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Global Business Today Eleventh Edition Chapter 5
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3. How might shareholders of a company view its contributing resources to social causes? How
might customers view it? Employees?
management FOCUS: Corporate Social Responsibility at Stora
Enso
Summary
This feature explores Stora Enso’s sustainability strategy. Stora Enso, a Finnish pulp and paper
manufacturer, has made sustainability a central focus for the organization. The company clearly
outlines on its website and company reports its commitment to ensuring that it acts in a socially
responsible, environmentally friendly way. All decisions at Stora Enso are guided by this
commitment.
Discussion Questions
1. Why is a sustainable strategy so important to Stora Enso? What message does its publicly
stated commitment to sustainability send? Consider your response from the perspective of
various stakeholders including investors and local communities.
2. As an employee of Stora Enso, what does its commitment to a sustainable strategy mean to
you? How does Stora Enso’s strategy affect its position in the global marketplace?
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Sustainability
N) Sustainable strategies are strategies that not only help the multinational firm make good
profits, but that do so without harming the environment while simultaneously ensuring that the
corporation acts in a socially responsible manner with regard to the stakeholders.
CONNECT
Click and Drag
Thinking Through Ethical Problems
Summary
This activity focuses on thinking through ethical problems and the responsibility of the
multinational firm to its stakeholders. In many situations, there are no conclusive right or wrong
answers and so managers must rely on basic ethical principles to guide their thinking.
Global Business Today Eleventh Edition Chapter 5
End-of-Chapter Resources
Critical Thinking and Discussion Questions
1. A visiting American executive finds that a foreign subsidiary in a less developed country has
hired a 12-year old girl to work on a factory floor, in violation of the company’s prohibition on
child labor. He tells the local manager to replace the child and tell her to go back to school. The
local manager tells the American executive that the child is an orphan with no other means of
support, and she will probably become a street child if she is denied work. What should the
American executive do?
Answer: This question, illustrating a potentially very real ethical dilemma facing managers
working in subsidiaries located in developing countries, is designed to stimulate class discussion.
2. Drawing upon John Rawls’ concept of the veil of ignorance, develop an ethical code that will
(a) guide the decisions of a large oil multinational toward environmental protection and
(b) influence the policies of a clothing company in its potential decision to outsource its
manufacturing operations.
Answer: According to John Rawls, a decision is just and ethical if people would allow for it
when designing a social system under a veil of ignorance. Rawls’ veil of ignorance is a
3. Under what conditions is it ethically defensible to outsource production to the developing
world where labor costs are lower when such actions also involve laying off long-term
employees in the firm’s home country?
Answer: This question is likely to stimulate some lively discussion, particularly if students have
personally felt the impact of this practice. Many American companies are outsourcing not only
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4. Do you think facilitating payments (speed payments) should be ethical? Does it matter in
which country, or part of the world, such payments are made?
Answer: Students will probably be divided on this question, and a lively debate should ensue.
5. A manager from a developing country is overseeing a multinational’s operations in a country
where drug trafficking and lawlessness are rife. One day, a representative of a local “big man”
approaches the manager and asks for a “donation” to help the big man provide housing for the
poor. The representative tells the manager that in return for the donation, the big man will make
sure that the manager has a productive stay in his country. No threats are made, but the manager
is well aware that the big man heads a criminal organization that is engaged in drug trafficking.
He also knows that the big man does indeed help the poor in the rundown neighborhood of the
city where he was born. What should the manager do?
Answer: Many students will probably suggest that the manager should not accept the assistance
of the “big man,” nor make the recommended “donation.” Students taking this perspective are
Video Note: Even though Mexico’s drug trafficking problem creates problems for companies,
the justice systems in both Mexico and the United States attempt to coordinate activities to be
more effective. For more information, watch https://www.bloomberg.com/news/videos/2016-05-
20/mexico-approves-extradition-of-drug-lord-el-chapo.
6. Milton Friedman stated in his famous article in The New York Times in 1970 that “the social
responsibility of business is to increase profits.” Do you agree? If not, do you prefer that
multinational corporations adopt a focus on corporate social responsibility or sustainability
practices?
Answer: This question is sure to generate considerable debate among students. Some students
Global Business Today Eleventh Edition Chapter 5
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7. Can a company be good at corporate social responsibility but not be sustainability-oriented? Is
it possible to focus on sustainability but not corporate social responsibility? Based on reading the
Focus on Managerial Implications section, discuss how much CSR and sustainability are related
and how much the concepts differ from each other.
Answer: This question will likely result in a number of responses depending on how students
define corporate social responsibility. Those who define the concept as being a good corporate
globalEDGE™ Research Task
Use the globalEDGE™ site (globaledge.msu.edu) to complete the exercises in the text.
Exercise 1
Search phrase: Country Reports on Human Rights Practices
Resource Name: U.S. Department of State: Country Reports on Human Rights Practices
Exercise 2
Search phrase: Bribe Payers Index
Resource Name: Transparency International: Bribe Payers Index
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You can view the results by country, or also by sector (i.e., companies from which sectors are
more or less likely to bribe). Higher scores indicate a lower likelihood to engage in bribery.
Woolworths’ Corporate Responsibility Strategy
closing case
Summary
The opening case explores corporate social responsibility at Woolworths Group. The Australian
conglomerate has set 2020 as the deadline to achieve goals across three areas that comprise its
Corporate Social Responsibility Strategy 2020. Woolworths believes that it needs to be socially
responsible across multiple areas within the framework of People, Planet, and Prosperity.
Because the focus in each of these areas is unique, specialized strategic initiatives have been
developed for each focus. The focus on People is about encouraging diversity, Planet focuses on
the environment, and Prosperity focuses on trusted relationships.
Case Discussion Questions
1. What challenges do you think a company like Woolworths Group is facing when developing
and implementing a companywide corporate social responsibility strategy that takes into account
the more than 200,000 employees, diverse interests, and stakeholders?
2. The focus on People is about encouraging diversity. The idea is to increase the number of
Indigenous employees in line with the company’s stated commitments under the Australian
Federal Government’s Employment Parity Initiative. Does such a diversity approach enhance, or
not, the company’s sustainability strategy? How?
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3. Woolworths Group is trying to reduce its carbon emissions or footprint by 10 percent. Based
on where we are as a world, is 10 percent enough of a reduction? Perhaps global warming is not
real, albeit the vast majority of scientists clearly suggest it is; what do you think?
4. Woolworths’ targets are to achieve a top quartile ranking in how the business engages fairly
and equitably with its suppliers. How do supplier relationships and the fairness in dealing with
suppliers relate to sustainability and “doing good” for society (and the company)?
CONNECT
Geography
Summary
This activity is designed to test the student’s knowledge of geography. Questions related to
chapter material are asked, requiring students to understand the topics and the locations of the
countries involved.
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Continuous Case Concept
The auto industry, as Continuous Case Concept in Chapter 1 demonstrated, is a global one.
Manufacturing takes place across the globe, and auto companies rely on suppliers around the
world to produce quality parts at a reasonable cost.
• Ask students whether the auto companies should run their foreign operations according to
the ethical standards in the host country or according to home country standards. The
recall of Japanese-made Takata airbags affected many key players in the global auto
industry including Honda, Toyota, and General Motors. Discuss the responsibility of
those automakers to their consumers.
• The recall of Takata airbags is expected to involve some 12 million vehicles globally, but
it is just one of many recalls that seem to have become common-place in the industry.
Audi, for example, announced a recall of airbags made by a different company. Ask
students how companies like Audi and General Motors can reconcile how their suppliers
run their operations with their own ethics policies. Do these companies have any
responsibility to ensure that suppliers make ethical decisions?
• Finally, reflect on the move by both Honda and Nissan to create new positions to oversee
safety. At Honda, executives are taking pay cuts as a signal of their responsibility and
concern over performance and quality lapses. What do these actions communicate to
employees and other stakeholders?
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Additional Readings and Sources of Information
European firms are increasingly tackling the scourge of bribery
https://www.economist.com/business/2018/05/26/european-firms-are-increasingly-tackling-the-
scourge-of-bribery
Organizational Culture Drives Ethical Behavior
https://www.oecd.org/corruption/integrity-forum/academic-papers/Filabi.pdf
Goodbye Boozy Dinners: Korean Business Braces for Corruption Crackdown
http://www.bloomberg.com/news/articles/2016-08-29/korean-business-culture-set-for-shake-up-
as-anti-graft-law-looms
Here’s a Simple Lesson on Business Ethics From the Former CFO of Enron
http://www.bloomberg.com/news/articles/2015-07-02/here-s-a-simple-lesson-on-business-ethics-
from-the-former-cfo-of-enron
At Detroit's auto show, the issue is trust, not just new cars
https://www.usatoday.com/story/money/cars/2016/01/10/auto-industry-scandals-general-motors-
gm-volkswagen-takata/78406022
