Unit 3: Ethics in Global Business

3.1 Issues in International Business

International business refers to the exchange of goods, services, and resources across
national boundaries. Ethical challenges arise due to cultural, legal, and economic
differences, often influenced by differing standards and expectations.

Key Ethical Issues:

1. Cultural Sensitivity:

Understanding and respecting cultural values and norms is crucial.

Dilemmas may occur when local customs (e.g., gift-giving in Japan or China) clash with
international standards (e.g., anti-bribery laws in the U.S.).

Example: Western firms in Middle Eastern countries navigating religious sensitivities.

2. Bribery and Corruption:

Common in some emerging markets where informal payments may be expected.

Violates legal statutes such as the U.S. Foreign Corrupt Practices Act (FCPA), UK Bribery
Act.

Companies like Siemens have faced heavy penalties for bribery-related offenses.

3. Labor Exploitation:

Outsourcing often leads companies to operate in regions with minimal labor protection.

Ethical concerns include child labor, unsafe working conditions, and wage suppression.

Example: Apple’s supply chain in China faced scrutiny for labor issues.

4. Political Influence:

Unethical lobbying or building inappropriate relationships with officials can distort policy.

Leads to unfair advantages and undermines fair competition.

5. Environmental Lapses:
Businesses might exploit weaker regulations in developing countries to reduce costs.

Example: Textile factories dumping untreated waste into rivers in Bangladesh.

Diagram: Ethical Challenges in International Business

+-----------------------+
| International Trade |
+----------+------------+
|
+----------------------+----------------------+
| | |
Cultural Norms Legal Systems Economic Inequality

Best Practices:

Develop a universal code of ethics.

Regularly conduct cross-cultural training.

Thorough due diligence on partners.

Implement whistleblower protection systems.

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3.2 Issues in Employment Practices

Global companies face ethical responsibility to ensure fair and just treatment for all workers
across diverse settings.

Major Ethical Concerns:

1. Discrimination:

Based on race, gender, disability, sexual orientation, religion, or nationality.

Diversity initiatives and affirmative action can address historical inequalities.

2. Fair Compensation:

Providing living wages that meet basic needs—not just minimum legal wages.
Example: Starbucks’ efforts to ensure fair wages across global operations.

3. Working Conditions:

Companies must ensure health and safety, hygiene, and freedom from harassment.

Supply chains must be monitored to avoid labor violations.

4. Right to Organize:

Freedom of association and collective bargaining are essential labor rights.

Some countries suppress unions—companies must tread carefully.

5. Diversity and Inclusion:

Encourage hiring and retaining employees from varied backgrounds.

Programs should include unconscious bias training and inclusive leadership.

Diagram: Ethical Employment Framework

+-------------------------------------------------+
| Ethical Employment |
+-------------------------------------------------+
| Discrimination-Free | Fair Wages | Safe Workplaces |
| Inclusion | Labor Rights | Compliance |
+-------------------------------------------------+

Global Employment Guidelines:

International Labour Organization (ILO) – Sets labor standards.

UN Global Compact – 10 principles promoting labor and human rights.

SA8000 – A certification standard for decent workplaces.

Best Practices:

Third-party audits and reporting.

Employee feedback systems.

Public commitment to inclusivity.

Case Study: Unilever’s “Opportunities for Women” initiative helps create gender equity
through education, job training, and leadership development globally.

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3.3 Environmental Issues

Environmental ethics involve a corporation’s duty to minimize ecological damage and

Core Environmental Concerns:

1. Pollution and Waste:

Air, water, and soil pollution due to industrial operations.

Ethical responsibility for recycling and proper disposal of waste.

2. Climate Change Contributions:

Emissions from factories, logistics, and energy consumption.

Pressure to move toward carbon neutrality.

3. Resource Management:

Overuse of water, deforestation, and depletion of minerals.

Calls for sustainable and circular economy models.

4. Biodiversity Loss:

Business operations often disrupt local ecosystems.

Rainforest destruction by agriculture or mining.

5. Greenwashing:
False or exaggerated claims about environmental practices.

Misleads consumers and investors.

Diagram: Triple Bottom Line (TBL) Approach

+----------------+
| Sustainability |
+--------+-------+
|
-----------------------------------
| | |
People Planet Profit
(Social) (Environmental) (Economic)

International Agreements and Guidelines:

Paris Agreement: Global pact to combat climate change.

Kyoto Protocol: Binding emission targets.

ISO 14001: Environmental management standards.

Corporate Best Practices:

Conduct environmental impact assessments.

Invest in renewable energy and clean tech.

Report transparently through sustainability reports (e.g., GRI framework).

Encourage supply chain sustainability.

Example: Patagonia invests heavily in environmental conservation, circular fashion, and

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Conclusion

Ethical practices are central to sustainable global business. Balancing profit with integrity
builds trust with stakeholders and society.

Key Takeaways:
Ethical issues in international operations stem from cultural, legal, and regulatory diversity.

Fair employment practices must focus on justice, safety, and empowerment.

Environmental responsibility includes preventing harm and ensuring long-term viability.

Final Thoughts: A company’s ethical performance influences brand reputation, investor trust,
customer loyalty, and employee satisfaction. Strong internal ethics, global frameworks, and
stakeholder engagement ensure long-term success.

Suggested Actions for Students:

Study international business case studies for real-world ethics applications.

Follow current environmental news to understand corporate impact.

Engage in ethical debate and simulation exercises.