fact in many nations and therefore, practices within a country pose
both legal and ethical dilemmas.
9) Corporations that operate in countries other than where they have their
headquarters are subject to the laws of both their home country and their host
countries.
10) Since the laws of the host country generally govern business of foreign companies
in that country, these laws may be contrary to the laws applied in the home
country where a company is domiciled.
11) In the 1980’s Pakistan was the model for ethical behavior and remains as such in
the 21st century.
12) A way to define cultural relativism is that appropriate behavior in a country or its
laws and customs rule culture.
13) Ethical principles are supposed to be universal rather than culturally determined.
14) Ethics requires that firms as well as individuals not simply accept existing
customs or prevailing practices in a country.
15) Donaldson identifies two fundamental conflicts between moral absolutes and
local traditions and context: the conflict of relative development and the conflict
of cultural traditions.
16) Donaldson concludes that not all intercultural comparisons of values are
meaningless.
17) Levi Strauss solved its dilemma in Bangladesh by leaving the country, a moral
victory for child labor.
18) According to Donaldson, among the guidelines for ethical leadership is the
exercise of moral imagination.
19) Among the minimal set of rights that Donaldson notes is the freedom of physical
movement.
20) Issues are more complex when people do not have the means to protect their
rights and advance their interests.
21) Facebook’s “Human Rights Production Standards” is highly regarded and
followed by companies such as Nike.
22) Levi Strauss got embroiled in a labor problem involving slavery in Saipan and
revised its Global Sourcing Guidelines due to this problem.
23) Poverty, lack of education, and inadequate health care situations make operating
in developed nations difficult.
24) Under the principles of Calabresi and Melemad, when a decision needs to be
made, you need to ask yourself which party is in the best position to induce others
to take actions that will improve the difference between social benefits and costs.
25) Distributive justice principles call for relieving the economic burdens of the poor
rather than contributing to their burdens.
26) The Clinton administration was heavily involved in looking into the abuses in
foreign sweatshops used by American companies and the current Bush
administration has also vigorously followed this approach given the
administration’s great support of labor and employees over employers.
27) IBM has been roundly criticized for not joining the Fair Labor Association that
monitors labor practices abroad.
28) The Caux Round Table Principles of Business set forth both obligations and
values derived from the western concept of human dignity and the Chinese
concept of kyosei, or acting in the common good.
29) A bribe is intended to corrupt the behavior of the recipient.
30) From the perspective of utilitarian analysis, bribery is good because it does not
distort economic activities away from those that produce the greatest well-being.
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Multiple Choice Questions:
31) The capability of different countries to deal with ethical issues and concerns is
limited by what?
a) The United Nations charters
b) The World Bank regulations
c) Its poverty, corruption, legal system and society
d) The International Monetary Fund regulations
32) Ethical systems are intended to be what?
a) Tailored to each country
b) Compatible with each country’s culture
c) A function of the country’s social and moral systems
d) Universal—that is, they apply to all countries
33) Treaties and agreements regulating interactions among nations include:
a) USA Foreign Corrupt Practices Act (FCPA).
b) International Monetary Fund or IMF.
c) The required US government approval for the acquisition by a foreign firm of a
U.S. firm essential to national security.
d) Official boycott by the USA of Cuba.
34) Actions of international bodies include all of the following except which of the
following?
a) UN response to Iraq’s invasion of Kuwait
b) Law of the Heavens
c) UN Convention on Contracts for the International
Sale of Goods
d) Law of the Seas
35) International law compares to domestic law in which of the following ways?
a) Same as
b) Different from
c) Totally resemble each other
d) Only a few countries differ from Anglo-Saxon common law
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36) What country estimated that bribes amounted to $200 million annually?
a) China
b) Taiwan
c) Brazil
d) Indonesia
37) According to Sen, about countries and cultures “hide more than they reveal”?
a) Stories
b) Specific evaluations
c) Generalizations
d) None are correct answers
38) Which of the following is not among the minimal set of rights proposed by
Donaldson?
a) Freedom of physical movement
b) Fair trial
c) Minimal education
d) Right to join a union
39) Some ethics issues arise not from the actions of individuals and firms, but instead
from what?
a) The edicts of rulers
b) Local laws
c) International treaties
d) The policies of countries
40) Which country’s one-child-per-family law is viewed by many people as violating
basic human rights?
a) Bangladesh
b) India
c) Switzerland
d) China
41) Using Kant’s moral rules applied to the Lockheed payment problem, all of the
following are conclusions except which of the following?
a) Bribery is not reversible
b) Bribery treats the recipient of the bribe as an end
c) The rules of bribery are not universalizable
d) Bribery treats the recipient as a means
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42) The Lockheed vice president used the following arguments to justify the bribe of
12 million dollars paid to the Japanese in 1977, except which one?
a) They would provide Lockheed workers with jobs
b) The action was legal under the American law at that time
c) The action was legal under the Japanese law at that time
d) The action was an acceptable practice in Japan.
43) Which of the following factors contributes to the complexity of doing business in
developing countries?
a) Ethical issues faced in host countries are different
b) There are basic cultural differences
c) The laws, practices, and ethical principles may be conflicting with those
available in home countries
d) Each of the above is a contributing factor
44) Increasingly, American companies seek foreign cheaper labor, but there is not
always smooth sailing. Many issues, such as child labor, need to be monitored and
managed. Which of the following is a group deeply concerned with monitoring
these issues?
a) Union of Needletrade, Industrial and Textile Employees (UNITE)
b) Union of Child Labor Advocates
c) Ethics in Developing Nations Association
d) There are no such bodies
45) Standards of compliance concerning labor in suppliers’ factories are monitored by
what?
a) Fair Labor and Standards Work Group
b) World Health Organization
c) World of Workers’ United
d) Fair Labor Association
46) The Foreign Corruption Practices Act (FPCA) makes bribery of foreign officials,
political parties, candidates for office and public international organizations what?
a) A moral affront
b) Criminal offense
c) Civil offense
d) Unethical
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47) The Omnibus Trade and Competitiveness Act of 1988 amended the FCPA in all
of the following ways except which one?
a) Altered some language about third parties
b) A payment to a foreign individual became illegal under the act if it was illegal
in the foreign country
c) If a payment were illegal in a foreign nation, the defendant could not use it as
legality in his or her defense
d) Language was clarified to indicate that payments securing performance of
routine government actions were not illegal
48) What concepts of higher order standards do Cummins guides meet?
a) Kantian and utilitarianism
b) Kantian and Cartesian
c) Utilitarianism and relativism
d) None of the above
49) What is the rule for a corrupt payment in the Cummins guidelines?
a) If it influences the agent’s decisions
b) If it is not known to the principal
c) Both a and b
d) Neither a nor b
50) The United States estimated that its companies lost ______ of dollars a year in
sales because of bribes paid by companies from other countries.
a) billions
b) millions
c) thousands
d) None are correct
Essay and Review Questions:
1) Cite and explain relevant international laws and agreements that affect
international business. Give specific examples.
2) Donaldson argued that all intercultural comparisons are meaningless. Others
argue that understanding and comparing cultures is a must for the USA to be
competitive in a global economy. Debate both points of view. What do you think?
Explain your reasoning giving some examples.
3) For many managers who venture overseas to do business in the global
marketplace, the challenge of facing some questionable practices and different
ethical principles can be overwhelming. Give some specific examples of these
challenges.
4) You are a new representative with Reebok. You are given the assignment to
explain Reebok’s international policies over the last years. Write a history,
explanation and analysis to share with stockholders.
5) FOR POSSIBLE CLASS PROJECT OR EXTRA ASSIGNMENT:
Select one developing country to study carefully and act as the resident expert on
that country.
Write a detailed report including at least these aspects:
a) Basic demographic and economic information
b) The importance of this country to the U.S.A.
c) The cultural traits of the citizens of the country
d) The business practices of doing business in the country
e) The potential conflict between norms and practices in this country and in the
USA
f) Your code of conduct to do business successfully in that country without
breaking any USA laws or regulations.
6) Discuss, analyze and explain the issues and concerns in the case, Complications in
Marnera.
7) Discuss, analyze, evaluate, and critique the issues in the evolving case of
Corporate American Ethics in the 21st Century.
8) What are the ethical issues marketing infant formula in developing countries?
Who has the responsibility in this case? What are the principles that should guide
marketing? What are the ethical complexities in the situation? What role are
research and science playing? Is there a parallel case you can cite which might
raise similar problems?
9) Select an issue of interest to you that involves ethical issues in international
business. Using the chapter as a framework and guide, prepare an analysis for an
industry of your choice.
10) Discuss, analyze, evaluate, and critique case of Siemens: Anatomy of Bribery.