Name : Abdul Samad Memon

Registration No: 04091913005

Subject :Ethics
Section/Sem: “B”, 3rd
Instructor Name : Dr; Raja Adnan
Date: 26-01-2020
 Part 1:
QNo(1) = Highlight the major ethical issues around the globe. Also explain
major problems faced by a multinational organization in a foreign land.

Ans:
Ethics Around The Globe:
Associations working on a worldwide premise frequently face especially extreme
moral difficulties due to different social, political, economic, technological , and
market factors. The more noteworthy the multifaceted nature of the climate, the
more prominent the potential for moral issues and errors for worldwide
associations. In an international business, the most important ethical issues involve
employment practices, human rights, environmental norms, corruption, and the
moral obligation of international corporations .Conducting business internationally
involves more than currency, time and language differences
Employment Practices and Ethics:
Ethical issues might be related employment practices in numerous countries. The conditions in
a host nation might be a lot of mediocre compared to those in a world wide’s home country.
Many may propose that pay and work conditions should be comparative across countries,
however nobody really thinks often about the quantum of this difference. 12-hour workdays,
insignificant compensation, and apathy in shielding laborers from harmful synthetic compounds
are normal in some agricultural countries. Is it fine for a worldwide to fall prey to a similar
practice when they picked such agricultural countries as their host nations? The responses to
these inquiries may appear to be simple, yet by and by, they truly make tremendous problems.

Human Rights:
Basic human rights are still denied in many nations. Freedom of speech, association, assembly,
movement, freedom from political repression, etc. are not universally accepted. South Africa
during the days of white rule and apartheid is an example. It lasted till 1994. The system
practiced denial of basic political rights to the majority non-white population of South Africa,
segregation between whites and nonwhites was prevalent, some occupations were exclusively
reserved for whites, etc. Despite the odious nature of this system, Western businesses
operated in South Africa. This unequal consideration depending on ethnicity was questioned
right from 1980s. It is still a major ethical issue in international business. Corporations
sometimes face dilemmas linked to operations in countries with governments accused of
violating human rights.

Corruption :
Corruption is an issue in every society in history, and it continues to be so even today.
Corruption is a concept that agglomerates practices ranging from multi-million dollar payments
to high government officials to a few dollars bribe to a low-level bureaucrat. It is estimated that
over $1 trillion are paid in bribes annually, which squanders public resources and deprives
millions of food, education and other government services to which they are entitled. Corrupt
government officials are everywhere. International businesses often seem to gain and have
gained financial and business advantages by bribing those officials, which is clearly unethical
Some of the most common ethical issues organizations encounter globally include outsourcing,
working standards and conditions, workplace diversity and equal opportunity, child labor, trust
and integrity, supervisory oversight, human rights, religion, the political arena, the
environment, bribery, and corruption.

The following one are examples of large-scale corruption in international business. According
to a report issued by the Mexican Employers Association in 2011, companies operating in
Mexico spend more than 10 percent of their revenue on corrupt acts. One of the most well-
known cases was the Walmart scandal that came to light in September 2005 and resulted in the
company’s stock value dropping by as much as $4.5 billion. Evidence unearthed by internal and
external investigations revealed a widespread use of bribes, alleged to total more than $24
million. The bribes were paid to facilitate the construction of Walmart stores throughout
Mexico. The country is a huge market for Walmart—one in every five Walmart stores is in
Mexico. As of October 2014, the investigation continued, having implicated Walmart senior
level management of complicity or awareness.

Bribery:
Bribery is one of the archetypal examples of a corporation engaged in unethical behavior. A
number of problems can be attributed to business bribery. First, it is obviously illegal—all
countries have laws that prohibit the bribery of government officials—so the foreign company
engaging in bribery exposes its directors, executives, and employees to grave legal risks.
Second, the rules and regulations that are circumvented by bribery often have a legitimate
public purpose, so the corporation may be subverting local social interests and/or harming local
competitors.
Bribery in foreign operations was not always considered morally wrong. Some even saw it as a
normal operating expense when doing business in emerging economies. German corporate law,
while severely punishing bribery at home, considered foreign bribes as tax deductible expenses

Environmental Pollution
When environmental regulation in the host nation is much inferior to those in the home nation,
ethical issues may arise. Many nations have firm regulations regarding the emission of
pollutants, the dumping and use of toxic materials, and so on. Developing nations may not be
so strict, and according to critics, it results in much increased levels of pollution from the
operations of multinationals in host nations.
Is it fine for multinational firms to pollute the developing host nations? It does not seem to be
ethical. What is the appropriate and morally correct thing to do in such circumstances? Should
Multi national Corporations (MNCs) be allowed to pollute the host countries for their economic
advantage, or the MNCs should make sure that foreign subsidiaries follow the same standards
as set in their home countries? These issues are not old; they are still very much contemporary.

Globalization
The increasing phenomenon of globalization (an integrated global economy consisting of free
trade, capital flows, and cheaper foreign labor markets)70 also pressures global firms facing
international risks to rely on governments, NGOs (nongovernmental organizations), the UN
(United Nations), and other business and stakeholder alliances and relationships to help meet
nonmarket threats. For example, the ten principles of the UN Global Compact serve as
guidelines for international firms doing business in LDCs (least developed countries), and
abroad,
(1) businesses should support and respect the protection of internationally proclaimed human
rights,
(2) ensure that they are not complicit in human rights abuses,

(3) uphold the freedom of association and the effective recognition of the right to collective
bargaining,
(4) eliminate of all forms of forced and compulsory labor,
(5) abolish child labor,

(6) eliminate the discrimination of employment and occupation,

(7) support a precautionary approach to environmental challenges,
(8) promote greater environmental responsibility through initiatives,
(9) encourage the development and diffusion of environmentally friendly technologies, and
(10) work against corruption, including extortion and bribery.
The increasing phenomenon of globalization (an integrated global economy consisting of free
trade, capital flows, and cheaper foreign labor markets).

Cultural diversity:
Principles of international law hold that corporations ought to respect the customs and culture
of the communities where they operate. Traditional values can be lost to the homogenizing
trends introduced by globally integrated production processes and product promotion. Some
amount of change is inevitable and certain local practices may not deserve protection if they
violate important minimum global norms.

Western corporations, which typically promote gender equality at home, often find themselves
operating in societies intolerant against women. In Saudi Arabia, for example, gender
separation is almost total and women are forbidden by law to practice many professions while
companies usually justify discriminatory practices out of respect for local traditions, these
arguments can be problematic: “As in Saudi Arabia today, South Africa maintained a system
where a broad segment of society was discriminated against in all walks of life and under the
authority of men without any fear of being considered responsible for their actions. The only
difference was that the victims in South Africa were black.
Sometimes, cultural diversity dilemmas manifest themselves in marketing decisions. Developed
countries usually have strict regulations against dangerous substances such as tobacco. As
change in customer preferences and health laws generated a decline in cigarette consumption
in developed economies, tobacco companies shifted their attention and marketing dollars to
emerging markets with different regulatory standards. For example, US tobacco executives had
to decide how to market tobacco in Egypt, where the minimum legal age to buy cigarettes is 14.
Should the company use the home standard (abstain from marketing tobacco to people under
18) or the host standard? Is the 14-year-old threshold from Egypt below some global minimum
or the result of cultural preferences about the age at which people should be responsible for
choosing whether to smoke or not?

Corporations:
While philanthropy and charity were always present in the business world, the idea that
corporations have a moral obligation toward stakeholders beyond shareholders is quite recent.
Corporate leaders began paying attention to corporate citizenship in the late 1990s, following
waves of anti-globalization protests. The main response of corporations to the moral challenges
of globalization has been the development of global codes of ethics.

A multinational has four types of global responsibilities toward their stakeholders.

First, to generate economic performance. Companies are expected to produce goods and
services on a global scale and to sell them globally for a profit.
Second, they have the responsibility of following the law in countries where they operate.

Third, when the law is not appropriate to guide the ethical behavior, the corporation has an
obligation to do what is right. Ethical responsibilities include practices and activities that are
expected or prohibited in a society, but are not codified in the law: rules, standards and
expectations of what employees, customers, shareholders and the global community regard as
fair, equitable and consistent with the protection of stakeholders’ moral rights.

Fourth, corporations have a philanthropic responsibility that reflects a society’s expectation

about the involvement of companies in activities that are not required by the law nor generally
expected by ethics.
International business ethics investigates the third level of the Corporate Social Responsibility
Pyramid: ethical responsibilities that are desirable or prohibited, but are not necessarily
codified in law. Theoretical developments for answering this question were based on the
adaptation of traditional ethical theories such as libertarianism, utilitarianism, Kantian
deontology and virtue ethics to the new challenges posed by globalization.

Moral Obligations:
Some of the modern philosophers argue that the power of MNCs brings with it the social
responsibility to give resources back to the societies. The idea of Social Responsibility arises due
to the philosophy that business people should consider the social consequences of their
actions.

They should also care that decisions should have both meaningful and ethical economic and
social consequences. Social responsibility can be supported because it is the correct and
appropriate way for a business to behave. Businesses, particularly the large and very successful
ones, need to recognize their social and moral obligations and give resources and donations
back to the societies.

QNo(2)= Discuss Social Responsibility and it’s dimensions in details.

Ans:
Social Responsibility: Social responsibility means that individuals and companies have a
duty to act in the best interests of their environment and society as a whole. Social
responsibility, as it applies to business, is known as corporate social responsibility (CSR), and is
becoming a more prominent area of focus within businesses due to shifting social norms.
Social responsibility is the concept that people should be accountable for their actions and not
impact their society in a negative manner. When applied to businesses, corporate social
responsibility (CSR), which is also referred to as corporate citizenship, involves being aware of
the impact a company has on the community or world around them. Businesses that have a
corporate social responsibility mandate frequently work to enhance their communities in
different ways.

The economic dimension is the basis that the firm demands profits and being profitable assures
its endurance. A firm is accountable to its shareholders, to its employees and to the customers
in the economic sense. It has the responsibility to make profit for the investors that trusted the
corporation with their funds and have a reasonable and acceptable return on their investment
for them. Furthermore the corporation has the duty to have fair compensation for the
employees employed by it. To the customers the responsibility is to provide product and
services for a fair price.
The responsibility of an organization for the impacts of its decisions and activities on society
and the environment, through transparent and ethical behavior that:
o Contributes to sustainable development, including health and the welfare of society
o Takes into account the expectations of stakeholders
o Is in compliance with applicable laws and consistent with international norms of
behavior Is integrated throughout the organization and practiced in its relationships
o Organizations can achieve sustainability by paying careful attention to their impact on
society and the environment. Behaving in a transparent, ethical manner ensures an
approach that helps protect the long-term success of society and the environment
KEY TAKEAWAYS:

• Social responsibility means that businesses, in addition to maximizing shareholder value,

should act in a manner that benefits society.
• Socially responsible companies should adopt policies that promote the well-being of
society and the environment while lessening negative impacts on them.
• Companies can act responsibly in many ways, such as promoting volunteering, making
changes that benefit the environment, and engaging in charitable giving.
• Consumers are more actively looking to buy goods and services from socially
responsible companies, hence impacting their profitability.
There are four key aspects of social responsibility: ethical, legal, economic and philanthropic:
Ethical Social Responsibilities:

This the main responsibility on which other responsibilities relies. As one of the most important
elements of social responsibility, ethical actions define the core values of a business. Instead of
merely abiding by the law, a business that focuses on corporate social responsibility needs to go
above and beyond that and make choices based on what is right, not just what is legal. Acting
ethically means going above and beyond the legal requirements and meeting the expectations
of society.
For example, if a business pays its employees minimum wage, that action follows a legal
directive. However, if an employer chooses to pay its employees more than minimum wage in
the belief that the employees do important work and deserve to be compensated accordingly,
that is making a socially responsible decision. In addition to the compensation, employers can
offer paid vacation, education and training perks and health coverage to improve the lives of
responsibility

Legal Social Responsibilities:

Legal Responsibilities are required by society. A company must follow the law and have a legal
obligation to do so. For example, car companies are required to meet a certain level of
emissions standard in car production. Legal Responsibilities mean complying with laws and
regulations, operating businesses within the law, behaving as law-abiding citizens, fulfilling legal
obligations to stakeholders and ensuring that its products and services meet minimum legal
requirements. From a legal perspective, it’s critical for businesses to follow the letter of the law.
In addition to being aware of local, federal and international laws, companies also need to
understand the rules of regulatory bodies for their industries. All businesses have a legal
responsibility to do so.
For example, if a small business sells toys for children, it needs to ensure that the products
meet all safety regulations specified by the regulatory bodies. In addition, it needs to check that
any international manufacturers used appropriate materials, since businesses in other countries
may have different rules and regulations.

Economic Social Responsibilities:

Ethical Responsibilities are expected by society. Ethical Responsibilities mean doing what is just
and fair while avoiding harm. Ethical Responsibilities mean going beyond what is legislated or
required by law to support social standards and values, preventing ethics from being
compromised on the altar of business goals and recognizing that brand-business integrity goes
beyond compliance with standards. Companies need to maintain strong economic interests so they
can stay in business. Being profitable and providing value to shareholders is part of a company being
socially responsible. Part of being socially responsible is remaining profitable. Businesses
support a lot of people, including shareholders and investors, employees and partners. It is
socially responsible for the company to thrive and meet its revenue goals. In addition to
increasing revenue, businesses need to work to reduce expenses and costs so they can
maximize their profits.
However, economic interests are not the only guideposts and should not be viewed in a
vacuum. Businesses maintain profitability and minimize expenses by keeping the broader
community in mind and not taking any actions to harm it. This means ethical sourcing of
products, using sustainable business practices, treating employees and customers fairly, and
taking responsibility for business actions.

Philanthropic Social Responsibilities:

This is the expectation that companies should give back to society in the form of charitable
donations of time, money, and goods. Some organizations, such as REI, based in Seattle,
Washington, donate 3 percent of profit and thousands of hours to nonprofit community groups
each year
One of the best-known aspects of social responsibility is philanthropy. Philanthropic
Responsibilities focus on being a good corporate citizen. Companies take actions that improve
the society around them, such as donating money or products and volunteering time. By
helping those in need, businesses make a positive difference in the lives of people in their
communities.
For example, a bakery could send leftover bread at the end of the day to a nearby food bank, or
a hairdresser can offer free haircuts to homeless people in the community. These philanthropic
actions help the businesses to remain accountable and show employees and customers the true
values of their businesses.

Social Responsibility of Business and Social Contract:

It is evident from above, the social responsibility of business implies that a corporate enterprise
has to serve interests other than that of common shareholders who, of course, expect that
their rate of return, value or wealth should be maximized.
But in today’s world the interest of other stakehold­ers, community and environment must be
protected and promoted. Social responsibility of business enterprises to the various
stakeholders and society in general is considered to be the result of a social Fig. 1
Responsibility of Business Enterprises towards Stakeholders and Society in General
contract.
Social contract is a set of rules that defines the agreed interrelationship between
various elements of a society. The social contract often involves a quid pro quo (i.e.
something given in exchange for another). In the social contract, one party to the
contract gives something and expects a certain thing or behavior pattern from the
other.

Corporate social responsibility (CSR):

Corporate social responsibility (CSR) refers to strategies that companies put into
action as part of corporate governance that are designed to ensure the company’s
operations are ethical and beneficial for society.
Generally, corporate social responsibility initiatives are categorized as follows:

1. Environmental responsibility
Environmental responsibility initiatives aim at reducing pollution and greenhouse
gas emissions, and the sustainable use of natural resources.
2. Human rights responsibility
Human rights responsibility initiatives involve providing fair labor practices
Business Ethics To keep it simple, business ethics are the moral principles that act
as guidelines for the way a business conducts itself and its transactions (e.g.,
equal pay for equal work) and fair trade practices, and disavowing child labor.
3. Philanthropic responsibility
Philanthropic responsibility can include things such as funding educational
programs, supporting health initiatives, donating to causes, and supporting
community beautification projects.
4. Economic responsibility
Economic responsibility initiatives involve improving the firm’s business operation
while participating in sustainable practices – for example, using a new
manufacturing process to minimize wastage.
Business Benefits of CSR:
In a way, corporate social responsibility can be seen as a public relations effort. However, it
goes beyond that, as corporate social responsibility can also boost a firm’s competitiveness. The
business benefits of corporate social responsibility include the following:

1. Stronger brand image, recognition, and reputation

CSR adds value to firms by establishing and maintaining a good corporate reputation and/or
brand equity Brand Equity IN marketing, brand equity refers to the value of a brand and is
determined by the consumer’s perception of the brand. Brand equity can be positive or

2. Increased customer loyalty and sales

Customers of a firm that practices CSR feel that they are helping the firm support good causes.

3. Operational cost savings

Investing in operational efficiencies results in operational cost savings as well as reduced

environmental impact.
4. Retaining key and talented employees
Employees often stay longer and are more committed to their firm knowing that they are
working for a business that practices CSR.
5. Easier access to funding
Many investors are more willing to support a business that practices CSR.

Example of CSR:
CSR of Starbucks is a well-known firm that practices corporate social responsibility. As indicated
by the company: “Starbucks’ social corporate responsibility and sustainability is about being
responsible and doing things that are good for the planet and each other.”
Starbucks’ CSR initiatives include:
o Starbucks Youth Action Grants: Awarding grants to inspire and support youth action.
o Ethos Water Fund: Raising clean water awareness and providing children with access to
clean water.
o Ethical Sourcing: Commitment to buying and serving ethically traded coffee.
o Green Building: Using the U.S. Green Building Council’s LEED certification program to
create energy and water-efficient store designs.

Part 2
Note:
(b) Morality and Business Ethics :
There may be a consensus that ethics and morality are different in some way, but there is far
from a consensus about precisely what that difference is or even how people define the two
terms. IN practical terms, if you use both “ethics” and “morality” in conversation, the people
you’re speaking with will probably take issue with how you’re using these terms, even if they
believe they’re distinct in some way.
Ethics focuses on the decision-making process for determining right and wrong, which
sometimes is a matter of weighing the pros and cons or the competing values and interest.
Morality is a code of behavior usually based on religious tenets, which often inform our ethical
decisions.
➢ Morals come from within. One’s own internal compass. Ethics are more extrinsic rule
sets to guide us all.
➢ Ethics deals with codes of conduct set my policies in the workplace and morality is the
standards that we individually set for ourselves in regards to right and wrong.
➢ Ethics is a set of principles developed purposefully over time. Morality is something one
feels intuitively.
 ➢ Ethics is a map of how one makes choices. Morality is an established code that can be
used to judge behavior.

Historically:
Ethics” comes from the ancient Greek word “ethikos,”derived from “ethos,” which means
custom or habit. The Roman politician, lawyer and bon vivant Cicero coined the term “moralis”
as a Latin equivalent of “ethikos.” Historically, then, the roots of the words “ethics” and
“morality” meant the same thing. One was a translation of the other.

Usage of Both in Sentence :

In practical terms, if you use both “ethics” and “morality” in conversation, the
people you’re speaking with will probably take issue with how you’re using these
terms, even if they believe they’re distinct in some way.
The conversation will then veer from whatever substantive ethical point you were
trying to make (“Our company has an ethical and moral responsibility to hire and
promote only honest, accountable people”) to an argument about the meaning of
the words “ethical” and “moral.” I had plenty of those arguments as a graduate
student in philosophy, but is that the kind of discussion you really want to have at
a team meeting or business conference?
You can do one of three things, then:

1. Use “ethics” and “morality” interchangeably only when you’re speaking

with people who believe they’re synonymous.
2. Choose one term and stick with it.
3. Minimize the use of both words and instead refer to what each word is
broadly about: doing the right thing, leading an honorable life and acting
with high character.
Moral Ethics and Business Ethics :

Moral Ethics
We all, whether knowingly or subconsciously, approach life with a moral and ethical
framework. For many of us, this framework is cultivated early in life. We often tend to take on
the beliefs and world view of our parents, our religious community, our friends at school and
others who play an influential part in our upbringing. Nonetheless, as we grow and mature, our
viewpoints change — sometimes becoming more liberal and sometimes more conservative.
The moral frameworks we carry with us do not simply disappear when we start working or
when we manage employees. In fact, the ethical frameworks of small business owners are
incredibly important factors that shape how the organization is run.

Business Ethics
Business ethics is concerned with applying a moral framework to the way organizations do
business. From dealing with human resources issues to sales and marketing policies, ethical
viewpoints can shape and change the way businesses operate. Business ethics has both
normative and descriptive elements. The normative part of business ethics has to do with
understanding how the behavior you and your employees exhibit is related to cultural issues or
social upbringing. If you tend to be conservative with money, for example, you may be able to
attribute this to being raised with “savers” as parents. The key to normative ethics for small
business owners is to understand how your personal beliefs affect the choices you make as a
business owner. The descriptive part of business ethics, on the other hand, is related to how
you incorporate “best practices” into your organization’s policies and procedures. Have you
found, for example, that your employees and/or customers respond well to the observance of
certain religious traditions or holidays? You may do well then to incorporate these things into
your policies, keeping ever cognizant of the varying beliefs and ethical viewpoints of all your
customers and employees.