In: Operations Management
What are trade sanctions and embargos. List and describe an example of a global company that faces ethical issues for its operations outside the US.
Trade Sanctions and Embargoes :
Trade sanctions are the prohibitions on certain type of products, services or technology to another country due to various reasons. The reasons may include, nuclear non-proliferation, humanitarian purposes or it could be anything related to two countries. Trade sanctions can also be called as considered as "partial embargoes" as they restrict trade in certain areas. For example, the U.S. has trade sanctions with North Korea that prohibit the export of any material that would help N.Korea in its Nuclear or any other mass destruction or weapons related program.
Embargoes is the complete ban or prohibition of trade by one country with other. Under embargoes, no goods or services can be imported or exported from or to the embargoed nation. For example, the U.S. currently has a trade embargo with Cuba (except in limited and exeptional circumstances, such as the export of food and agricultural products to Cuba). Another example is Iran. There is an embargo on US goods going to Iran unless you export medical and dental “devices” or foodstuff.
An example of a global company that faces ethical issues is Coke Cola. Coke Cola is a company with global operations. It faced ethical issues in India because of the ingredients it posses. Secondly, it is called unethical in India because of its depletion of underground water. The company uses thousands of gallons of water for making its beverages, which raised an alarm to the givernment on unethical depletion of water resources and created a wild spark among the farmers who raised protests for depleting the undderground water which is used for agricultural purposes. Since then, the sales of Coke has reduced in India and people now are more aware of the choices they make in what they consume.
An other example is Airbnb. Airbnb ran into trouble in 2014, with a crackdown on advertised rental properties falling outside local housing and tourism regulations. The company was forced to pay a €30,000 fine for a breach of local tourism laws in Barcelona. Since then its operations have been termed as unethical.