International business Essays (1171 words) - Chevron Corporation

International business Tarhab Motiwala Assignment 3 1. A visiting American executive finds that a foreign subsidiary in a poor nation has hired a 12-year-old girl to work on a factory floor, in violation of the company's prohibition on child labor . He tells the local manager to replace the child and tell her to go back to school. The local manager tells the American executive that the child is an orphan with no other means of support, and she will probably become a street child if she is denied work. What should the American executive do? ANS. This question, illustrating a potentially very real ethical dilemma facing managers working in subsidiaries located in developing countries, is designed to stimulate class discussion. Students should recognize that neither alternativeviolating the company's position on child labor , nor putting the child out on the streetsseems acceptable. In the end, many students may agree that allowing the child to continue to work in the factory is the lesser of the two evils. 2. Drawing upon John Rawls's concept of the veil of ignorance, develop an ethical code that will (a) guide the decisions of a large oil multinational toward environmental protection, and (b) influence the policies of a clothing company to outsourcing of manufacturing process. ANS. According to John Rawls, a decision is just and ethical if people would allow for it when designing a social system under a veil of ignorance. Rawls' veil of ignorance is a conceptual tool that can contribute towards the moral compass that managers can use to help them navigate through difficult ethical dilemmas. 3. Under what conditions is it ethically defensible to outsource production to the developing world where labor costs are lower when such actions also involve laying off long-term employees in the firm's home country? ANS. This question is likely to stimulate some lively discussion, particularly if students have personally felt the impact of this practice. Many American companies are outsourcing not only blue collar work, but white collar positions to the developing world. Students are facing a tenuous job market where positions that they may have sought when they began their college degrees are being "shipped abroad." Some students will argue that companies have to do what is best for all stakeholders, and if that means taking advantage of cheaper labor costs elsewhere, then that is the appropriate strategy. Others however, will probably argue that companies owe a social debt to their home countries, and that loyalty from long term employees should be rewarded. 4. Are facilitating payments (speed payments) ethical? ANS. Although facilitating payments are legal, facilitating payment are questionably from an ethical point of view. In many countries, payoffs to government officials in the form of speed money area part of life. From a practical standpoint, giving bribes, although a little evil, might be the price that must be paid to do a greater good. According to the textbook, several economists advocate this reasoning, suggesting that in the context of pervasive and cumbersome regulations in developing countries, corruption may improve efficiency and help growth. These economists theorize that in a country where pre-existing political structures distort or limit the workings of the market mechanism, corruption in the form of black- marketeering , smuggling, and side payments to government bureaucrats to "speed up" approval for business investments may enhance welfare. However, facilitating payments allows for unfair competition. Smaller businesses have fewer opportunities and less fin ancial possibilities when larger corporations can bribe foreign government officials. In addition, facilitating payments provides a dependence on irregular payments, creates additional risk, and discourages investment. In my opinion, I think facilitating payments are unethical from a business standpoint. 5. A manager from a developing country is overseeing a multinational's operations in a country where drug trafficking and lawlessness are rife. One day, a representative of a local "big man" approaches the manager and asks for a "donation" to help the big man provide housing for the poor. The representative tells the manager that in return for the donation, the big man will make sure that the manager has a productive stay in his country. No threats are made, but the manager is well aware that the big man heads a