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Chapter 09 - Ethics and Globalization
9-13
Frontline Focus
“A Matter of Definition–Tom Makes a Decision” Questions
1. What do you think Charles Cooper will say to his counterpart at Smith’s?
2. What do you think Smith’s reaction will be?
3. Is there a chance that Tom’s company could save its relationship with Smith’s?
Key Terms
Developed Nation: A country that enjoys a high standard of living as measured by economic,
social and technological criteria.
Ethical Relativism: Gray area in which your ethical principles are defined by the traditions of
your society, your personal opinions, and the circumstances of the present moment.
Global Code of Conduct: A general standard of business practice that can be applied equally to
all countries over and above their local customs and social norms.
Globalization: The expansion of international trade to a point where national markets have been
overtaken by regional trade blocs (Latin America, Europe, Africa), leading eventually to a global
market.
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Less-Developed Nation: A country that lacks the economic, social, and technological
infrastructure of a developed nation.
Multinational Corporation (MNC): A company that provides and sells products and services
across multiple national borders. Also known as transnational corporations.
OECD Guidelines for Multinational Enterprises: Guidelines that promote principles and
standards of behavior in the following areas—human rights, information disclosure,
anticorruption, taxation, labor relations, environment, competition and consumer protection; a
governmental initiative endorsed by 30 members of the Organization for Economic Cooperation
and Development and 9 nonmembers (Argentina, Brazil, Chile, Estonia, Israel, Latvia, Lithuania,
Romania, and Slovenia).
UN Global Compact: A voluntary corporate citizenship initiative endorsing 10 key principles
that focus on four key areas of concern—the environment, anticorruption, the welfare of workers
around the world, and global human rights.
Utilitarianism: Ethical choices that offer the greatest good for the greatest number of people.
Review Questions
NOTE: Some questions allow for a number of different answers. Below are some suggestions.
1. Do you think global businesses would be willing to subscribe to a global code of conduct?
Explain your answer.
2. Would it be easier to just follow the business practices and customs of the country in which
you’re doing business? Why or why not?
3. Are there more stakeholders for an international or global company than a domestic one?
Chapter 09 - Ethics and Globalization
4. How would the Foreign Corrupt Practices Act (FCPA) that we reviewed in Chapter 6 come
into play here?
5. Which offers greater guidance to international businesses, the UN Global Compact or the
OECD guidelines? Explain your answer.
6. What is the most ethical way to do business internationally?
Review Exercises
1. What is the right thing to do here?
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2. Why shouldn’t National just deliver the American version of CFS? If it works here, it should
work there.
3. Which stakeholders will be affected by Kathy’s decision?
4. What are her options here?
Internet Exercises
1. Visit the website for the Institute for Global Ethics (IGE) at www.globalethics.org.
a. What is IGE’s stated purpose?
b. Which five values does the IGE identify in building a code of ethics?
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c. How could a corporation benefit from the services of the Institute for Global Ethics?
Students’ answers will vary. The services of the Institute for Global Ethics (IGE)
2. Visit the website for Walmart’s Global Ethics at
http://www.walmartethics.com/Landing.aspx#
a. Why did Walmart create the Global Ethics Office?
b. Summarize how Walmart employees can contact Global Ethics.
c. Locate and download Walmart’s most recent “Global Sustainability Report,” and
provide three examples of projects that the company has undertaken that demonstrate
its commitment to global ethics.
Students’ answers will vary. The ninth annual Global Responsibility Report (GRR)
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
o Committed $20 million through 2019 to support the reintegration of U.S.
veterans into civilian life.
o 1 million+ women farmers, factory workers and others will be trained by
programs supported by Walmart.
• Focus on Sustainability
o 75% of global wate diverted from landfill
o 35.6 million metric tones of greenhouse gas emissions eliminated from
supply chain.
Team Exercises
1. Global or local?
Divide into two teams. One team must prepare a presentation advocating for the
development of a standardized global code of conduct. The other team must prepare a
presentation arguing for the development of a more flexible local code of conduct that takes
into account the cultural norms of individual nations.
Students’ answers will vary. A global code of conduct creates a flexible solution that
2. Restoring a reputation.
Divide into groups of three or four. Each group must map out its proposal for restoring the
ethical reputation of a multinational corporation that has been fined for one of the following
transgressions: bribery, pollution, operating sweatshops, or employing child labor. Prepare
a presentation outlining your plan for restoring the reputation of the company with its
stakeholders.
Chapter 09 - Ethics and Globalization
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Students’ answers will vary. Reputations are crucial to uphold, but once a company is found
guilty and fined for any unethical transgression it is difficult to restore and regain its positive
image. In order to combat these transgressions (such as bribery, pollution, operating
sweatshops, and employing child labor), the MNC must emphasize its new standards. The
OECD guidelines represent a governmental approach and should be followed to incorporate
new ethical practices, as well as the nongovernmental UN Global Compact.
3. Tamiflu.
Divide into two groups and prepare arguments for and against the following behavior:
Your American company operates manufacturing plants throughout Asia, with a
combined staff of 20,000 employees. In 2003, after Asia was hit with the severe acute
respiratory syndrome (SARS) epidemic, your company introduced a policy to stockpile
drugs in locations where employees don’t have access to high-quality health care. In
2005, SARS was replaced by avian influenza—bird flu—as the primary risk for the next
pandemic. Your company responded by stockpiling quantities of the drug Tamiflu, the
antiviral drug that is regarded as the best treatment for bird f u in humans.
There has been a reported outbreak of bird flu in a remote region of Vietnam, about 100
miles from where you have a manufacturing plant. The government clinic has a small
supply of Tamiflu, but aware of your company’s stockpile, the clinic has approached your
local plant manager to share some of your supply. The plant manager contacted you for
help in responding to the request. Your company policy on this is to make sure employees
are taken care of first, and so you decline the request for assistance, claiming that you
have insufficient quantities of Tamiflu to meet your immediate needs.
Students’ answers will vary. Arguments for this behavior include respect and concern for the
4. Looking the other way.
Divide into two groups and prepare arguments for and against the following behavior:
You have been sent to investigate a fraud claim made against your company by the
Customs [department] in one of the countries where you do business. On arrival, an
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officer explains that your company is being fined for underdeclaring the number of safety
boots imported into the country. You notice he is wearing a pair of the “missing” boots.
In preparation for your trip you verified that all the shipment and customs paperwork
was in order, and you are certain that the number of safety boots has not been
underdeclared. Since your company’s strategic plan features high growth expectations
from this region, you are tempted to simply pay the fi ne and get the officer’s name and
address so you can send him some other samples of your company’s products. However,
your company’s senior management team recently returned from a strategic planning
retreat in which they made a clear commitment to enforce the organization’s code of
ethics in all business transactions, here and abroad, even at the risk of losing short-term
business. Your CEO was quoted in the company newsletter as saying: “We should use
our higher moral standards as an opportunity to win customers who want to do business
with a reputable organization.”
So you reach into your briefcase for your copies of the customs paperwork and begin to
challenge the officer’s accusation of underdeclaring.
Students’ answers will vary. An argument for this behavior is to uphold your company’s
Thinking Critically
9.1 – TOMS Shoes: Ethically Global?
1. Does TOMS buy-one-give-one-away model make it a more ethical company than a
traditional manufacturer donating money to a charity? Why?
2. Why would customers pay such a high price for a simple linen shoe or pair of sunglasses?
Chapter 09 - Ethics and Globalization
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
willing to pay an additional fee for the shoes because they know it’s supporting a good
cause.
3. Mycoskie designed the TOMS model from the ground up. Could an established company
improve its ethical standards by launching a model like TOMS? How?
4. Is the Warby Parker model more or less effective than the TOMS model? Explain your
answer.
