11-19. Ethical Dilemma:
You were recently hired as a manager for international operations of Despoyle Chemical
Corporation, a major manufacturer of dyes, fertilizers, and other industrial chemicals.
Despoyle has chemical production plants in 28 countries, including many developing
economies. It has a decentralized organizational structure, and managers in individual
countries operate their plants independently of headquarters. After visiting various
Despoyle plants, you find the firm follows local environmental protection standards in
different countries. In India, Despoyle allows pollutants to flow freely into local rivers. In
Mexico, it generates pollution in local landfills and production sites. In Nigeria,
Despoyle’s factory emits air pollution that exceeds levels acceptable in more advanced
countries. As a new manager, you are surprised by the firm’s lax environmental practices
around the world. What should you do? Do you complain to senior management and risk
angering your superiors? Do you try to modify Despoyle’s environmental standards in
different countries? What solution, if any, do you propose to address Despoyle’s
practices? Use the ethical framework in Chapter 4 to formulate your answer.
(LO 11.2; LO 11.4; LO 11.5; AACSB: Reflective thinking)
A FRAMEWORK FOR MAKING ETHICAL DECISIONS
1. Identify the problem
2. Examine the facts
3. Create alternatives
Evaluate each proposed action to assess its consistency with accepted ethical
standards, using the approaches described earlier:
■ Utilitarian—which action results in the most good and least harm?
4. Implement course of action
5. Evaluate results
1. Identify the problem
Managers must learn to recognize and manage ethical problems – proactively anticipate,
confront and scan for ethical challenges.
This Dilemma:
Despoyle Chemical Corporation is polluting a number of countries worldwide via its own
chemical production plants. By putting pollutants into the atmosphere a company runs
the risk of harming citizens of that country. While the level of pollutants may be
acceptable in the eyes of some governments, i.e. ethical relativism, the real determinant
of corporate citizenship is what the corporation believes to be ethically acceptable, given
its own code of conduct and corporate social responsibility mandate. Though it is clear
environmental regulations vary, an ethical firm is still responsible for holding itself to a
higher standard, if corporate citizenship is pivotal to its image. Does Despoyle have an
ethical responsibility to these communities or a fiduciary responsibility to their
shareholders?
2. Examine the facts
Managers must systematically explore the ethical aspects of each decision the firm may make,
regarding its current and potential activities. Determine the nature and dimensions of the
This Dilemma:
As a new manager for international operations, you are shocked by the firm’s lax
environmental practices around the world. What should you do? Do you complain to top
management and risk angering your superiors? Should you “blow the whistle” on
Despoyle’s global practices to environmental groups and the media? Are shareholders,
employees or customers disproportionately disadvantaged?
3. Create alternatives
Consistent with the pyramid of ethical behavior, actions should be legal, i.e. it should not violate
host or home country laws or conflict with international treaties. Any proposed action should be
commensurate with company policy, the firm’s code of conduct, and its code of ethics.
This Dilemma:
What factors should you as the new manager for international operations consider in
deciding whether or not to “blow the whistle”?
Utilitarian – which action results in the most good and least harm?
Rights – which action respects the rights of everyone involved?
Fairness – which action treats people most fairly?
Common Good – which action contributes most to the overall quality of life of the
people affected?
◘ New Manager Does NOT Blow Whistle – Quality of life impacted most for employees,
Virtue – which action embodies the character strengths that you value?
4. Implement course of action
Implement your decision.
5. Evaluate results
Then evaluate it to see how effective it was. How did it turn out? If you had it to do again, would
you do anything differently?
Stakeholder trust and loyalty must be earned, especially from those in new markets abroad.
Some of Despoyle’s chemical production plants are not even meeting, let alone exceeding, a
high environmental standard expected of MNEs.
Due to the decentralized structure of the Despoyle Chemical Corporation, not all blame can be
placed on headquarters. By choosing a decentralized corporate structure, much of the
responsibility lies with the individual plants. It is the responsibility of the manager of international
operations to monitor each plant and act as a liaison with Despoyle headquarters. Would any of
the current activities at these production plants be frowned upon by board members or other
stakeholders?
Assessing this situation from any of the five approaches to ethical decision making, it is clear
that certain environmental practices by Despoyle’s worldwide production plants need to be
revaluated and remedied. Even if Despoyle is not violating any laws, it is the responsibility of a
manager of international operations to report any findings to headquarters and help decide how
to best handle this situation. Perhaps some structural changes are in order, where Despoyle
operates a more global, centralized strategy in terms of environmental regulations. This would
ensure consistency across global operations, elevate their brand image, and such self-imposed
environmental mandates, if more stringent than any government-imposed regulations would
diminish the probability of future wrongdoing as well as minimize government’s role in this
industry.
This Dilemma: Students may use the above-mentioned points as a springboard for
further discussion of whether the new manager for international operations should “blow
the whistle”.
● GlobalEDGE™ INTERNET EXERCISES http://globaledge.msu.edu
11-20. Visit the websites for Toyota (www.toyota.com) and Procter & Gamble
(www.pg.com). From what you can gather, how do these two firms organize their
international activities? Do they seem to be applying multidomestic strategy or global
strategy in their sourcing, manufacturing, product development, and marketing
activities? How and why might an internationalizing firm evolve its approaches to
internationalization over time?
(LO 11.4; LO 11.6; AACSB: Analytical Thinking)
Toyota generally applies global strategy in the production and marketing of automobiles.
For evidence of global strategy, use globalEDGE (globaledge.msu.edu) to go to
www.toyota-industries.com. Go to “Corporate Information” then “R&D” for evidence, then to
“Management Plan” and look under “Innovation;” then to “Corporate Philosophy and Global
Perspective/Learning” in the diagram, all illustrating a globally integrated approach to R&D,
management, innovation and learning.
Procter & Gamble generally applies multi-domestic strategy in the production and
marketing of food products. For evidence of multi-domestic strategy, use globalEDGE
11-21. Multinational firms play a key role in globalization. Various news organizations
prepare classifications and rankings of MNEs (e.g., Financial Times, Bloomberg
BusinessWeek, Forbes, Fortune). Find two such rankings and identify the criteria used to
rank the top global firms. What countries are home to the great majority of MNEs on
these lists? For each list, how global are the top three firms? That is, in what countries
do they operate? Conduct a search for rankings.
(LO 11.2; AACSB: Analytical Thinking)
FORTUNE’s Global Most Admired Companies 2015 and Forbes Global 2000 leading companies
are familiar, while using disparate methodologies. For both rankings, Japan, France, Britain,
Germany, Canada, and the United States are the most prominent home countries for the
●Walt Disney’s corporate website indicates that it has 11 theme parks and 47 resorts in North
America, Europe and Asia, with a sixth destination under construction in Shanghai. The Disney
●U.S. Bancorp’s corporate website indicates that it has more than 3,000 locations in 25 U.S.
states, is the fifth largest commercial bank in the U.S., and provides online and mobile services.
●Wells Fargo’s corporate website indicates that it operates across 35 countries, with over 70
JPMorgan Chase and Royal Dutch Shell comprise the top three performers.
●Exxon Mobil has a presence in nearly 200 countries through exploration or production
●JPMorgan Chase is the largest bank in the U.S., and the fifth largest in the world, with a
●Royal Dutch Shell is vertically integrated with operations in exploration, production, refining,
11-22. You work for an MNE that makes and markets cellular telephones. Senior
managers want to begin selling the phones in Latin America. To pursue a transnational
strategy, management wants to minimize adaptation of the phones. They have asked you
for a briefing. Focusing on three Latin American countries, prepare a brief report that
identifies the common features of Latin American markets that management should
consider when developing the cell phones the firm will sell there. For example, what
language should be used in the cell phones? What pricing should management use? You
may wish to consult the country commercial guides, Country Insights, and market
research reports available through globalEDGE™. In addition, the U.S. Department of
Commerce (www.export.gov) is a useful resource.
(LO 11.2; LO 11.4; AACSB: Analytical Thinking)
Latin America extends all the way from Mexico to Chile and includes the Caribbean Islands,
making it a more diverse region than it may seem. Brazil, Mexico, and Argentina have large
GDPs and similar ranks on the Transparency International corruption index. In terms of
Various currencies like the Bahamian dollar, quetzal, or peso are used in the region, so
determining a price may prove difficult because of differing currency values and exchange rate
The level of infrastructure and ability to provide services such as wireless internet and data
transmission for phones is not as highly developed as it is in countries such as the U.S., and
therefore phones may for the time being need to be more utilitarian than for diversion and
CAREER TOOLBOX EXERCISE
PREPARING FOR INTERNATIONAL NEGOTIATIONS
Visit MyManagementLab for more information.
Simulation Managing in a Global Environment
Apply what you have learned in this chapter by doing a simulation on the most appropriate
strategies a multinational firm should apply as it enters an emerging market country, and answer
the questions.
Go to MyManagementLab to access the simulation.
MyMaagementLab
Mymanagementlab.com for Auto-graded writing questions as well as the following
Assisted-graded writing questions:
11-23. What are the primary strategic objectives in international business?
11-24. Describe the requisite dimensions that characterize truly successful,
contemporary international firms.
11-25. MyManagementLab Only– comprehensive writing assignment for this
chapter.
Visit MyManagementLab for sugges ted answers.