Global Chapter 10

Provide an example of how the FCPA has cracked down on corrupt practices

In late 2008, German engineering company Siemens AG and authorities in the U.S. settled a longstanding bribes-for-business case with a record $1.6 billion fme, ahnost 20 times higher than the largest previous penalty under the FCPA. Siemens was penalized for routinely offering bribes to win overseas contracts with the following countries - Russia, Argentina, China, and Israel. The company was said to have spent more than $1 billion in bribing goverrnnent officials around the globe1The U.S. was able to apply the FCPA to Siemens because it is now listed on the U.S. Stock Exchange

Current standards for SA800 include all the following except a. certifications. b. compensations. c. management systems. d. child labor.

a. certifications.

International markets must be pursued if firms want to remain a. competitive. b. ethical. c. free from corruption. d. legitimate.

a. competitive.

The position that advocates that an MNC follow the host country's ethical standards is called a. ethical relativism. b. ethical egoism. c. ethical imperialism. d. ethical hegemony.

a. ethical relativism.

Arguments in favor of bribery include a. it's necessary for profit. b. nobody does it. c. they are forms of wages. d. they are not expected.

a. it's necessary for profit.

Major strategies MNCs may use to conduct global business, but still maintain an ethical sensitivity include all of these except: a. modify or redesign products. b. link ethics with global strategy. c. suspend business activities in certain countries. d. conduct ethical audits.

a. modify or redesign products.

Which of the following is not an argument commonly used against bribery? a. Bribes are inherently wrong. b. Bribes create dependence on corrupt individuals. c. Bribes are unfair because foreigners can get them, while U.S. citizens cannot. d. Once bribes start, they never stop.

c. Bribes are unfair because foreigners can get them, while U.S. citizens cannot.

The FCPA differentiates between: a. domestic and international disputes b. land ownership and building rental c. bribes and grease payments d. entry fees and corporate filing fees

c. bribes and grease payments

Which of the following is not one ofhome!host stakeholder pressures? a. culture b. system of government c. economic system d. laws

c. economic system

The position that advocates that an MNC should continue to follow its horne country's ethical standards even while operating in another country is known as a. ethical relativism. b. ethical egoism. c. ethical imperialism. d. ethical hegemony.

c. ethical imperialism.

Multinational corporations are all of the following except a. corporations operating with offices, factories, and headquarters in more than one country. b. multinational enterprises. c. fmancial powerhouses d. transnational corporations.

c. fmancial powerhouses

Which of the following is not a strategy for improving global business ethics? a. use of global codes of conduct b. incorporating ethical dimensions into top level strategic planning processes c. imposing the horne country's ethical standards on the host country d. suspension of activities

c. imposing the horne country's ethical standards on the host country

In 2012, the United States' rank in the Corruption Perception Index was: a. first, being least corrupt. b. in the top 10. c. in the top 20. d. at the very bottom.

c. in the top 20.

Which of the following is not part of the anticorruption movement? a. Transparency International b. OECD antibribery initiatives c. individual country initiatives d. World Trade Organization

d. World Trade Organization

The criticism of their use of sweatshops has led MNCs to do all of these things except:: a. work to improve working conditions. b. establish codes of conduct. c. perform social or ethical audits. d. create the Fair Labor Association (FLA).

d. create the Fair Labor Association (FLA).

Which of the following is not a characteristic of sweatshops? a. child labor b. low pay c. poor working conditions d. forced prostitution

d. forced prostitution

The Foreign Corrupt Practices Act allows a. bribes under $10,000. b. bribes, as long as the finn does not deduct them on its tax return. c. bribes, as long as they are disclosed to shareholders. d. grease payments.

d. grease payments.

Which of the following is not a feature of the global economy? a. international movement oflabor b. more trade in goods than in services c. international flow of capital d. international laws governing fair trade

d. international laws governing fair trade

All of the following are arguments in support of bribery except a. everybody does it. b. it is normal practice in many countries. c. it is a form of commission, tax, or compensation for doing business between cultures. d. it is a way of providing needy foreiguers with money they need.

d. it is a way of providing needy foreiguers with money they need.

Which of the following is not one the broad issues facing MNCs in their relationships with host countries? a. cultural aspects b. business/goverrunent interactions c. exploration of global markets d. religious and other traditional holidays

d. religious and other traditional holidays

The Alien Tort Claims Act has recently been interpreted by the U.S. Supreme Court to apply not only within the U.S., but outside it as well.

false

Economic integration of many formerly national economies into one worldwide economy is called a. globalization. b. world-system theory. c. capitalization. d. material diversification.

globalization

A major ethical challenge ofMNCs is that their fmns' cultures and philosophies may differ from that of their host countries.

true

Corruption, at its core, is essentially an abuse of power.

true

Countries at earlier stages of economic development often do not have a legal or ethical infrastructure in place to help protect their citizenry.

true

Cultural differences between an MNC's horne country and its host country sometimes make it difficult to distinguish between cultural issues and ethical issues.

true

For an MNC to be perceived as legitimate in the eyes of a host country, it must fulfill its social responsibilities.

true

Involving two or more cultures in ethical issues makes their resolution much more difficult.

true

MNCs based in the United States and in the European Union have played a key leadership role in world affairs.

true

One of the ethical issues that is exacerbated by operating in an developing countries is that the host nation's citizeus ofteu do not understand the technology being used, nor do they recognize its poteutial dangers.

true

One way to resolve ethical conflicts between an MNC's horne country and host country is to simply stop doing business in the host country.

true

The FCPA has had a significant impact on the way American firms do business globally.

true

The ethical issues eucountered in underdeveloped countries are ofteu more difficult than those found in industrialized nations.

true

The opposite of cultural relativism is ethical imperialism.

true

Despite the poor economy, there is a backlash against globalization.

true

The Nestle infant formula case is one in which a normal business practice in the frrm's horne country proved to be problematic in the host countries.

true

Discuss the best ways to combat bribery.

As with most social ills, the best way to combat bribery is to stop it before it starts. As the textbook points out, the very people who are in the positions to benefit the most from bribery are also the ones with the power to allow it or stop it. Of course, this proposal ignores the fact that bribery already exists in many places and is accepted practice in several of them. If we acknowledge that the practice of bribery exists, then the preferred method of combating it is to expose it as much as possible. Illicit practices tend not to flourish in the broad light of day.

Describe Earth Hour, and its growth. What has been its effect on awareness of global warming and climate change? Have you ever participated in Earth Hour in your community?

Earth Hour is a global sustainability movement which seeks to stop degrading the Earth's natural environment, and to create a low-carbon future for the planet. The event is celebrated by people turning off their lights for one hour at the prescribed time in cities which h ave signed on to the initiative. Earth Hour began in 2007 in Australia by the World Wide Fund for Nature (WWF), and is now celebrated worldwide by millions of people in 7,000 cities across !52 countries. Major buildings such as the Sydney Harbor Bridge, the CN Tower in Toronto, Rome's Colosseum, India Gate, the Golden Gate Bridge in San Francisco and many more stand in darkness for that hour in order to represent the world's ethical responsibility to the earth.

Describe the differences between internationalization and globalization.

Internationalization refers to the process by which firms increase their awareness of the influence of international activities on their future and establish and conduct transactions with firms from other countries. In other words, the focus of internationalization is a single finn expanding its markets. Globalization, on the other hand, is the integration of separate national economies into one global economy. The focus here is one entire economies interacting and integrating.

Discuss the differing philosophies held by MNCs and less-developed host countries. Which philosophy do you think is more appropriate?

Most MNCs, corning from industrialized nations, tend to focus on economic growth, efficiency, specialization, free trade, and competitive advantage. LDCs concentrate more on equitable distribution of income and wealth, increased economic self-reliance. Because of these differences in philosophies, many MNCs are viewed as exploiters of the LDCs, their citizens, and their natural resources. This is the view espoused by Immanuel Wallerstein and David Korten in their works on the world economic system. Because we (Earth's inhabitants) consume more resources than is sustainable, the MNCs' emphasis on continued growth and competitive advantage is outmoded and ultimately detrimental to all of us. Thus, I would adhere more closely to the LDCs' philosophy.

Review the major causes of the Nestle infant formula controversy.

Nestle and other infant formula producers sought to distribute their products in several tropical LDCs, where sanitary conditions were poor and refrigeration was not widespread. Because of these factors, the formula mixed with local water often caused disease and diarrhea in the babies. In addition, the mothers tended to overdilute the formula, thus diminishing the nutritional content of a given amount of formula. Marketing practices included having women posing as "milk nurses" promote the formula as superior to breast milk. Finally, because they bottle-fed their children, the mothers' milk often dried up, thus making the infants dependent on the formula.

Discuss the previous assumption that global trade would expand continually, the effect of the global economic crisis, and the implications of those events.

Previously, global trade continued to grow rapidly, and it was assumed that such growth would continue. But the economic crisis of2008-09 essentially put the brakes on that growth, slowing global trade. In fact, Fortune magazine predicts that the world is turning inward, and soon, domestic success will again start to deliver growth for companies and nations again.

Describe a situation in which the best course of action for an MNC would be to suspend business activities in a host country where it is currently doing or contemplates doing business. What would precipitate such an action?

Students answers will vary, but should recognize the major causes which would persuade an MNC to abandon its plans to do business in aa host country or its current business operations in the host country. Some of these would include an irreconcilable conflict between the ethical values of the MNCs horne country and those of its host country; a legal requirement for too great a portion of local ownership and control; a culture requiring payment of bribes; confiscation by a host country of the MNCs assets and operations; laws which violate the MNCs ethical principles.

The Alien Tort Claims Act applies to: a. actions that occur on foreign soil. b. actions that occur on U.S. soil. c. actions that occur in the host country where a U.S. firm is based. d. actions that occur in a foreign country where a foreign firm is based.

b. actions that occur on U.S. soil.

All of the following groups have criticized MNC labor practices except a. social activist groups. b. church groups. c. labor unions. d. grassroots organizations.

b. church groups.

The philosophy of Western industrialized nations and their MNCs includes all of these factors except: a. economic growth. b. decentralization. c. efficiency. d. free trade.

b. decentralization.

The advantages of offshoring to developing countries have been: a. increasing b. decreasing c. staying the same d. doubling each decade

b. decreasing

An attempt to assess the underlying moral justifications for corporate actions and the consequent results of those actions are contained in a. social audits. b. ethical impact statements. c. human rights statements. d. envirornnental impact statements.

b. ethical impact statements.

The process by which firms increase their awareness of the influence of international activities on their future and establish and conduct transactions with firms from other countries is known as a. legitimization. b. internationalization. c. market awareness. d. multinationalism.

b. internationalization.

Moving jobs that have historically resided in the horne country to a lower-cost host country is called a. expense minimization. b. offshoring. c. career displacement. d. employment modernization.

b. offshoring.

Regarding the infant formula controversy, Nestle was criticized for all of these actions except: a. distributing free samples. b. providing purified water with the formula. c. promoting bottle-feeding over breast-feeding. d. the use of so-called "milk nurses."

b. providing purified water with the formula.

Payment of a bribe implies some type of a. extortion. b. quid pro quo. c. gambling. d. physical harm to the payee.

b. quid pro quo.

Global trade is: a. speeding up. b. slowing down. c. doing about the same. d. diminishing exponentially.

b. slowing down.

The Foreign Corrupt Practices Act a. governs the operations offoreigu MNCs in the United States. b. makes it illegal to make any type of payment to a foreigu citizen for the purpose of doing business. c. makes it illegal for the representative of an American corporation to offer or pay officials offoreigu governments for the purpose of getting or maintaining business. d. makes it illegal for American goverrnnent officials to accept bribes from foreigu nationals.

c. makes it illegal for the representative of an American corporation to offer or pay officials offoreigu governments for the purpose of getting or maintaining business.

Arguments against bribery include all the following except a. you shouldn't compromise your beliefs. b. bribery is illegal in the United States. c. managers can deal with corrupt governments. d. one should take a stand for honesty.

c. managers can deal with corrupt governments.

Grease payments are all of following except a. monies given to minor officials b. get goods through red tape c. monies given to high ranking officials d. small sums of money

c. monies given to high ranking officials

Which of the following is not an example of corruption? a. bribery b. paying for political favors c. negotiating for the lowest price on a contract d. paying protection money to the police

c. negotiating for the lowest price on a contract

The most challenging situation for an MNC to face is a. operating in socialist countries. b. operating in more than ten countries at the same time. c. operating is less-developed countries. d. operating without a clearly defined strategic plan.

c. operating is less-developed countries.

Ethical issues in the global envirornnent include all of these except: a. product safety. b. human resource management. c. production efficiency. d. marketing.

c. production efficiency.

All of the following are proposed standards for the SA8000 program, to improve sweatshop conditions, except a. allowing workers to form unions. b. prohibiting corporal punishment. c. providing retirement benefits. d. limiting work to a maximum of 48 hours per week.

c. providing retirement benefits.

Which of the following is not an SA8000 standard proposed to improve sweatshop conditions? a. prohibition on employing workers under a certain age b. provision of a safe and healthy working environment c. provision of educational opportunities for workers d. prohibition of discriminatory practices

c. provision of educational opportunities for workers

Peter Drucker has labeled the expanded global marketplace the a. moral free space. b. hypercompetitive economy. c. transnational economy. d. multinational competitive sphere.

c. transnational economy.

One of the things that makes it difficult for U.S. MNCs to deal with sweatshops is that they only occur in foreign countries.

false

U.S. based MNCs are increasingly interested in cases brought under the Alien Tort Claims Act because a. they could allow the finn to recoup some costs of incorporating overseas. b. they could allow the finn to sue foreign fmns on a reciprocal basis. c. they provide an insight in the customs of the host country. d. they are increasingly being named as defendants in tort cases for doing business in countries with repressive governments.

d. they are increasingly being named as defendants in tort cases for doing business in countries with repressive governments.

In the 1970s, because of the differing safety standards around the world, American fmns: a. continued to export drugs that had been banned in the U.S. b. continued to export pesticides that had been banned in the U.S. c. built asbestos manufacturing plants, banned in the U.S., in other countries. d. took all of these actions.

d. took all of these actions.

The ethics and global strategy plan for improving global business ethics has as its central idea a. placing ethics ahead of profits as the number one priority. b. focusing on human rights rather than profits. c. employing only hypernorrns for the MNC's ethical standards. d. utilizing ethical standards as siguificant inputs into top-level strategy formulation and implementation.

d. utilizing ethical standards as siguificant inputs into top-level strategy formulation and implementation.

According to Transparency International's Corruption Perception Index (CPI), underdeveloped countries typically rank low in corruption.

false

Cultural relativism is the best ethical guide for MNCs faced with a moral dilemma in its host country.

false

Global codes of conduct seek to establish domestic principles or guidelines by which businesses might follow while doing business around the world.

false

MNCs often pay their employees in underdeveloped countries less than the average local wage.

false

Most of the ethical problems that arise in international markets are very different than the moral issues encountered in their horne countries.

false

One of the fortunate things about ethical issues in the global market is that they do not affect domestic operations.

false