Chapter 3

Global corporation

An MNC in which management and other decisions are centralized in the home country. World market is treated as an integrated whole; focus is on control and global efficiency.

Transnational (borderless) organization

An MNC where artificial geographical boundaries are eliminated. Country of origin or where business is conducted becomes irrelevant; increases efficiency and effectiveness in a competitive global marketplace.

3 ways in which managers can encourage ethical behavior:

Establishing a code of ethics Providing ethical leadership Offering ethics training

Exporting & Importing

Exporting: making products domestically and selling them abroad. Importing: acquiring products made abroad and selling them domestically.

Multidomestic corporation

Management and other decisions are decentralized to the local country in which it is operating. Relies on local employees to manage the business, tailors strategies to each country's unique characteristics, and is used by many consumer product companies.

TRUE/FALSE

Managers regularly confront decisions that have a dimension of social responsibility, such as philanthropy, pricing, employee relations, resource conservation, product quality, and doing business in countries with oppressive governments.

global outsourcing

Managers who want to enter a global market with minimal investment usually start with global sourcing (also called global outsourcing), which means purchasing materials or labor from the cheapest source in order to maintain a competitive edge. For instance, Massachusetts General Hospital uses radiologists in India to interpret CT scans.

What determines ethical behavior?

Morality Values Experience The organization's culture Ethical issue being faced

What does it mean for an organization to be global?

Organizations are considered global if they exchange goods and services with consumers in other countries. Capital globalization is the most common approach to being global. An organization can be considered global if it uses financial sources and resources outside its home country, which is known as financial globalization.

global village

a boundaryless world where goods and services are produced and marketed worldwide

Social responsibility (picture on phone)

a business's intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society. Social responsibility adds an ethical imperative to do those things that make society better and to avoid those things that could make it worse.

sustainability

a company's ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental, and social opportunities into its business strategies.

foreign subsidiary

a direct investment in a foreign country that involves setting up a separate and independent facility or office

Parochialism

a narrow focus in which managers see things only through their own eyes and from their own perspectives—not recognizing that countries have different values, morals, customs, political and economic systems, and laws—which can affect how a business is managed.

joint venture

a type of strategic alliance in which the partners form a separate, independent organization for a business purpose. For example, Hewlett-Packard has initiated joint ventures with various global suppliers to develop different components for its computer equipment.

Social obligations

activities a business engages in to meet certain economic and legal responsibilities. It does the minimum that the law requires and only pursues social goals to the extent that they contribute to its economic goals.

theory of justice view of ethics

an individual is equitable, fair, and impartial in making decisions. For instance, such a manager would pay individuals of similar skill, performance, or responsibility level the same wage and wouldn't base that decision on gender, personality, or favoritism.

multinational corporation

any type of international company that maintains operations in multiple countries

Social responsiveness

characteristic of the business firm that engages in social actions in response to a popular social need. Managers in these companies are guided by social norms and values and make practical, market-oriented decisions about their actions.

rights view of ethics

individuals are concerned with respecting and protecting individual liberties and privileges such as the right of free consent, the right to privacy, and the right of free speech. Under this view, making ethical decisions is simple because the goal is to avoid interfering with the rights of others who might be affected by the decision.

Licensing

most often used by manufacturing organizations that make or sell another company's products. For example, Anheuser-Busch licenses the right to brew and market Budweiser beer to foreign brewers such as Labatt in Canada and Kirin in Japan.

Franchising

primarily used by service organizations that want to use another company's name and operating methods, such as KFC and Dunkin' Donuts.

The utilitarian view of ethics

says that ethical decisions are made solely on the basis of their outcomes or consequences. The goal of utilitarianism is to provide the greatest good for the greatest number of people.

global strategic alliance

which is a partnership between an organization and a foreign company partner created to share resources and knowledge in developing new products or building production facilities. Honda Motor and General Electric, for example, teamed up to produce a new jet engine.

How to be an ethical leader:

• Be a good role model by being ethical and honest. • Tell the truth always. • Don't hide or manipulate information. • Be willing to admit your failures. • Share your personal values by regularly communicating them to employees. • Stress the organization's or team's important shared values. • Use the reward system to hold everyone accountable to the values.