Ch 10, Instructor’s Manual, Business & Society, Carroll 10e
Chapter 10
Ethical Issues in the Global Arena
LEARNING OUTCOMES
After studying this chapter, you should be able to:
1. Describe the ethical and social challenges faced by multinational corporations (MNCs)
operating in the global environment.
2. Summarize the key implications for managers of the following ethical issues: infant
4. Identify and discuss strategies companies may employ for improving global business
ethics.
TEACHING SUGGESTIONS
INTRODUCTION – This chapter serves dual purposes. First, it introduces the students to
ethical issues in the global marketplace, including two infamous examples that demonstrate some
of the difficulties encountered by operating in multiple nations. Second, it offers several takes
on ways to improve ethical performance in the global economy, using four different popular
strategies.
KEY TALKING POINTS – Students will likely have a vague notion of multinational
corporations (MNCs) and the difficulties of operating in widely divergent nations and cultures.
However, they are unlikely to know any of the details about cases like Nestlé and infant formula,
or the Union Carbide Bhopal incident. The textbook offers concise synopses of both cases,
which should be eye-opening revelations for most students. The chapter also examines two
Some of the most intractable ethical issues arise in developing countries, due to the vast
Ch 10, Instructor’s Manual, Business & Society, Carroll 10e
Copyright © 2018 Cengage. All rights reserved.
Immanuel Wallerstein proposed a world-system theory, in which he identified core regions that
benefited most from the capitalist world economy, and peripheral zones, such as Africa and Latin
America. His book, The Modern World-System: Capitalist Agriculture and the Origins of the
PEDAGOGICAL DEVICES – In this chapter, instructors may utilize a combination of:
Cases: 14-Something’s Rotten in Hondo
15-Nike, Inc. and Sweatshops
16-Coke & Pepsi in India
17-Chiquita – An Excruciating Dilemma
18-Dole’s DBCP Legacy
Ethics in Practice Cases:
Is the Fair-trade Movement Sustainable?
Helping Factories to Pass Sweatshop Audits – Using Cheating Consultants
Violations of the Foreign Corrupt Practices Act or Not?
Spotlight on Sustainability:
Earth Hour: A Global Ethical Sustainability Movement
LECTURE OUTLINE
I. BUSINESS CHALLENGES IN A GLOBAL ENVIRONMENT
II. ETHICAL ISSUES IN THE GLOBAL BUSINESS ENVIRONMENT
A. Questionable Marketing and Plant Safety Practices
1. The Infant Formula Controversy
2. Plant Safety and the Bhopal Tragedy
a. Factory Fire and Building Collapse in Bangladesh
B. Human Rights, Sweatshops, and Labor Abuses
2. Social Accountability 8000 (SA8000)
4. Alien Tort Claims Act and Human Rights Violations
C. Corruption, Bribery, and Questionable Payments
2. The Foreign Corrupt Practices Act (FCPA)
4. Corruption Perception Index (CPI)
5. Bribe Payers Index (BPI)
a. OECD Antibribery Initiatives
III. IMPROVING GLOBAL BUSINESS ETHICS
A. Balancing and Reconciling the Ethics Traditions of Home and Host Countries
2. Cultural Relativism
B. Strategies for Improving Global Business Ethics
1. Global Codes of Conduct
2. Ethics and Global Strategy
3. Suspension of Activities
4. Ethical Impact Statements and Audits
C. Corporate Action against Corruption
IV. SUMMARY
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
Students should recognize that their answers to these discussion questions should be well
reasoned and supported with evidence. Although some answers will be more correct than others,
students should be aware that simplistic answers to complex questions, problems, or issues such
as these will never be “good” answers.
1. Question: Drawing on the notions of moral, amoral, and immoral management introduced
in Chapter 7, categorize your impressions of (a) Nestle, in the infant formula controversy;
Ch 10, Instructor’s Manual, Business & Society, Carroll 10e
(b) Union Carbide, in the Bhopal tragedy; and (c) Google, in moving its search engine out
of China. Why is Google planning to return to China?
Answer: One of the things that students must keep in mind is that they have the benefit of
hindsight, and that case writers have analyzed the events to point out the errors that
In the Nestlé case, managers probably thought they were doing something not only ethical,
but also extremely beneficial to inhabitants of the tropical locales. The company was
providing powdered infant formula that was easily transported and that provided the
While many critics claim that Google’s exit from China may have been motivated by the
company’s desire to protect its intellectual property and as a result of certain security
2. Question: As an MNC seeks to balance and honor the ethical standards of both the home
and host countries, conflicts inevitably will arise. What criteria do you think managers
Ch 10, Instructor’s Manual, Business & Society, Carroll 10e
should consider as they try to decide whether to use home or host country ethical
standards? Does the use of hypernorms help? Explain.
Answer: To me, the answer to this question seems quite simple and straightforward—use
the “higher” ethical standard, regardless of whose it is, how much it costs or the ethical
3. Question: Differentiate between a bribe and a grease payment. Give an example of each.
Answer: A grease payment is an expected, small, customary payment to an official in order
4. Question: Conduct research, for purposes of updating the latest rankings of Transparency
International and the activities of the OECD, UNCAC, and individual country initiatives.
How could countries such as China, India, and Russia most effective improve their TI
rankings?
Answer: This question is left to the class instructor as time and events will have altered the
5. Question: What are the major strategies companies might employ in improving global
business ethics? What are the key steps research has shown are important to successful
company anticorruption efforts?
Ch 10, Instructor’s Manual, Business & Society, Carroll 10e
Answer: As noted in the text, companies can improve global ethics by (1) developing
According to a report issued by The Conference Board and the Ethics and Compliance
Officers Association (ECOA), the following are five key steps that companies can take to
fight bribery and corruption:
GROUP ACTIVITY
Divide students into groups of four to five students. Ask each group to draft a general global
code of conduct that could be used by any multi-national corporation. Students should explore
INDIVIDUAL ASSIGNMENT
Ask students to categorize the following as a facilitating payment (grease payment), a bribe or
neither of these under the Foreign Corrupt Practices Act. Students should explain why they
chose a certain answer.
(1) Jane Jones, who works for XYZ Corporation (a U.S. publicly-traded company), has
documents that she needs to clear customs in order to make it to an important business