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MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
MGMT 374 Week 15 Lecture Presentation
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MGMT 374 Week 15 Lecture Presentation

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  • Notice that Walmart’s revenues is roughly equal to the GDP of Taiwan, which is the 26 th largest economy in the world.
  • Transcript

    • 1. <ul><li>Globalization of Ethical Decision Making </li></ul>C H A P T E R 10
    • 2. Capitalism, Economics and Business Ethics <ul><li>The first decade of the 21 st century was a turbulent one </li></ul><ul><ul><li>Ethical misconduct and excessive risk-taking seemed rampant </li></ul></ul><ul><ul><li>Many stakeholders lost confidence in businesses </li></ul></ul><ul><li>Lack of fairness, trust and honesty made stakeholders question the stability of major institutions, as well as the intentions of executives </li></ul><ul><li>Even the competence of governmental regulatory institutions was called into question </li></ul>
    • 3. Risk Compartmentalization <ul><li>Occurs when profit centers within an organization are unaware of the consequences of their decisions on the organization as a whole </li></ul><ul><ul><li>No single person can be blamed for negative outcomes that occur because of systemic problems </li></ul></ul>Source: Flying Colours Ltd.
    • 4. Key Figures in Modern Economics <ul><li>Adam Smith </li></ul><ul><ul><li>Laissez-faire capitalism </li></ul></ul><ul><li>John Maynard Keynes </li></ul><ul><ul><li>Government can stimulate the private sector </li></ul></ul><ul><li>Milton Friedman </li></ul><ul><ul><li>Return to self-regulating free market system </li></ul></ul>
    • 5. Keynes and Friedman Agreed That: <ul><li>People have rational preferences among outcomes that can be identified and associated with value </li></ul><ul><li>Individuals seek to maximize utility and firms seek to maximize profits </li></ul><ul><li>People act independently on the basis of full and relevant information </li></ul>
    • 6. Capitalism, Economics and Business Ethics <ul><li>Socialism: Advocates that wealth and power be shared equally across society based on the amount of work expended in production </li></ul><ul><ul><li>Karl Marx was the most famous advocate </li></ul></ul><ul><li>Social democracy formed in the 1940s as an offshoot of socialism </li></ul><ul><ul><li>Private ownership of property, but large government </li></ul></ul><ul><li>Current global economic system has created bimodal wealth distribution: The middle class shrinks so that there are many poor and a few very wealthy </li></ul>
    • 7. Two Schools of Economic Thought <ul><li>Rational economics: Assumes that people are rational and base their decisions on maximizing their utility based on the amount of resources available to them </li></ul><ul><li>Behavioral economics: Assumes that humans do not always act rationally </li></ul><ul><ul><li>Also believes that how information is presented can affect people’s choices, which is called the framing effect </li></ul></ul>
    • 8. The Economic Capitalism Country Differential
    • 9. Common Values, Goals, and Business Practices <ul><li>Global common values: Shared across most cultures </li></ul><ul><li>Country cultural values: Specific to certain groups that express actions, behavior and intent </li></ul><ul><li>Culture: Everything in our surroundings that is made by people </li></ul><ul><ul><li>Each nation has a distinctive culture beliefs about what business activities are acceptable </li></ul></ul><ul><ul><li>Subcultures can also be found within many nations </li></ul></ul>
    • 10. Cultural Differences <ul><li>Can become liabilities when firms transfer personnel </li></ul><ul><ul><li>One significant area of cultural differences is language </li></ul></ul><ul><ul><li>Cultural differences in body language can also lead to misunderstandings </li></ul></ul><ul><ul><li>Perceptions of time may differ </li></ul></ul>Source: Corbis, Pacific Rim
    • 11. Global Business Practices <ul><li>The Self-reference criterion (SRC): An implied perspective of ethical superiority is common </li></ul><ul><ul><li>SRC is an unconscious reference to one’s own cultural values, experiences, and knowledge </li></ul></ul><ul><ul><li>We react on the basis of knowledge, which is accumulated over a lifetime and grounded in the culture of origin </li></ul></ul>
    • 12. Perceptions of Countries as Least/Most Corrupt
    • 13. Global Business <ul><li>Dumping: The practice of charging high prices for products sold in domestic markets while selling the same products in foreign markets at low prices, often below the costs of exporting them </li></ul><ul><ul><li>The U.S. has multiple anti-dumping laws </li></ul></ul>Source: Jack Star/PhotoLink
    • 14. Cultural Relativism <ul><li>The concept that morality varies from one culture to another </li></ul><ul><li>There is a continuum of cultural relativism </li></ul><ul><ul><li>Some believe that only one culture defines ethical behavior for the whole globe </li></ul></ul><ul><ul><li>For the business relativist , there may be no ethical standards except for the one in the transaction culture, or none at all. These people may be in conflict with their own individual moral standards. </li></ul></ul>
    • 15. Matrix for Global Relativists When Making Cross-Cultural Decisions
    • 16. Consumerism <ul><li>The belief that consumers, not the interests of corporations, should dictate the economic structure of society </li></ul><ul><ul><li>Belief that consumption of goods relates to increased well being </li></ul></ul><ul><ul><li>Made-to-break (planned obsolescence) encourages consumers to regularly buy more items </li></ul></ul><ul><li>Consumerism meeting with backlash because of increased sustainability concerns </li></ul>
    • 17. Human Rights <ul><li>Defined as an inherent dignity that should be afforded all people with equal and inalienable rights as the foundation of freedom, justice and peace in the world </li></ul><ul><li>Have been codified in the United Nations Human Rights Declaration </li></ul>Source: Nancy Ney
    • 18. Health Care <ul><li>Is a major global human rights issue </li></ul><ul><li>The issue of healthcare availability and affordability for workers in all nations is becoming a major source of concern </li></ul><ul><li>Question remains of whether access to healthcare is a right or a privilege </li></ul>
    • 19. Labor <ul><li>More people than ever work in nations other than their homeland </li></ul><ul><li>Doing business in many different countries, firms today have many ethical concerns involving labor issues </li></ul><ul><li>A corporation must always know where the labor comes from in its entire supply chain so as to avoid controversy </li></ul><ul><li>Corporations that do not take labor issues seriously will find themselves in legal and ethical trouble </li></ul>
    • 20. Sustainable Development <ul><li>Is a systematic approach to achieving development in such a way that the earth’s resources are preserved for future generations </li></ul><ul><ul><li>Will be a serious issue for most firms in the future </li></ul></ul><ul><li>Some companies conduct their own sustainability performance reports </li></ul>
    • 21. The Millennium Ecosystem Assessment
    • 22. The International Monetary Fund <ul><li>The IMF emerged from the Bretton Woods agreement of 1944 </li></ul><ul><li>The IMF assumed a major role in the 1980s in the management of the less developed countries (LDC) debt crisis </li></ul><ul><li>An ethical issue surrounding the IMF has to do with the increased inequality in LDCs </li></ul><ul><ul><li>Some contend that foreign corporations offload their debt via IMF bailouts </li></ul></ul>
    • 23. The World Trade Organization <ul><li>The WTO was established in 1995 and now includes 133 member nations and 33 others with observer status </li></ul><ul><li>Administers its own trade agreements, facilitates future trading negotiations, settles trade disputes and monitors the trade policies of member nations </li></ul><ul><ul><li>Addresses economic and social issues in a broad range of industries </li></ul></ul>
    • 24. The Multinational Corporation <ul><li>Are public companies that operate on a global scale without significant ties to any one nation or region </li></ul><ul><ul><li>Represent highest level of international business commitment </li></ul></ul><ul><li>MNCs are subject to ethical criticism over their impact on the countries in which they do business </li></ul><ul><li>Because of increased scrutiny and pressure to be socially responsible, many corporations belong to Business for Social Responsibility </li></ul>
    • 25. World’s Largest Countries and Corporations (Based on GDP and Revenues)

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