Question

Following are the useful information for preparing the first assignment.

1. Do a research on unethical business practices in international business

2. Write at least 10 unethical business practices that you had found out.

3. Give a brief write up on the strategies of corporates in expanding their business

Answer 1

According to post, et al (2000), business ethics is not a special set of ethics but the application of general ethical ideas to business behavior. For example,if dishonesty is considered to be unethical,then anyone in business who is dishonest with its stakeholders -customers, suppliers, employees or shareholders, is acting unethically. If protecting others from harm is considered to be ethical, then a company that withdraws a dangerously defective product from the market is acting in an ethical way. As political, legal, economic, and cultural norms vary from nation to nation, various ethical issues rise with them. A normal practice may be ethical in one country but unethical in another. Multinational managers need to be sensitive to these varying differences and able to choose an ethical action accordingly.When entering a foreign market, establishing a code of ethics can build a positive international image that results in better business practices and profits.

Few examples of unethical business practices :

1.Very low wages may be considered unethical in rich, advanced countries, but developing nations may be acting ethically if they encourage investment and improve living standards by accepting low wages.

2.Gift-giving is acceptable in most cultures, but in others, it may be considered unethical. In most European countries and Canada, giving a gift gets attention because it isn't expected. A German colleague will be particularly appreciative of a small, well-selected gift. On the other hand, Asian counterparts do expect to receive a gift and will examine it closely for appropriateness.

3.In the United States, the Foreign Corrupt Practices Act prohibits US companies from paying bribes to foreign government officials to gain business favors and advantages. Other developed countries don't have similar restrictive laws, and their companies are perfectly free to pay such bribes, putting US companies at a disadvantage. Germany, for example, recognizes bribes paid to foreign government officials and allows these payments as tax deductions.

4.Wages in the US are extremely high compared to labor rates in countries such as China, India, Phillippines and Mexico and major corporations are taking advantage of these wage differentials and moving jobs overseas. Rexnord, a Milwaukee-based manufacturer of machine parts, is an example of this trend.It is unethical to close down a factory and open it in another country in order to save labor costs

5.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.

6.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.

7.Corruption is an issue in every society in history, and it continues to be so even today. 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.

8.Ethical issues may be related to employment practices in many nations. The conditions in a host country may be much inferior to those in a multinational’s home nation. Many may suggest that pay and work conditions need to be similar across nations, but no one actually cares about the quantum of this divergence.

9.Tobacco companies are similarly embroiled in a long-term ethical debate. Health advocates around the world agree that smoking is bad for a person’s long-term health. Yet in many countries, smoking is not only acceptable but can even confer social status. The United States has banned tobacco companies from adopting marketing practices that target young consumers by exploiting tobacco’s social cache. However, many other countries don’t have such regulations.

10.There is a tendency for laws protecting intellectual property to favor local firms and discriminate against foreign firms. This is an unfavorable situation for foreign companies considering that these are credited with introducing revolutionary technologies, products, and ideas to the host countries, leading to improvement in the quality of life in such countries.However, governments in a bid to protect local interests usually fail to enforce intellectual property laws against local firms when they are liable for violating the intellectual property rights of foreign firms.

Strategies of corporates in expanding their business

1. Diversification is when a company sells new products to a whole new market. This requires involved planning and research to ensure that this method will have positive results for your business. It is particularly risky because it is almost as if you were creating a whole new business again.
2. Finding a new target audience who would need your product, or finding new uses for your current product that could expand its reach.This method is also highly effective and requires low risk, because here is no new product being developed. The only thing that is changing is the audience you are targeting to buy your existing product
3. Market penetration is most common as it has lower risk than other corporate growth strategies. It requires a company to market the existing product to the same market it has been targeting, but requires an increase in market share. This may mean lowering prices to create great differentiation between the company’s product and a competitor, or using another strategy to capture a larger market share in order to better penetrate the market.
4. If there is really no room for growth when it comes to expanding your business with the product you have, it may be time to expand your product line. Creating a new product generates more opportunities to to sell a to your current audience, while increasing your revenue. Producing a product that makes sense for your current customers is a great way to expand your business because you are already familiar with your customer base and their needs.
5. Acquisition means purchasing and absorbing a competitor to expand your business. Of course this is not a decision to be made lightly and may not be realistic for your business depending on the circumstances, but it can allow your company to absorb a previous competitor which provides you access to that company’s existing customers. This method allows businesses to grow at a much more rapid pace than the other four methods, but it is also costly and time consuming.
6. Exporting goods from a corporation's home country to other nations can be a solid starting point for global expansion. Exporting allows companies to introduce their brands and products to foreign markets with minimal or no direct investment in each country.Service businesses can find this option more challenging unless they perform services over the internet. Licensing agreements allow foreign companies to sell or represent your brands in their home markets, achieving the same kind of product introduction that exporting provides, but with a different set of risks. While exporting and licensing can open doors around the world, corporations must take further steps to truly achieve global expansion goals.
7. Multinational companies locate production facilities, regional headquarters, service and sales outlets, and training facilities all around the world, rather than concentrating on their home countries. In effect, multinationals give up the concept of a home country in favor of a truly global outlook on management, sourcing, production and marketing.
8. Adding new locations
9. Franchising opportunities
10. Selling products online across multiple platforms