D270 Ch 5

78 Starbs stores in Saudi Arabia; how many are for women and families?

1

top 4 least corrupt nations

New Zealand, Denmark, Finland, Norway

don't adjust moral values to country you're in

Normativism

The law is a good basis for ethical behavior because it embodies __

local cultural values

__ net capital flow if it results in outflows to send back profits back to the home country

negative

__ net export effect if it results in a decline in the generation of exports

negative

__ net import effect occurs if it results in an increase in imports

negative

__ is the easiest figure to calc bc of controls maintained by most central banks

net capital flow (c-c1)

__ are difficult to assess because of the time lag between i) the inward flow of investment funds ii) the subsequent outward flow of remitted earnings from that investment

net capital flows

Managers need to exhibit __—principles of honesty and fairness

ordinary decency

subsidiaries can sometimes feel like getting pulled in two different directions by __ and __

parent co; home government

in level 2 of ethical behavior, conventional, conform to

peers and social laws

__ net capital flow if the FDI results in capital inflows to build plants and capacity

positive

__ net export effect if the FDI results in the generation of exports

positive

__ net import effect occurs if the FDI results in the substitution of local production for imported products

positive

On the import side, the balance-of-payments is __ if the FDI results in a substitution for imports and __ if it results in an increase in imports

positive; negative

Level 3 of Moral Development

postconventional (aka autonomous or principled)

Level 1 of Moral Development

preconventional

in this level of moral devel, children learn what is right and wrong but don't necessarily understand why their behavior is right or wrong

preconventional

__ lobby governments to regulate MNE activities both at home and abroad

pressure groups

__ may reflect the interests of any stakeholder group

pressure groups

Rejecting the temptation to receive bribes comes from __ reinforced by corporate standards of conduct that prohibit bribes

principled behavior

WeChat poses a __ issue bc if hackers get password, have access to everything

privacy

as defined by NGO Transparency International, corruption is "the abuse of entrusted power for __"

private gain

Chinese super-app that can do almost everything, including chatting, restaurant reviews, investing

WeChat (allows WeChat to calc an insane amt of personal info)

if keep up level of plastic use/disposal, the weight of trash will be equivalent to __

all of the fish in the ocean

goal of state capitalism is to __

drive economic prosperity

It is not hard to determine whether or not the actions of MNEs affect societal conditions (t/f)

false

ethical behavior doesn't vary country to country (t/f)

false

even when an individual moves abroad, moral reasoning becomes is simple (t/f)

false (is very complicated bc consequences may vary due to legal differences, and what is right or wrong may depend to an extent on local values)

The FCPA applies not only to companies registered in the United States but also to any foreign company __

quoted on any U.S. stock exchange

__ holds that ethical truths depend on the values of a particular society and may vary from one society or country to another

relativism

adjust moral values to country you're in

relativism

__ own the company, STAKEholders are much more important than that

shareholders

__ want additional sales and increased productivity (which result in higher profits and returns)

shareholders

Companies must satisfy the demands of different groups of stakeholders:

shareholders, employees, customers, suppliers, society

in the __ term, for example, group aims often conflict.

short

exception to U.S.A. Foreign Corrupt Practices Act

speed money (pay more $ to get products into country faster)

main difference between GNI and GNP is that GNI adds in:

the payments that occur between countries (GNP just looks at domestic production of a country - economists felt didn't give good sense of what's coming in and out of that country)

state capitalism is when government's are working behind the scenes and it reduces political freedom bc

they are trying to speed the process up to drive the economy faster by limiting opponents

1/2 of Brazilian government officials charged, 1/3 of congress members charged, President arrested (t/f)

true

It is possible that behaviors under Level 2 and Level 3 are the same as long as individuals accept the laws where they live, or the codes of conduct of the companies they work for (t/f)

true

Many actions elicit universal agreement on what is right or wrong, but other situations are less clear (t/f)

true

The effect of an individual MNE may be positive or negative. (t/f)

true

VW offered $500 to each owner whose car was affected, but not enough costing them $250 million - customers demanding buy back of car (t/f)

true

Values differ from country to country and between employees and companies (t/f)

true

young Syrian refugees don't go to school and work in factories in Turkey to provide for their families (t/f)

true

Starbucks did nothing wrong legally (t/f)

true (followed local laws and customs; backlash from within Saudi Arabia and across the globe)

basic equation for analyzing the effect of FDI on a host country's balance of payments: B=

(m - m1) + (x - x1) + (c - c1) (B= balance-of-payments effects m= import displacement m1= import stimulus x= export stimulus x1= export reduction c= capital inflow for other than import and export payment c1= capital outflow for other than import and export payment)

understanding the Balance-of-Payments Effect of FDI: B=

(m-m1)+(x-x1)+(c-c1) m= import displacement m1= import stimulus x= export stimulus x1= export reduction c= capital inflow c1= capital outflow

MNC stakeholders (ppl have to make happy) include:

- Host & Home Country Governments - customers - employees - local communities - NGOs and Environmental Groups - suppliers - shareholders

losses for host countries of MNCs

- Lock out local firms - Destroy local entrepreneurship - Bid for labor and resources

gains for host countries of MNCs

- New jobs - Transfer of knowledge and technology - Save jobs (acquisition)

Is law a good justification of ethical behavior? iffy bc

- Some things that are unethical are not illegal - sometimes a law can be a good basis for ethical basis because it embodies local cultural values

MNE ownership advantages

- investment (links to local cos; increased productivity; improved efficiency; capital formation) - HR (training; employment; mgr skills) - technology (R&D; Industrial upgrading; new capital equip) - trade (export expansion; lower-cost imports) - environment (access to clean tech; pollution - abatement skills; cowide standards)

only 1 in __ plastic bottles are actually recycled, rest goes to landfill

5

The argument that both home and host countries may gain from FDI rests on two assumptions:

1) resources aren't necessarily being fully employed 2) capital and technology can't be easily transferred from one industry to another

From a business standpoint, ethical behavior can be instrumental in achieving one or both of two possible objectives:

1. To develop competitive advantage 2. To avoid being perceived as irresponsible

4 reasons companies need to act responsibly - because unethical and irresponsible behavior:

1. could result in legal sanctions 2. could result in consumer boycotts 3. could lower employee morale 4. could cost sales because of bad publicity

3 levels of ethical behavior

1. preconventional 2. conventional 3. autonomous/postconventional

By end of 2016, VW paid over $__ Billion in compensation to customers and government fines - but will lose more bc of lawsuits

18

VW has fallen to #__ car maker in world bc used software in diesel emissions to score better on emissions tests to work around laws

2

in Bolivia, __% of children ages 7-14 are working

20

Which of the following statements is most likely true about the preconventional level of moral development? A. Individuals learn what is moral but not why such behavior is moral. B. Individuals behave morally because they fear negative repercussions from their peers. C. Individuals learn how to conform to society's values through observation. D. Individuals behave morally because they believe such actions are right.

A. Individuals learn what is moral but not why such behavior is moral.

Since the late 1980s, the growing emergence of freer markets has been powered by the realization that ____. A. economic growth is directly related to economic freedom B. economic growth has a limited effect on the standard of living C. adoption of free market principles contributes to social injustices D. centrally planned economies are best designed to deliver progress

A. economic growth is directly related to economic freedom

According to the text, which of the following has resulted from GE's Ecomagination initiative? A. rising profitability for many GE products B. increasing doubt among GE's foreign partners C. reducing investments by GE due to poor returns D. improving pollution levels near GE plants in China

A. rising profitability for many GE products

__ of public officials takes place to obtain government contracts or to get officials to do what they should be doing anyway

Bribery

__ are payments or promises to pay cash or anything of value.

Bribes

Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________. A. standardized procedures implemented by the state B. high economic growth rates for the long term C. privatization of many factors of production D. violent political and legal upheaval

C. privatization of many factors of production

__ involve these four dimensions: • Setting a global policy that must be complied with wherever the company operates • Communicating the code to employees, suppliers, and subcontractors • Ensuring that policies are carried out • Reporting results to external stakeholders

Codes of conduct

__: - covers 180 countries - measures perceived levels of corruption in the public sector - aggregates scores from 13 independent research organizations - each country is assigned a score and rank - Score and rank are a basic comparison of two countries; do more research for IB evaluation

Corruption Perceptions Index

aspects that cause what's right and wrong to differ by country

Cultural dimensions, individualism vs collectivism, religious values, economic circumstances, laws, social values, etc.

__ want higher-quality products at lower prices

Customers

__ want safer workplaces and higher compensation

Employees

the __'s (ETI) trading initiative base code identifies the following issues: 1. Employment is freely chosen. 2. Freedom of association and the right to collective bargaining are respected. 3. Working conditions are safe and hygienic. 4. Child labor shall not be used. 5. Living wages are paid. 6. Working hours are not excessive. 7. No discrimination is practiced. 8. Regular employment is provided. 9. No harsh or inhumane treatment is allowed.

Ethical Trading Initiative

The __ Act is U.S. legislation that makes bribery illegal; applies to domestic or foreign operations and to company employees as well as their agents overseas

Foreign Corrupt Practices

production from a foreign co in the US like Toyota is NOT included in __ (GDP/GNI)

GNI

__ results from the release of greenhouse gases that trap heat in the atmosphere rather than allowing it to escape

Global warming

patch of solid waste the size of Texas floating in the currents of the North Pacific gyre, mostly consisting of plastics

Great Pacific Garbage Patch

the __, which was signed in 1997, committed signatory countries to reducing the emissions to 5.2 percent below 1990 levels between 2008 and 2012

Kyoto Protocol

__ for ethical behavior may not be sufficient because not everything that is unethical is illegal

Legal justification

__ are active in prodding companies to comply with certain standards of ethical behavior

NGOs

The __ Agreement involving 187 countries targeted policies to reduce GHG emissions in order to keep the global average temperature to 2°C above pre-industrial levels

Paris Climate

where did government scandal in Brazil begin

Petrobras (largest oil supply in Brazil)

3 levels of moral development:

Preconventional, Conventional, Postconventional (aka autonomous or principled)

__ legislation in the United States is helpful in combating corruption through more effective corporate governance, financial disclosure, and public accounting oversight

Sarbanes-Oxley

__ religious law requires separate entrances and dining rooms for men and women/families or single-sex businesses

Saudi Arabian

Starbucks scandal about being sexist by not allowing women to enter was in what country?

Saudi Arabie

Other Areas in which IB is Under __ Today: • Environmental SUSTAINABILITY • ENERGY CONSERVATION and sustainability • PHARMACEUTICAL/Medical Industry Issues • LABOR issues (Sweatshops and more) -Low wages, child labor, poor work conditions, long work hours, right to unionize, etc • LACK of IP Protection

Societal Scrutiny

__ would like to see more jobs, increased corporate taxes, more corporate support for social services, and more trustworthy behavior on the part of corporate executives

Society

4 most corrupt nations

Somalia (most corrupt), South Sudan, Syria, Afghanistan

new car manuf leader, after VW

Toyota

as shown in the Syrian refugee video, no child labor laws in __

Turkey

Boeing (a US co) produces planes in the US and Germany; planes produced in BOTH countries are included in __'s GNI, but are NOT included in __'s GNI

US; Germany

Boeing (a US co) produces planes in the US and Germany; planes produced in __ are included in US GDP, but planes produced in __ are NOT included in US GDP

US; Germany

Boeing (a US co) produces planes in the US and Germany; planes produced in __ are included in US GNP, but planes produced in __ are NOT included in US GNP

US; Germany

German planes produced in the US __ (are/are not) included in US GDP

are

The formula to determine the balance-of-payments effect is simple but the data used must be estimated and are subject to __

assumptions

net capital flow

c-c1

greatest challenge for an emerging market

can they sustain their growth (but each is different)

net capital flows=

capital inflow - capital outflow (c-c1)

humans have used more plastic in the past 10 years then in the past __

century

Some companies avoid operating in countries where __ is employed, whereas others try to establish responsible policies in those same countries

child labor

Starbs received criticism for false product labeling of ___ milk

coconut

A major component in a company's strategy for ethical and socially responsible behavior is a __

code of conduct

Petrobras scam consisted of government working with Petrobras leaders by getting contracts with other cos at inflated prices and splitting $ b/n __

construction cos, Petrobras, and Brazil gov officials

Level 2 of Moral Development

conventional

in this level of moral devel, we learn role conformity, first from our peers (including parents), then from societal laws

conventional

Bribery is one facet of __

corruption

How can cos avoid __: - Follow the laws of the home and host countries - know and follow international, regional and national rules and laws - use international 'watch dog' organizations to find what orgs saying abt country doing business in - U.S.A. Foreign Corrupt Practices Act (US companies, in their worldwide operations, are FORBIDDEN to engage in activities that are ILLEGAL in the USA; exception is speed money) - Internal Code of Conduct for employees

corruption

The abuse of entrusted power for private gain

corruption

effects of __ include: • LOWER ECONOMIC GROWTH and per capita INCOME LEVELS • erodes the AUTHORITY OF GOVERNMENT which condones it • damage the REPUTATION of the country and the MNEs from there (locally and globally)

corruption

The determinants of corruption include what 3 forces:

cultural, legal, and political

in level 1 of ethical behavior, preconventional, children learning right from wrong, but __

don't know why

the __ approach asserts that we make moral judgments or engage in moral reasoning independent of consequences; it implies that actions are right or wrong per se (in other words, ethics teaches that "people have a responsibility to do what is right and to avoid doing what is wrong")

deontological

method of examining moral values in which moral judgments are made and moral reasoning occurs independent of consequences

deontological approach

major labor issues that MNEs get involved in through FDI or purchasing from independent manufacturers in __ countries are fair wages, child labor, working conditions, working hours, and freedom of association

developing

really only one law in every country:

don't hurt anyone

VW used tech to go around government __ requirements

emissions

Sustainability is no longer just good business practice; new businesses are emerging that are combining the idea of __ and __

environmental responsibility; profitability

Although initial capital flows to the host country are positive, they may be negative in the long run if capital outflows eventually __ the value of the investment

exceed

net export effect=

export stimulus - export reduction (x-x1)

societal scrutiny with ethics and the environment

global warming (Paris Climate Agreement), pollution, raw materials

bribes can be categorized in 3 ways depending on the amounts of money and the sector where it operates

grand, petty, and political

the total market value of all the goods and services produced by the workers and capital WITHIN A NATION'S BORDERS (DOESN'T MATTER WHAT COUNTRIES OWN THE COMPANIES)

gross domestic product (GDP) (production from cos like foreign Toyota within the US ARE included)

__ has replaced gross national product (GNP) and is used more frequently

gross national income

the value of all the production that's going on in a domestic economy COMBINED WITH all the income that that country receives from other countries MINUS the $ that the country has to pay OUT to other countries

gross national income (GNI)

The balance-of-payments effects in terms of capital flows for FDI are usually: • positive for the __ country initially and negative for the __ country • negative for host country and positive for the home country later

host; home

Social responsibility requires __, which is subjective and ambiguous

human judgment

net import effect=

import displacement - import stimulus (m-m1)

for China internet more like __ bc political party blocks many sites like FB, YouTube, Google

intranet

#ShameOnStarbs connects __ groups - gender equality - concerns over Islam and Sharia law - racism - sustainability - Saudis

interest

in level 3 of ethical behavior, autonomous/postconventional, individuals

internalize what is morally right

Several good reasons for using the __ to justify ethical behavior: 1. The law embodies many of a country's moral principles, making it an adequate guide for proper conduct. 2. The law provides a clearly defined set of rules, and following it at least establishes a good precedent for acceptable behavior. 3. The law contains enforceable rules that apply to everyone. 4. Because the law represents a consensus derived from widely shared experience and deliberation, it reflects careful and wide-ranging discussions.

law

According to the __, an individual or company can do anything that isn't illegal. However, there are five good reasons why this is inadequate: 1. Some things that are unethical are not illegal. Some forms of interpersonal behavior, for example, can clearly be wrong even if they're not against the law. 2. The law is slow to develop in emerging areas, and it takes time to pass and test laws in the courts. Moreover, because laws essentially respond to issues that have already surfaced, they can't always anticipate dilemmas that will arise in the future. 3. The law is often based on imprecisely defined moral concepts that can't be separated from the legal concepts they underpin. 4. The law often needs to undergo scrutiny by the courts. This is especially true of case law, in which the courts create law by establishing precedent. 5. The law simply isn't very efficient. "Efficiency" in this case implies achieving ethical behavior at a very low cost, and it would be impossible to solve every ethical behavioral problem with an applicable law.

legal argument

In the __ term, all of these aims must be adequately met

long

loss for home countries for MNC

loss of jobs

net import effect=

m-m1

gain for home countries for MNC

new jobs to manage international ops

__ holds that there are indeed universal standards of behavior that, although influenced by different cultural values, should be accepted by people everywhere

normativism

the collection of constituencies that an organization must satisfy to survive in the long run

stakeholders

If all __ aren't adequately met, there's a good chance that none of them will be, especially if each stakeholder group is powerful enough to bring operations to a standstill

stakeholders' desires

VW scandal discovered in 2015 bc of

student group at University of Virginia

meeting the needs of the present without compromising the ability of future generations to meet their own needs

sustainability

with the __ approach, decisions are based on the consequences of the action

teleological

When individuals engage in moral reasoning, they use one or the other of these methods, or possibly some mixture of the two

teleological and deontological

method of examining moral values that holds to the idea that decisions are based on the consequences of the action

teleological approach

there are __ among stakeholders bc can't please everyone

trade-offs

The philosophy, goals, and actions of each MNE are __

unique

a consequences-based theory of moral reasoning that means that "an action is right if it produces, or if it tends to produce, the greatest amount of good for the greatest number of people affected by the action. Otherwise, the action is wrong"

utilitarianism

tendency of media to be circulated rapidly

virality

Growth and employment effects are not a __ because MNEs may use resources that were unemployed or underemployed

zero-sum game