HBC 2234: INTERNATIONAL BUSINESS MANAGEMENT

GROUP MEMBERS:

1. DERRICK MUTIE

2. ESTHER MUGASIA

3. MCINTYER NDUTA

4. KUNGU NDIRANGU

5. PENINNAH GITAU

6. TEDDY OMONDI

TABLE OF CONTENTS

TITLE PAGE

INTRODUCTION2

DEFINITION OF ETHICS...3, 4

SOURCES OF ETHICS.....5, 6

THEORIES OF ETHICS7, 8

TYPES OF UNETHICAL BEHAVIOR9, 10

HOW TO SOLVE UNETHICAL BEHAVIOUR..11, 12

APPROACHES IN INTERNATIONAL BUSINESS ETHICS..13, 14

IMPORTANCE OF INTERNATIONAL BUSINESS ETHICS..15, 16

CONCLUSION...17

REFERENCES18, 19

INTRODUCTION

Ethics can be described as Well-founded standards of rights and wrong which prescribe what human being ought to do in terms of right obligation, benefits to society fairness or specific virtues. The purpose of this document is to discuss the topic Ethics in International Business Management. This topic has been broken down into six sub-topics which are; Definition of Ethics, Sources of Ethics, Theories of Ethics, Types of Unethical Behavior, how To Solve Unethical Behavior and Types of Ethical Behavior.

DEINATION OF ETHICS

ETHICS

Well founded standards of rights and wrong which prescribe what human being ought to do in terms of right obligation, benefits to society fairness or specific virtues.

International business ethics is a particularly complex issue as ethical standards are different depending on where you are. Corporate governance, bribery, corruption, working conditions and targeted marketing are all issues that require organizations to establish an ethical standpoint from which they can work on.

Standards that impose responsible obligation to refrain from unethical behavior. Ethic relate to life for example right to life, freedom, privacy etc.

In general ethics is a moral philosophy where a person makes a specific moral choice and sticks to it.

Business Ethics

Are a key factor in responsible decision making. Maintaining a high ethical standpoint when operating your business can provide benefits to both the internal and external stakeholders of your business.

Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.

Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

Ethic in society

Study and development on ones ethical standards. Continuous effort of studying our own moral beliefs and moral standards and ensuring that we help shape and live up to these standards.

www.wikipidea.com

SOURCES OF ETHICS

Primarily ethics in business is affected by three sources;-

Culture.

Religion.

Laws of the state.

Religion

It is one of the oldest foundations of ethical standards. Religion wields varying influences across various sects of people. It is believed that ethics is a manifestation of the divine and so it draws a line between the good and the bad in the society. Depending upon the degree of religious influence we have different sects of people; we have sects, those who are referred to as orthodox or fundamentalists and those who are called as moderates. Needless to mention, religion exerts itself to a greater degree among the orthodox and to lesser extent in case of moderates. Fundamentally however all the religions operate on the principle of reciprocity towards ones fellow beings!

Culture

Culture is a pattern of behaviors and values that are transferred from one generation to another, those that are considered as ideal or within the acceptable limits. No wonder therefore that it is the culture that predominantly determines what is wrong and what is right. It is the culture that defines certain behavior as acceptable and others as unacceptable.

Human civilization in fact has passed through various cultures, wherein the moral code was redrafted depending upon the epoch that was. What was immoral or unacceptable in certain culture became acceptable later on and vice versa.

During the early years of human development where ones who were the strongest were the ones who survived! Violence, hostility and ferocity were thus the acceptable. Approximately 10,000 year ago when human civilization entered the settlement phase, hard work, patience and peace were seen as virtues and the earlier ones were considered otherwise. These values are still pt in practice by the managers of today!

Still further, when human civilization witnessed the industrial revolution, the ethics of agrarian economy was replaced by the law pertaining to technology, property rights etc. Ever since a tussle has ensued between the values of the agrarian and the industrial economy!

Law

Laws are procedures and code of conduct that are laid down by the legal system of the state. They are meant to guide human behavior within the social fabric. The major problem with the law is that all the ethical expectations cannot be covered by the law and specially with ever changing outer environment the law keeps on changing but often fails to keep pace. In business, complying with the rule of law is taken as ethical behavior, but organizations often break laws by evading taxes, compromising on quality, service norms etc

Sourabh, A- http://managementstudyguide.com/ http://www.managementstudyguide.com/workplace-ethics.htm

THEORIES OF ETHICS

Compassion and Consequence

Theories of ethics based on abstract moral principles have been criticized by some thinkers for neglecting the question of human compassion. No business based solely on compassion could succeed financially, but that doesn't mean compassion should never be a factor in ethical decision-making. A doctor who sees a needy patient without charging for services or a business owner who hires a troubled teenager to give him a second chance could be seen as acting with compassion. Another way to look at ethical problems is to think about the potential consequences of a particular course of action. Business practices that create environmental problems might bring an immediate benefit for stockholders, but with serious long-term consequences.

Virtue and Vice

Virtue ethics is an ancient ethical theory that has made a comeback in recent years. A practitioner of virtue ethics tries to act so as to embody certain virtues such as honesty or courage, while avoiding vices such as dishonesty or cowardice. In real-world decision-making, no ethical theory is sufficient for all situations. The best approach is to examine each situation according to all the major ethical theories. For instance, before making a major decision, a business leader could ask himself several questions about his planned course of action. Is it in the best interests of the company? Does it fulfill the duty to act in the interests of investors or stockholders? What is the likely impact on the community, employees and the environment? Any decision made after thoughtfully considering these questions is likely to be an ethical one.

Self-Interest, Enlightened or Otherwise

Strong believers in laissez-faire capitalism often argue that business decisions should be made solely on the basis of self-interest to the extent allowed by the law. In most personal interactions, this type of behavior would be seen as unethical, but champions of free market economics argue that self-interested behavior produces wealth and creates new jobs. Because a business leader has no way of knowing which altruistic actions would most benefit society as a whole, the best way he can contribute to society is by doing whatever benefits his own business. This theory of business ethics could be used to justify nearly any business decision. However, enlightened self-interest is a variation of the theory based on the idea that self-interest can lead to the same decisions as altruism in some circumstances. For instance, a business owner who implements a sustainability program may save money by reducing expenses.

Duty to Principles or People

A pure free market economy is a hypothetical concept, as real markets are always subject to regulations and restrictions. Most business ethics theorists accept the idea that a business leader may have some ethical obligations beyond self-interest. However, much debate exists about who or what the business leader might be obligated to. If a company has investors or stockholders, the business owner has a legal duty to act in their financial interest. Some would argue that he also has an ethical duty to operate in the best interests of the community, the environment, his employees or other stakeholders. Some business leaders consider themselves to have a personal duty to uphold moral principles they believe in, such as religious teachings.

Thompson, S- http://smallbusiness.chron.com/ethical-theories-business-74122.html

TYPES OF UNETHICAL BEHAVIOR

Misrepresentation

Corporate misrepresentation can take many forms. It can be as simple as a salesman who lies about his company's products, or it can be false or misleading advertising. Misrepresentation can involve a cover-up of illegal workplace conditions or transactions; falsified data in a shareholder report; lying to a union about corporate profits; or hiding or denying safety problems with a product. Other examples include corporate board members with conflict of interests, doctors who push the most expensive drugs rather than the most effective ones, and brokers who recommend stocks that they own in an effort to drive up the price.

Financial Misconduct

Examples of financial misconduct include price-fixing, or an illegal agreement between industry competitors to "fix" the price of a product at an artificially inflated level; physicians who refuse to treat non-insured patients, or perform unnecessary procedures to make more money; tax evasion; tax fraud; and "cooking the books" to make the company look more profitable than it is. Other possibilities include paying unjustifiable salaries and bonuses to top officials regardless of work performance -- sometimes in spite of it -- and chasing short-term profit by placing investor's money in questionable investments.

Mistreating Employees

Many examples exist of unethical corporate conduct toward employees or other workers in the supply chain. Many U.S. corporations used third- World sweatshops to produce their goods; some have even been found to use child labor. Every year, lawsuits are filed against employers who are accused of sexual harassment or discrimination against their employees. Some employers have been sued for threatening or firing whistle-blowers, or employees who point out illegal practices or safety violations in the workplace. Some U.S. businesses use undocumented workers because they can pay them less than minimum wage.

Bending the Rules

Bending the rules in a business situation is often the result of a psychological stimulus. If an employee is asked to perform an unethical task by a supervisor or manager, he may do it because his allegiance to authority is greater than his need to abide by the rules. Turning the other way to avoid trouble for another employee is still unethical, even though the motivation may be empathetic. For example, knowing that a coworker is having issues outside work justifies watching him leave early each day without reporting it. Withholding information that can change an outcome also falls under the umbrella of unethical behavior, even if the perpetrator believes he is doing what is in the best interest of the business. For example, if a poor earnings report is withheld until after a stockholder meeting.

Environmental

Unethical behavior by companies, such as releasing pollutants into the air, can affect cities, towns, waterways and masses of people. Though accidents can occur, the release of harmful toxins into the environment due to lax safety standards, improper maintenance of equipment or other preventable reasons is unethical. If a business willingly continues production of a product knowing inherent environmental risks exist, it can certainly be categorized as unethical behavior.

Strain, M- http://smallbusiness.chron.com/3-types-unethical-behavior-business-21878.html

HOW TO SOLVE UNETHICAL BEHAVIOR

Multinationals should respect the human rights of their employees as this will reduce exploitation of workers.

Multinational corporations should always pay their fair share of taxes as lack of paying taxes is considered unethical.

Multinationals should respect the local culture and work with it not against it. Rather than simply transferring their home country ways into the host country, MNEs should consider changes in operating procedure, plant planning etc. which take into account local needs and customs.

They should also practice participation not paternalism. This helps learning about needs of stakeholders rather than deciding what is best for them. When needs and requirements of stakeholders are taken into consideration, ethical dilemmas can be easily resolved.

Creating a code of conduct is another solution. A written code of conduct provides employees and managers in a multinational agency with an overview of the type of conduct and behavior a company expects. It outlines what behaviors are unacceptable and what measures are taken if an employee violates the code of conduct.

Reinforce consequences. Multinational managers and owners must hold their employees accountable when they act unethically. Start by informing new employees of the rules during their orientation session. If an employee acts unethically, refer to the code of conduct and take the necessary measures to warn or terminate.

Hire for values. This is another way for solving unethical problems. MNEs seek on to bring individuals who have the education and experience that prove they are skilled workers. Employers should also look at candidates values to ensure they mesh with the companys culture to prevent unethical behavior.

Frederick Reamer & Sr.Ann Patrick Conrad in Professional Choices:Ethics at Work(1995). Langford,D.(1999) business computer ethics

John William(1970)systematic study of international business ethics

APPROACHES IN INTERNATIONAL BUSINESS ETHICS

Doing business transnationally raises a number of issues that have no analogue in business dealings done within a single country or legal jurisdiction. International business ethics seeks to address those issues.

One common approach in international business ethics is to refer to or to construct lists of norms that ought to guide transnational business conduct. Thus, for example, the United Nations' Universal Declaration of Human Rights or, more recently, the United Nations Global Compact, is advanced as a guide to conduct. The UN Global Compact enjoins business firms to support and respect internationally recognized human rights, avoid complicity in human rights abuses, uphold freedom of association and collective bargaining, eliminate forced and compulsory labor, eliminate child labor, eliminate all forms of discrimination in employment, support a precautionary approach to environmental challenges, promote greater environmental responsibility, encourage the development of environmentally friendly technologies, and work against corruption in all its forms, including extortion and bribery.

Alternatively, whether inspired by something like the UN Global Compact, a preferred moral theory, a preferred theory of justice, or some combination of these or other factors, other lists of norms are proposed as guides to the ethical practice of transnational business. DeGeorge (1993), for example, advances seven guidelines for the conduct of multinational firms doing business in less developed countries. These guidelines call for;

The avoiding harm

Doing good

Respecting human rights

Respecting the local culture

Cooperating with just governments and institutions

Accepting ethical responsibility for one's actions

Making hazardous plants and technologies safe.

Among other uses, Donaldson and Dunfee (1999) see the hypothetical, macro social contract in ISCT providing an ideal framework for adjudicating questions of transnational business conduct.

Criticism

The main conversation in academic business ethics is focused on the large, publicly traded corporation. It owes its prescriptions mainly to normative political philosophy, rather than moral theory. It speaks more to public policy toward business (and especially the large, publicly traded corporation) and the institutions of capitalism than it does to ethical business conduct, i.e., what one ought to be doing when one is doing business.

IMPORTANCE OF INTERNATIONAL BUSINESS ETHICS

Primarily it is the individual, the consumer, the employee or the human social unit of the society who benefits from ethics. In addition ethics is important because of the following:

Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices.

Creating Credibility: An organization that is believed to be driven by moral values is respected in the society even by those who may have no information about the working and the businesses or an organization. Infosys, for example is perceived as an organization for good corporate governance and social responsibility initiatives. This perception is held far and wide even by those who do not even know what business the organization is into.

Uniting People and Leadership: An organization driven by values is revered by its employees also. They are the common thread that brings the employees and the decision makers on a common platform. This goes a long way in aligning behaviors within the organization towards achievement of one common goal or mission.

Improving Decision Making: A mans destiny is the sum total of all the decisions that he/she takes in course of his life. The same holds true for organizations. Decisions are driven by values. For example an organization that does not value competition will be fierce in its operations aiming to wipe out its competitors and establish a monopoly in the market.

Long Term Gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money. Tata group, one of the largest business conglomerates in India was seen on the verge of decline at the beginning of 1990s, which soon turned out to be otherwise. The same companys Tata NANO car was predicted as a failure, and failed to do well but the same is picking up fast now.

Securing the Society: Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a mute spectator, unable to save the society and the environment. Technology, for example is growing at such a fast pace that the by the time law comes up with a regulation we have a newer technology with new threats replacing the older one. Lawyers and public interest litigations may not help a great deal but ethics can.

Ethics tries to create a sense of right and wrong in the organizations and often when the law fails, it is the ethics that may stop organizations from harming the society or environment.

Entrepreneur; Liar, Liar; Joshua Kurlantzick; October 2003 "Graziadio Business Review"; Creating and Sustaining an Ethical Workplace Culture; Charles D. Kerns; 2003 Harvard Business School; The Importance of 'Don't' in Inducing Ethical Employee Behvior; Carmen Nobel; February 2011 Business Management Daily; Encourage Ethical Behavior as Economy Recovers; Patricia J (REFERENCES FOR BOTH IMPORTANCE OF INTERNATIONAL BUSINESS ETHICS AND APPROACHES IN INTERNATIONAL BUSINESS ETHICS)

Criticism

The main conversation in academic business ethics is focused on the large, publicly traded corporation. It owes its prescriptions mainly to normative political philosophy, rather than moral theory. It speaks more to public policy toward business (and especially the large, publicly traded corporation) and the institutions of capitalism than it does to ethical business conduct, i.e., what one ought to be doing when one is doingCONCLUSION

Ethics tries to create a sense of right and wrong in the organizations and often when the law fails, it is the ethics that may stop organizations from harming the society or environment. Ethics are very important in international business. They cant be ignored. The topics in this document define Ethics, their importance, various examples, sources of ethics and various solutions to unethical behavior. This document contains comprehensive study of ethics and it will help one understand what Business Ethics is all about.

REFERENCES

Sourabh, A- http://managementstudyguide.com/ http://www.managementstudyguide.com/workplace-ethics.htm

http://www.managementstudyguide.com/sources-of-business-ethics.htm

Thompson, S- http://smallbusiness.chron.com/ethical-theories-business-74122.html

Strain, M- http://smallbusiness.chron.com/3-types-unethical-behavior-business-21878.html

Phillips, C- http://smallbusiness.chron.com/kinds-unethical-behavior-business-20479.html

Stanford Encyclopedia of Philosophy is copyright 2014 by The Metaphysics Research The Lab, Center for the Study of Language and Information (CSLI), Stanford University

Library of Congress Catalog Data: ISSN 1095-50

www.Management study guide 2013

Entrepreneur; Liar, Liar; Joshua Kurlantzick; October 2003 "Graziadio Business Review"; Creating and Sustaining an Ethical Workplace Culture; Charles D. Kerns; 2003 Harvard Business School; The Importance of 'Don't' in Inducing Ethical Employee Behvior; Carmen Nobel; February 2011 Business Management Daily; Encourage Ethical Behavior as Economy Recovers; Patricia J

1.Frederick Reamer & Sr.Ann Patrick Conrad in Professional Choices:Ethics at Work(1995). 2.Langford,D.(1999) business computer ethics na 3. John William(1970)systematic study of international business ethics

www.wikipidea.com

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