Business Ethics

1. BUSINESS ETHICS
Global Management Issue
Prepared by:
Hamdoon Hussain
B.Sc (Economics), MBA HRM
Karachi University Business School (K.U.B.S)

2. GLOBAL MANGEMENT ISSUE

3. GLOBAL MANAGEMENT
What is global management?
 International and Global Management is concerned with the techniques and
practices.
 That are involved in directing and controlling international organizations.
 Thus, it covers all the issues that arise as a consequence of international and
global strategies.

5. GLOBAL MANAGEMENT
Global Management includes.
 International Trades.
 MNCs i.e., Multinational corporations.
 Free Trade.

6. GLOBAL MANAGEMENT
Global Management example.
 Global business is defined as corporate or economic activity that takes place
across different countries. When a company has factories and distributors in
the U.S., Europe and Asia, this is an example of global business.

9. GLOBAL MANAGEMENT
MNC DEFINED
 A multinational corporation (MNC) has facilities and other assets in at least one
country other than its home country.
 A multinational company generally has offices and/or factories in different
countries and a centralized head office where they coordinate global
management.
 These companies, also known as international, stateless, or transnational
corporate organizations tend to have budgets that exceed those of many small
countries.

10. GLOBAL MANAGEMENT
MNC DEFINED
 Multinational corporations participate in business in two or more countries.
 MNC can have a positive economic effect on the country where the business is
taking place.
 Transnational business is considered diversifying the investment.

11. GLOBAL MANAGEMENT
Types of Multinationals
 There are four categories of multinationals that exist.They include:
 A decentralized corporation with a strong presence in its home country.
 A global, centralized corporation that acquires cost advantage where cheap
resources are available.
 A global company that builds on the parent corporation’s R&D.
 A transnational enterprise that uses all three categories

13. GLOBAL MANAGEMENT
Characteristics of MNC’s
 Very high assets & turnover
 Network of branches
 Control
 Continued growth
 Advanced technology
 Right skills
 Forceful marketing & strategy
 Good quality products

15. GLOBAL MANAGEMENT
Advantage of MNC’s
 Efficiency
 Development
 Employment
 Innovation

17. Ethical and Social Responsibilities of MNC’s
Honoring LocalTraditions
 A company doing business in another nation is not an invader; it is a guest and
must strive to accept traditions that may not be familiar.
 This can create ethical dilemmas. For example, an American company must
offer the same wages for the same work regardless of the ethnicity or gender of
the worker. If this goes against a tradition in a foreign country, the company has
a responsibility to make it clear that it will honor its home value while accepting
the host country's differences. In short, a multinational company has a
responsibility to accept, but not to embrace foreign customs.

18. Ethical and Social Responsibilities of MNC’s
Respecting Human Rights:
 American companies have a responsibility to ensure the safety, health and well-
being of their workers, no matter where their workers are employed.
 While a U.S. company may contract with a foreign company that has different
practices, all employees doing work for the American company have the same
basic rights as its American personnel.
 The company can pay lower wages in another country if the prevailing cost of
living is lower, but taking advantage of foreign workers by offering lower-than-
subsistence wages goes against the company's responsibilities.

19. Ethical and Social Responsibilities of MNC’s
Protecting Environment:
 Many companies may find U.S. environmental restrictions burdensome, but
that doesn't mean they can willfully destroy the environment in another
country.
 American companies have a responsibility to honor the host nation's
environment to the greatest extent possible, even when local laws don't require
them to do so.
 Multinational companies may not suffer fines for ignoring the environment
abroad, but they could face a public relations crisis if word gets out.

20. Ethical and Social Responsibilities of MNC’s
Giving Back:
 Many companies engage in philanthropic activities, and some multinational
companies elect to take on the responsibility of spreading their social initiatives
to host countries where they do business.
 For example, multinationals may fund initiatives to supply vaccines in countries
with poor health care, or they may create task forces to teach locals how to
maintain a clean water supply. In more developed countries, a multinational
corporation may contribute to neighborhood beautification projects or
purchase supplies for local schools.
 This kind of charity can be good business. Positive public relations are just as
important in a host country as they are in a home country.

21. Free Trade vs Protectionism
FreeTrade:
 Free trade means just what the name implies: free and unfettered trade
between countries, unhindered by steep tariffs, and where goods can pass over
borders unmolested by any restrictions.

22. Free Trade vs Protectionism
Protectionism:
 Protectionism also means what the name implies:
 It's the process where governments slap stiff taxes – tariffs – as well as a host of
restrictive regulations on goods that other countries want to export.

24. Reasons for Protectionism
The main arguments for protection are:
 Protect sunrise industries.
 Protect sunset industries.
 Protect strategic industries.
 Protect non-renewable resources.
 Deter unfair competition.
 Save jobs.
 Help the environment.
 Limit over specialisation.

25. FREE TRADE AGREEMENTS
 Free trade agreements are contracts between countries to allow access to their
markets.
 FTAs can force local industries to become more competitive and rely less on
government subsidies.
 They can open new markets, increase GDP, and invite new investments.
 FTAs can open up a country to degradation of natural resources, loss of
traditional livelihoods, and local employment issues.
 Countries must balance the domestic benefits of free trade agreements with
their consequences.

27. ADVANTAGES OF FREE TRADE
 Increased Economic Growth
 More Dynamic BusinessClimate
 Lower Government Spending
 Foreign Direct Investment
 Expertise: (mining, oil drilling, and manufacturing)
 TechnologyTransfer

28. DISADVANTAGES OF FREE TRADE
 Increased Job Outsourcing.
 Theft of Intellectual Property:
 Many developing countries don't have laws to protect patents, inventions, and
new processes.
 The laws they do have aren't always strictly enforced. As a result, corporations
often have their ideas stolen.
 They must then compete with lower-priced domestic knock-offs.

29. DISADVANTAGES OF FREE TRADE
Crowd out Domestic Industries:
 Many emerging markets are traditional economies that rely on farming for most
employment. These small family farms can't compete with subsidized agri-
businesses in the developed countries. As a result, they lose their farms and
must look for work in the cities. This aggravates unemployment, crime, and
poverty.
Poor Working Conditions:
 Multi-national companies may outsource jobs to emerging market countries
without adequate labor protections. As a result, women and children are often
subjected to grueling factory jobs in sub-standard conditions.
Degradation of Natural Resources:
 Emerging market countries often don’t have many environmental protections.
Free trade leads to depletion of timber, minerals, and other natural
resources. Deforestation and strip-mining reduce their jungles and fields to
wastelands.

30. DISADVANTAGES OF FREE TRADE
Destruction of Native Cultures:
 As development moves into isolated areas, indigenous cultures can be
destroyed. Local peoples are uprooted. Many suffer disease and death when
their resources are polluted.
ReducedTax Revenue:
 Many smaller countries struggle to replace revenue lost from import tariffs and
fees