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Multinational corporations (Mans) are corporations that “own or control production or service facilities outside the country in which they are Nations, 1973, P. 23) The rise of Globalization has forced and enabled more companies to venture abroad in order to thrive for more profitability: bigger market, cheaper raw materials, and lower labor costs. However, Mans have also noticed that the more countries they enter, the more ethical issues appear.
At best, even when Mans are dealing with one only one culture, they are already facing ethical difficulties; as they encounter woo or more different cultures, it would become extremely problematical. Hence, multi-national corporations (Mans) face more challenges than ever before in the cultural contexts and different countries they operate due to different ethical and moral standards among different countries. Hence, Mans are often under a dilemma with ethical difficulties when operating in different countries.
Successful Mans require stability for development, and to resolve ethical difficulties is one of the key issues that could affect such stability, this is the focus of this assignment: first, it will explain the ethical faculties multinational business encounter while operating in several countries; followed by the general principles required to resolve such teeth kcal problems; lastly, an example of such a problem to illustrate the application of principles to resolve problems in real situations. 2. 0 Ethical difficulties faced by multinational companies in other countries According to Robert Solomon (Solomon in Hartman, 2005, P. 71), “Ethics is a matter of ethos, participation in a community, a practice, a way of life. Business ethics is a function of the business ethos. ” McNeil and Pedigree (2001 ) suggested that business ethics is the fundamental part of the decision- making process within an organization. In reality’, we could observe that the ethical problems seem to be fewer in developed countries compared with underdeveloped, less developed or developing countries because “these countries are at earlier stages of economic development”. Carroll & Bucktooth, 2003, P. 278) Thus, when Mans from developed countries venture to these host countries, it becomes more difficult to justify what is right or wrong as ethical perception differs from country to country. That is, Mans loud face more difficulties and complexities in making sound ethical business decisions: should they follow the ethics of the host countries, or should they follow the code of ethics from their home county which might then result in disobedience to the ethical system of the host country?
Below are some of the ethical difficulties Mans could encounter when operating in different countries: 2. 1 The remuneration practices -Wages and Benefits When Mans venture to other countries (underdeveloped, less developed, & developing), question of fair remuneration practices has been always the issue. Arguments about ethically acceptable or appropriate levels of wages and labor standards for the host country’s laborers are intensive.
Even famous multinational companies, such as Nikkei, Wall-Mart, Smart, Rebook, Disney, etc. Have been addressed for these issues: (Maintain, 1997; Carroll & Bucktooth, 2003) In 1998, when an investigation launched into Nine’s subcontracted factories in Vietnam for allegations of worker abuse, the report found that its employees were paid $1. 84 a day, with average monthly salary of $48 while the minimum wage in Vietnam was $45 at that time. (Lutes S. 004) A pair of Nikkei shoes sold in US marketed for $1 00 or more, but a worker from Vietnam factory works six days a week and earns about $600 a year, which is “half the average income in Ho Chi Mini City, but about four times the annual earnings in more remote rural regions of Vietnam” (Lutes S. , 2004) On the other hand, shipments of Nikkei shoes accounted for 5% of Vietnamese total exports in 1998, and if Nikkei withdrew its factories from Vietnam, 35,000 Vietnamese would lose their jobs. So is a $48 monthly salary morally acceptable or indefensible? If it’s too little, then how much should Nikkei pay to be fair?
Similar cases happened to Wall-Mart: in 1996, it was discovered that the seamstress from its clothes supplier in Honduras worked 20 hours a day for 31 cents an hour. My former employer, a Southeast Asian based cruise liner company was faced with similar difficulties. As multinational company, its onboard crew were recruited from more than 30 countries, and the wage distribution system is based on nationality and position – crew with higher position are paid more than those in the lower position, salary of crew members of the same position would decline from plopped countries to underdeveloped countries.
Thus, debates occur between creamers of similar position; doing same duties but getting different salaries; worse still the crew with higher position are paid less than lower positioned crew. An example, from the Front Office Department, monthly salary for front office manager from Philippines is SAG 1,300, from US is USED 3,000. The Japanese receptionist monthly salary was USED 1,700, but the salary for receptionists from Philippines, China, Indonesia were only SEDGES, SEDGES and SEDGES respectively.
From company’s point of view, the fractionated salary scale is developed based on the Stage Of the crew’s home country economic development in order to appear attractive to crews from different nations. If equal salary system was applied, either the crew from developed countries will leave as they would prefer to find a job at home with a higher salary; or the company will have to pay more to balance all crew salaries. From an individual’s point of view, they would argue that they are all working in the same conditions and position, doing the exact same duty, hence why should some get paid more or less just because of nationality?
After all, the company operates in a foreign country where all creamers spend the same amount of money to buy things they need. Therefore the company’s salary system is immoral, and unjust. Several salary adjustments were done for the past few years, yet the problem is still unresolved. In this example, what form of salary system should the company apply? Is there a principle that can be applied in this situation? 2. 2 The gift giving/facilitation payment practices – Bribery Or? In business, to what extent is gift giving considered bribery? How to distinguish between facilitation payment and bribery?
Although bribery is ideal condemned, different countries with different culture, norms, laws and standards have brought increased difficulties for Mans businesses in a host country. For example, according to the law of US, it is illegal for US companies to pay bribes in order to do business. (Béchamel & Bowie, 2004) However other countries operate without such restrictions, instead, it is even been treated as the common way of doing business. Starting from mid-19705, questionable corporate payments to foreign government officials, political parties, and other influential persons have become widely known issues in the world.
Even major corporations as Lockheed, Gulf Oil, Northrop, Carnation, and Goodyear were among those firms admitting to such payments. For instance, Lockheed paid USED 12. 5 million to All Nippon Airways in order to obtain the sales deal worth USED 430 million, which resulted in force resignations and the former Japan Prime Minister stood for trial. (Carroll and Bucktooth 2003) In this case, the president of Lockheed claimed that giving bribes was a common practice and that it was expected in business in Japan.
Do you think what he said is acceptable? ‘Are those who accede to bribery equal in guilty to those who demand bribes? (Disgorge, 1 982, P. 53) Ethical difficulties therefore arise for multinational companies: what is right decision under such circumstances? The Case of Gillette, Inc. Very well addressed these conflicts within Mans when doing business in different country. (Refer to Appendix One) It has also raised questions on ethical decision making for Mans – must a business adopt the ethical standards of a host country in order to succeed?
If yes, then are all of these actions ethical? If not, then how to handle ethical conflicts be;en the home and host countries? 2. 3 Different Attitudes to Gender – Discrimination Or? Due to different cue Trees and traditions among society, attitudes towards gender from different countries are also varied. For example, in quite a number of developing countries, women are viewed as lower class to men; they are insufficiently protected by the government laws, and often experience discrimination and sexual harassment in the workplace.