This document discusses globalization, government regulation, and ethical issues in business. It addresses how globalization impacts businesses and how businesses relate to government policy. Several ethical issues are examined, including bribery versus grease payments, enforcing halal certification logos, a share swap between two airlines, and setting up a rare earth processing plant. Overall, the document argues that while governments regulate business through laws, organizations need their own mechanisms to ensure ethical conduct as loopholes may be exploited without oversight.

1. GLOBALIZATION,GLOBALIZATION,GLOBALIZATION,GLOBALIZATION,
GOVERNMENTGOVERNMENTGOVERNMENTGOVERNMENT
RELATION, ANDRELATION, ANDRELATION, ANDRELATION, ANDRELATION, ANDRELATION, ANDRELATION, ANDRELATION, AND
ETHICAL ISSUES INETHICAL ISSUES INETHICAL ISSUES INETHICAL ISSUES IN
BUSINESSBUSINESSBUSINESSBUSINESS

2. TOPIC OUTCOMES
At the end of this chapter, students should beAt the end of this chapter, students should beAt the end of this chapter, students should beAt the end of this chapter, students should be
able to:able to:able to:able to:
Explain the impact of globalization overExplain the impact of globalization overExplain the impact of globalization overExplain the impact of globalization over
2
Explain the impact of globalization overExplain the impact of globalization overExplain the impact of globalization overExplain the impact of globalization over
businesses.businesses.businesses.businesses.
Explain the relationship betweenExplain the relationship betweenExplain the relationship betweenExplain the relationship between
government regulation and businessgovernment regulation and businessgovernment regulation and businessgovernment regulation and business
practices & ethical conduct of businesses.practices & ethical conduct of businesses.practices & ethical conduct of businesses.practices & ethical conduct of businesses.

3. GLOBALIZATION IN TODAY'S BUSINESSGLOBALIZATION IN TODAY'S BUSINESSGLOBALIZATION IN TODAY'S BUSINESSGLOBALIZATION IN TODAY'S BUSINESS
GlobalizationGlobalizationGlobalizationGlobalization refers to the increasing
movement of goods, services, and capital
across national borders.
Transnational and multinational companies
exceed borders, making everything from
product conception, design, manufacturing toproduct conception, design, manufacturing to
assembly truly international.
Think of an iPod. It was designed in the USA,
its parts were produced in Taiwan, the
Ukraine, Thailand, it is assembled in China
and is shipped into the world. The label
shouldn't read "Made in China", but "Made in
the World". Globalization

4. FACTORS THAT DRIVES GLOBALIZATIONFACTORS THAT DRIVES GLOBALIZATIONFACTORS THAT DRIVES GLOBALIZATIONFACTORS THAT DRIVES GLOBALIZATION
1.1.1.1. TechnologicalTechnologicalTechnologicalTechnological innovationinnovationinnovationinnovation –––– internet,,,, sophisticated software,
fiber optics, wireless, and satellite technology, among
others, have made it easier and faster for companies to
communicate with employees, partners, suppliers, and
customers all over the globe in real time.
2.2.2.2. TransportationTransportationTransportationTransportation systemsystemsystemsystem –––– improvement in transportation,
from air freight to ocean vessels, enable fast and cheap
movement of goods and services from one place tomovement of goods and services from one place to
another.
3.3.3.3. TheTheTheThe riseriseriserise ofofofof majormajormajormajor transnationaltransnationaltransnationaltransnational companiescompaniescompaniescompanies –––– big, well-
capitalized firms are better equipped to conduct business
across national borders than smaller, local companies.
4.4.4.4. SocialSocialSocialSocial andandandand politicalpoliticalpoliticalpolitical reformsreformsreformsreforms –––– critical has made products
and services accessible to the entire computerized world,
creating a wish to buy things irrespective of where they are
produced. E.g. When China opens its economy, this
accelerate globalization process.

5. HOW GLOBALIZATION AFFECT BUSINESS?HOW GLOBALIZATION AFFECT BUSINESS?HOW GLOBALIZATION AFFECT BUSINESS?HOW GLOBALIZATION AFFECT BUSINESS?
Multi national companies (MNCs) need to
deal with government in various
countries, thus prune to ethical business
conduct.
Corporations and individuals, especiallyCorporations and individuals, especially
corporations doing business globally, must
understand and evaluate the cultures of
the people with which it wishes to do
business in order to ensure smooth
transactions and negotiations.

6. HOW BUSINESS & GOVERNMENT RELATE?HOW BUSINESS & GOVERNMENT RELATE?HOW BUSINESS & GOVERNMENT RELATE?HOW BUSINESS & GOVERNMENT RELATE?
Governments create the rules &
frameworks in which businesses are able to
compete against each other. From time to
time the government will change these
rules and frameworks forcing businesses torules and frameworks forcing businesses to
change the way they operate.
Business is thus keenly affected by
government policy. Key areas of
government policy that affect business are:

7. HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)
1.1.1.1. Economic policiesEconomic policiesEconomic policiesEconomic policies – Government interferes the
country’s economy for reason to rectify economic
cycle. But some had triggered issues such as:
E.g. some claimed that privatisation of government
agencies or institutions made workers lost theiragencies or institutions made workers lost their
pensions.
E.g. according to a statement made by a Public
Works Minister, the NSE was built for a projected use
of 160,000 vehicles per day, but is now being used
by 1,200,000 vehicles per day.

8. HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)
2.2.2.2. Legal changesLegal changesLegal changesLegal changes – Government changes the laws regularly in
line with its political policies. As a result, businesses are
continually having to respond to changes in the legal
framework:
E.g. The requirement for businesses to cater for disabled
people, by building ramps into offices, shops etc.people, by building ramps into offices, shops etc.
E.g. Creating tighter antiantiantianti----competition lawcompetition lawcompetition lawcompetition law on what
constitutes fair competition between businesses. [Further
reading material: Competition policies in Malaysia]
E.g. Imposing requirements to reduce “glass ceiling”“glass ceiling”“glass ceiling”“glass ceiling” for
women and preventing sexual harassment at workplace.

9. ISSUE 1: BRIBE VS. GREASE PAYMENTISSUE 1: BRIBE VS. GREASE PAYMENTISSUE 1: BRIBE VS. GREASE PAYMENTISSUE 1: BRIBE VS. GREASE PAYMENT
Grease
Payments
Grease
Payments
Relatively small sums of money given
for the purpose of getting minor officials to:
Relatively small sums of money given
for the purpose of getting minor officials to:
• Do what they are supposed to be doing
• Do what they are supposed to be doing faster
• Do what they are supposed to be doing better
BribesBribes
Relatively large amounts of money given for the
purpose of influencing officials to make decisions
or take actions that they otherwise might not
take. If the officials considered the merits of the
situation only, they might take some other action.
Relatively large amounts of money given for the
purpose of influencing officials to make decisions
or take actions that they otherwise might not
take. If the officials considered the merits of the
situation only, they might take some other action.
Is “greasing” similar to “bribery”?Is “greasing” similar to “bribery”?Is “greasing” similar to “bribery”?Is “greasing” similar to “bribery”? Anti-
Corruption
Video

10. ISSUE 2: ENFORCEMENT OF JAKIM HALALISSUE 2: ENFORCEMENT OF JAKIM HALALISSUE 2: ENFORCEMENT OF JAKIM HALALISSUE 2: ENFORCEMENT OF JAKIM HALAL
LOGO W.E.F. 1LOGO W.E.F. 1LOGO W.E.F. 1LOGO W.E.F. 1STSTSTST JAN 2012JAN 2012JAN 2012JAN 2012
Can the Malaysian government makes itCan the Malaysian government makes itCan the Malaysian government makes itCan the Malaysian government makes it
compulsory for all companies claimingcompulsory for all companies claimingcompulsory for all companies claimingcompulsory for all companies claiming
sellingsellingsellingselling halalhalalhalalhalal product to display no otherproduct to display no otherproduct to display no otherproduct to display no othersellingsellingsellingselling halalhalalhalalhalal product to display no otherproduct to display no otherproduct to display no otherproduct to display no other
than JAKIM certified HALAL Logo? Will thisthan JAKIM certified HALAL Logo? Will thisthan JAKIM certified HALAL Logo? Will thisthan JAKIM certified HALAL Logo? Will this
new requirement be construed as againstnew requirement be construed as againstnew requirement be construed as againstnew requirement be construed as against
the individual rights as what had beenthe individual rights as what had beenthe individual rights as what had beenthe individual rights as what had been
promoted by the Western countries?promoted by the Western countries?promoted by the Western countries?promoted by the Western countries?

11. ISSUE 3: THE SHARE SWAPPING BETWEENISSUE 3: THE SHARE SWAPPING BETWEENISSUE 3: THE SHARE SWAPPING BETWEENISSUE 3: THE SHARE SWAPPING BETWEEN
MAS AND AIR ASIAMAS AND AIR ASIAMAS AND AIR ASIAMAS AND AIR ASIA
1.1.1.1. List down the affected stakeholders.List down the affected stakeholders.List down the affected stakeholders.List down the affected stakeholders.
2.2.2.2. Has the Malaysia government madeHas the Malaysia government madeHas the Malaysia government madeHas the Malaysia government made
the right decision when instructingthe right decision when instructingthe right decision when instructingthe right decision when instructing
MAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia sinceMAS to swap shares with Air Asia since
many parties claiming that it was amany parties claiming that it was amany parties claiming that it was amany parties claiming that it was a
“win“win“win“win----lose” business dealing?lose” business dealing?lose” business dealing?lose” business dealing?
3.3.3.3. If you were the owner of MAS, what willIf you were the owner of MAS, what willIf you were the owner of MAS, what willIf you were the owner of MAS, what will
be your decision then i.e. how will yoube your decision then i.e. how will yoube your decision then i.e. how will yoube your decision then i.e. how will you
rectify the current situation?rectify the current situation?rectify the current situation?rectify the current situation?

12. ISSUE 4: THE SETTING UP OF LYNAS PLANT ATISSUE 4: THE SETTING UP OF LYNAS PLANT ATISSUE 4: THE SETTING UP OF LYNAS PLANT ATISSUE 4: THE SETTING UP OF LYNAS PLANT AT
GEBENG, PAHANG.GEBENG, PAHANG.GEBENG, PAHANG.GEBENG, PAHANG.
Whose voices has more “right to be heard”Whose voices has more “right to be heard”Whose voices has more “right to be heard”Whose voices has more “right to be heard”Whose voices has more “right to be heard”Whose voices has more “right to be heard”Whose voices has more “right to be heard”Whose voices has more “right to be heard”
over the issueover the issueover the issueover the issue –––– politicians or the residentspoliticians or the residentspoliticians or the residentspoliticians or the residents
nearbynearbynearbynearby GebengGebengGebengGebeng areas? Why?areas? Why?areas? Why?areas? Why?

13. CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSION
It is inevitably for government to regulateIt is inevitably for government to regulateIt is inevitably for government to regulateIt is inevitably for government to regulate
laws to control unethical or unlawfullaws to control unethical or unlawfullaws to control unethical or unlawfullaws to control unethical or unlawful
business activities. But, as the laws isbusiness activities. But, as the laws isbusiness activities. But, as the laws isbusiness activities. But, as the laws is
made by human being, there are certainlymade by human being, there are certainlymade by human being, there are certainlymade by human being, there are certainly
few loopholes being manipulated byfew loopholes being manipulated byfew loopholes being manipulated byfew loopholes being manipulated byfew loopholes being manipulated byfew loopholes being manipulated byfew loopholes being manipulated byfew loopholes being manipulated by
certain parties for personal interest. Tocertain parties for personal interest. Tocertain parties for personal interest. Tocertain parties for personal interest. To
overcome this risk, organization and itsovercome this risk, organization and itsovercome this risk, organization and itsovercome this risk, organization and its
corporate people should create our owncorporate people should create our owncorporate people should create our owncorporate people should create our own
method as “check and balance”method as “check and balance”method as “check and balance”method as “check and balance”
mechanism to ensure that we run ourmechanism to ensure that we run ourmechanism to ensure that we run ourmechanism to ensure that we run our
business ethically.business ethically.business ethically.business ethically.

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