Business Ethics in an International Environment
Business Be constrained
To what extent should a business be constrained by the moral norms of a society?
A business organization does not exist with the sole purpose of maximizing its profits; it is also supposed to be a socially responsible corporate citizen. Incorporating a sense of respect for social and cultural norms of the society is essential for business organizations if they want to achieve a sustainable future in the industry. Social norms of the society should be followed by every business organization; irrespective of its size, nature of business, type of industry, or geographical location. It becomes even harder for organizations to mold their policies, procedures, and operations according to the cultural, social, and moral norms shared by the members of the society in an international environment.
This paper has been written with a view to discuss the importance of business ethics and moral norms for business organizations when they operate in countries other than their home country. The major focus of the paper is to discuss the organizations’ profit-maximizing behavior that may make their policies and practices unethical or unacceptable in the eyes of society members.
Business ETHICS IN AN INTERNATIONAL ENVIRONMENT
Business ethics refers to the degree to which a business organization avoids doing any illegal, unethical, or criminal activity while operating in a society for profit-maximization purposes. These are basically the principles that discriminate the right from the wrong from the perspective of societal values. It also includes the policies and actions of an organization that keep it safe from any civil law suits and objections. Business ethics vary with respect to the common values, beliefs, and moral norms shared within the society in which a business organization operates and establishes its business.
In an international setup, business organizations have to become more cautious towards social and moral norms of the society while designing and implementing their profit-maximization policies and procedures. Reason being, they have to operate in a totally different business environment where their customers, employees, supply chain members, investors, and other key stakeholders share different values and beliefs. Operating in an international country brings a number of challenges for an organization; especially when it has just entered that country with a view to expand its business operations in a legal and lawful way.
From a critical point-of-view, a business organization must be made to strictly follow the social and moral norms of the society in which it is going to operate its business functions. If an organization ignores these norms and adopts the same policies and practices as they were in its home country, it may have to face strong critics from the foreign country nationals, governmental authorities, and stakeholders. This thing can badly hamper its public image and take the sustainability of its bright future in the industry on a risky side. A sustainable future is only ensured if the organization gives equal concern to the environment in which it operates along with its own strategic benefits. Keeping in view the importance of social responsibility, organizations are now taking steps to make themselves a good corporate citizen and secure their future from expected ethical issues.
In support of this argument, the example of Nestle Corporation can be presented. Nestle is present all over the World with a wide range of product offerings. During the last few decades, Nestle has faced a number of boycotts and criticism in different regions of the world. It was argued that Nestle does not show any respect for the social and moral norms of the societies; rather it is just concerned with increased market share and profit maximization of its business. It was boycotted for its Instant Formula (a substitute for Breast milk), extracting water from an aquifer in Sao Lourenco, issue of unfair trade alternatives, violation of labor rights in Philippines, etc. Although these boycotts and criticism was effectively handled by the Nestle Management, but these black stains are like permanent marks on Nestle’s public image.
A business organization must be constrained by the moral and social norms of the society so that it does not engage itself into any activity that may hamper these society norms and spoil its own public image. The major role in this regard is played by the regulatory authorities of the foreign country in which the business organization enters to establish its business. The regulatory authorities may include the Federal Environmental Protection Department, Health and Care Department, Industrial Relations Department, the Federal Ministry of Commerce and Trade, etc. For example, if a company wants to offer such a product whose level of acceptability is very high in its home country but is totally against the social norms of the society when offered in the new foreign country, the concerned regulatory authority must restrict its entry into this market. Alternatively, it can ask the company to mold or redesign its product so as to meet the life styles, preferences, social values, and moral norms of the people in the target country.
A similar situation was faced by McDonald’s when it tried to offer beef burgers to its customers in the Indian market. McDonald’s totally ignored the fact that Indians worship cows as they consider them as their god. It did not care for the cultural values of the Indian society which resulted in a great financial loss. It also put a negative impact on McDonald’s public image and brand loyalty in this one of the largest countries of the world.
Some profit maximization behaviors of business organizations may be completely unacceptable or illegal in every region of the world. These behaviors must be avoided by organizations if they wish to ensure a sustainable future and a continuous business growth in their industries. For example, an organization may reduce the quality of one of its products in order to save its business costs and expenses. To do this, it will purchase an inferior quality of raw material, use less effective plant and machineries, and give a lesser concern to reliability and durability.
These steps are quite legal as every business concern is allowed to produce its products as per its own standards and policies. But it has been widely observed that organizations never convey this reduction in quality to their customers. They hide this fact in a fear that it may shrink their customer base and negatively impact the brand loyalty and sales volume. Although these steps will reduce business costs for that particular product, but the customers will find a poorer quality product with the price of a high quality product.
Similarly, some organizations are allowed to produce and offer their products for a particular age group of the society, but they totally ignore this thing and sell their products openly to every one. For example cigarettes, alcohols, food supplement products, etc. are sold to people over 18 years of age, but companies do not restrict their business development agents, franchisees, or private outlets from selling these products to children. This profit maximization behavior of business organizations is quite unethical and illegal in the eyes of the society and the Law.
Some business organizations produce a low quality product but promote it on different marketing mediums as a good or high quality product. This behavior is absolutely against the ‘Honesty and Truth’ principle of business ethics. Business organizations are supposed to speak the language of honesty and truth while they conduct their business in a society. This principle applies to every organization; whether it operates at the local level or in the international markets. Marketing and advertising efforts are always good to promote a business to the most potential target market of that business. An organization can display or converse all the characteristics of its products on a promotional medium, but it must not cross the limitations set by the principles of business ethics in its industry and society.
Business ethics may be different when they are discussed for the home country as compared to a foreign country. For example, an organization may utilize the abundant natural resources in its home country without any restrictions. But on the other hand when it enters the new market, it may be totally restricted to consume those natural resources due to their scarcity. If the organization respects the society values, it will avoid using those resources. But if it ignores their high level of scarcity, it will be against the business ethics in that foreign market.
A similar practice is to dump the industrial waste into the sea. Governments of some countries allow the business corporations to dump their waste material into nearby seas. But these corporations must realize that this permission is not given by the government of every country. They must carefully analyze the business environment, the behavior of government towards business organizations, and its concern for environmental protection in the country before entering into that country for business purposes.
Business organizations are supposed to follow the business ethics and respect the social and moral norms of the society in which they conduct their business. However, some organizations ignore these norms by adopting such profit-maximization techniques and behaviors that are illegal and unacceptable in the eyes of their Society and the Law.
Based on the arguments presented in this paper in support of the business ethics principles, it can be concluded that business organizations must be strictly constrained with the social norms of a society so that they do not spoil these norms and values. Those who ignore these norms and keep their business running against them, have to bear heavy losses due to boycotts, criticism, and a stained public image. In order to survive in the industry competitively, ensure a sustainable future, and win the stakeholders’ confidence, business organizations should not use any profit-maximization techniques or behaviors that may be unacceptable or illegal in the eyes of the society. They should keep their operations running within the set ethical limits and boundaries.
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