Question

Do you think global businesses would be willing to subscribe to a global code of conduct? Explain your answer. Would it be easier to just follow the business practices and customs of the country in which you’re doing business? Why or why not? Are there more stakeholders for an international or global company than a domestic one? Explain your answer. How would the Foreign Corrupt Practices Act (FCPA) that we reviewed in Chapter 6 come into play here? Which offers greater guidance to international businesses, the UN Global Compact or the OECD guidelines? Explain your answer. What is the most ethical way to do business internationally?

Answer 1

Do you think global businesses would be willing to subscribe to a global code of conduct? Explain your answer.

Global Code of Conduct: With the increase in competition, the business world has to find out new ways to reach out to a larger audience. Some ways of expanding the business is by globalization. But in such a situation, the rules, regulations, ethics and laws will be subjected to change. Therefore, a global code of conduct is recommended i.e. a general standard of business practices that can be applied equally in all countries. It will be above the local customs and social norms.

Willingness to subscribe to Global Code of Conduct: The ultimate aim of any business organization is to earn more profits and to maximize the shareholders’ wealth. The Global Code of Conduct aims at setting a common code that will be followed by all companies that aim at expanding their business in other countries. Since, the main aim is to earn more profits, so some companies may try to earn profits even by unethical means. So, the willingness to follow or to subscribe to the global code of conduct might be less among the companies. They have to be made to willingly subscribe to the Global Code of Conduct by creating awareness about the need and the benefits of being ethical.

Would it be easier to just follow the business practices and customs of the country in which you’re doing business? Why or why not?

Actually in the country where the business is being carried out various practices and customs have to be followed because a business has no other option.Whether it is easy or not, a business is bound to follow all such practices and customs in a perfect manner.Without following it, the loss will be to the business only. Thus the business has to adapt itself to the external environment and make various changes in the organization so that the business should not have any negative impact on its workings.Thus the question of following such practices and customs in an easy manner is not a question but important is where the business follows the practices and customs of the country or not.

Are there more stakeholders for an international or global company than a domestic one? Explain your answer.

Global Code of Conduct: With the increase in competition, the business world has to find out new ways to reach out to a larger audience. Some ways of expanding the business is by globalization or by becoming a Multi-National Corporation or MNC. But in each of these situations, the rules, regulations, ethics and laws will be subjected to change. Therefore, a global code of conduct is recommended i.e. a general standard of business practices that can be applied equally in all countries. It will be above the local customs and social norms.

Stakeholders: The persons within and outside the business who are directly or indirectly affected by the activities of the business are known as the stakeholders of the business. The stakeholders are groups of people like customers, employees, suppliers, wholesalers, dealers, vendors and society in general. For a domestic company, the stakeholders only belong to that country but for global companies, the number of stakeholders will be more. This is because the company will have stakeholders in the home country as well as in the foreign land. Both sets of stakeholders will be affected by the business activities of the company. Thus, the company has to be extra cautious when it is expanding its operations to a foreign land. The company then becomes answerable to both the sets of stakeholders in the home country as well as foreign country.

How would the Foreign Corrupt Practices Act (FCPA) that we reviewed in Chapter 6 come into play here?

There are several laws that require individuals as well as business entities to undertake activities on the basis of ethics and legalities. These laws refrain business entities from engaging in unethical and illegal activities and also take actions against the violators in order to prevent unethical work environment.

Foreign Corrupt Practices Act (FCPA) refers to the act wherein business firms and officers of business firms are prevented from paying of bribe into foreign countries to obtain business interests and fulfil their business purposes. It is an act wherein citizens of Country USS are prohibited from engaging in paying of bribery to foreign government officials with a view to take benefit from these foreign government officials.

FCPA come into play a role in a way that the way Country USS has banned its companies to pay bribery to foreign countries and its officials with an expectation to obtain their favourable attitude can be considered as ethical because getting engaged in bribe paying is illegal and unethical act. It nowhere put companies from Country USS at a disadvantage position as compared to their foreign competitors because when companies will be blocked disallowing them to obtain benefit other countries using their money and monetary power, then only the world’s business will develop ethically. When countries like USS and others will encourage fair business dealings and motivate firms to engage in business associations with other firms in foreign countries on the basis of their products and services instead of using money power, then only fair and transparent business world can be developed.

The exploitation taking place in the business world can only be reduced when companies will do business in foreign nations will honesty and integrity. When firms will not engage in illegal acts like bribery paying or taking of undue advantage in foreign nations, then it will allow the countries to maintain their reputation in the world market for being honest and fair in their business dealings. This way FCPA comes into a light to play an important role.

Which offers greater guidance to international businesses, the UN Global Compact or the OECD guidelines? Explain your answer.

International business refers to the business that undertakes its business operations around the world. In international business, the rules and regulations are created for all the business entities that deliver their services at a global platform and performs business activities conforming the rules and regulations of every country where they operate.

The UN Global Compact refers to the non-binding pact between countries wherein businesses are encouraged at a world level. It works on the aims of sustainability and delivers corporate social responsibilities (CSR). The OECD (Organization for Economic Cooperation and Development) Guidelines refer to the international organization that strives to create better policies for creating better lives for people. It works on the ambitions like increase in equality, prosperity, well-being and opportunity

The one that offers greater guidance to international businesses is the UN Global Compact. This is because OECD is a partner of UN Global Compact in creating developed businesses around the world. OECD has taken its inspiration from the UN Global Compact in the creation of string economies that not only lifts unemployment but also promotes a healthy work environment. A large amount of CSR activities gets performed with the guidelines of UN Global Compact due to which even OECD had been successful in achieving its objectives at the world level. Taking inspiration from the UN Global Compact, OECD is active in various dimensions like healthy work environment, sustainable development, increase in employment opportunities, and also equality in business firms. The UN Global Compact has provided a framework for several organizations including OECD to undertake business activities with ethical concerns and to not to leave the path of correctness even after facing the challenges of financial crisis. This is the reason it can be concluded that it is the UN Global Compact that offers greater guidance to international businesses.

What is the most ethical way to do business internationally?

Global Code of Conduct: With the increase in competition, the business world has to find out new ways to reach out to a larger audience. Some ways of expanding the business is by globalization or by becoming a Multi-National Corporation or MNC. But in each of these situations, the rules, regulations, ethics and laws will be subjected to change. Therefore, a global code of conduct is recommended i.e. a general standard of business practices that can be applied equally in all countries. It will be above the local customs and social norms.

Most ethical way to do business: The most ethical way to do business internationally is by ensuring that the company is not causing any harm to the stakeholders in the foreign market and domestic market. The business should try to give back to the country where it is carrying out its operations. This can be done by ensuring that no harm is being done by the business and the taxes are paid on time to the country’s government. The company should also make an effort to improve the business institutions of the country with the help and co-operation of the local government. The safety and control measures should also be followed carefully so as to prevent the occurrence of any accidents that can cause damage.