International Management: Managing Across Borders and Cultures, Text and Cases, 8/E Deresky solutions manual and test bank

International Management: Managing Across Borders and Cultures, Text and Cases, 8/E Deresky solutions manual and test bank

International Management, 8e (Deresky)

Chapter 2 Managing Interdependence, Social Responsibility, and Ethics

1) In recent years, which of the following has lessened the criticisms of MNCs?

A) increasing economic differences among countries

B) greater emphasis on social responsibility by MNCs

C) limited emphasis on social responsibility and ethical behavior

D) dissolution of MNCs in developing countries

Answer: B

Diff: 2

Chapter: 2

Skill: Concept

Objective: 1

AACSB: Ethical understanding and reasoning abilities

2) Which of the following concepts includes the expectation that MNCs should be concerned with the social and economic effects of their decisions?

A) macropolitical interdependence

B) international social responsibility

C) corporate technoglobalism

D) moral idealism

Answer: B

Diff: 1

Chapter: 2

Skill: Concept

Objective: 2

AACSB: Ethical understanding and reasoning abilities

3) Which of the following significantly increases the complexity of social responsibility and ethical behavior of MNCs?

A) distance between the headquarters and the subsidiaries

B) difficulties posed in training managers from different cultures

C) additional stakeholders associated with the firm's activities

D) international laws, regulations, and moral principles

Answer: C

Diff: 3

Chapter: 2

Skill: Concept

Objective: 2

AACSB: Ethical understanding and reasoning abilities

4) Sundew, an American soda company, opened a number of manufacturing units in a developing country. It employed people from the host country to work in the new units. This move radically lowered the poverty rate in the developing country. In this scenario, Sundew is ________.

A) making questionable payments

B) following moral guidelines

C) making a foreign investment

D) adopting local customs

Answer: C

Diff: 3

Chapter: 2

Skill: Application

Objective: 2

AACSB: Analytic skills

5) Which of the following is a business benefit from corporate social responsibility?

A) revenue decreases

B) cost increases

C) increase in brand value

D) risk assessment

Answer: C

Diff: 2

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Ethical understanding and reasoning abilities

6) Which of the following terms refers to an integration of the business environments in which firms currently operate, resulting from a dissolution of traditional boundaries and from increasing links among MNCs?

A) operative culture

B) global corporate culture

C) corporate integration

D) moral universalism

Answer: B

Diff: 1

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Dynamics of the global economy

7) Moral universalism is the need for a moral standard that is accepted by all ________.

A) corporations

B) governments

C) cultures

D) employees

Answer: C

Diff: 1

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Ethical understanding and reasoning abilities

8) With an ethnocentric approach, a company applies the morality used in its ________.

A) host nation

B) industry

C) general society

D) home country

Answer: D

Diff: 1

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Ethical understanding and reasoning abilities

9) McDonald's, a fast food chain headquartered in the United States, applies the morality it practices in the United States to all foreign countries in which it operates. McDonald's is adhering to ________.

A) moral universalism

B) ethical relativism

C) ethnocentrism

D) geocentrism

Answer: C

Diff: 2

Chapter: 2

Skill: Application

Objective: 3

AACSB: Analytic skills

10) A company subscribing to ethical relativism would implement the morality of the ________.

A) host country

B) shareholders

C) legal system

D) home country

Answer: A

Diff: 2

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Ethical understanding and reasoning abilities

11) Which of the following often forces the MNC to act in accordance with ethnocentric value systems?

A) moral universalism

B) environmental policies in the home country

C) public pressure in the home country

D) media pressure

Answer: C

Diff: 2

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Dynamics of the global economy

12) Creating Shared Value(CSV) creates ________.

A) economic value by creating shared value

B) social value by increasing shared value

C) economic value by creating social value

D) social value by increasing market value

Answer: C

Diff: 1

Chapter: 2

Skill: Concept

Objective: 3

13) Which of the following creates shared value?

A) creating social value by creating economic value

B) disabling local cluster development

C) reconceiving products and markets

D) creating economic value by creating social value

Answer: C

Diff: 2

Chapter: 2

Skill: Concept

Objective: 3

14) The Anti-Sweatshop Code of Conduct requires companies to provide a healthy and safe work environment and ________.

A) to differentiate on the basis of gender

B) to pay the prevailing local minimum wage

C) to reduce environmental footprints

D) to employ forced labor when the situation demands it

Answer: B

Diff: 2

Chapter: 2

Skill: Concept

Objective: 2

AACSB: Ethical understanding and reasoning abilities

15) Which of the following is a policy of the Electronic Industry Code of Conduct (EICC)?

A) Excessive overtime can be propagated if it benefits the company.

B) Child labor can be allowed when there is a shortage of employees.

C) Contract manufacturers should follow some basic environmental requirements.

D) Factory inspection should be limited to the headquarters.

Answer: C

Diff: 2

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Ethical understanding and reasoning abilities

16) Primo is a multinational enterprise based in California that manufactures and sells affordably priced athletic shoes in retail stores around the world. A Primo manufacturing subsidiary in China employs over 20,000 locals. Primo executives recently learned of human rights violations at the firm's China subsidiary. Workers had been forced to work more than 60 hours each week and minimum wage laws were regularly ignored. As a result, Primo executives need to decide if operations in China should be discontinued.

Which of the following, if true, would best support a decision by Primo to remain in China?

A) Primo becomes SA8000 certified.

B) Sales of Primo's competitors drop sharply.

C) U.S. manufacturing jobs decrease in number.

D) More service sector jobs become available in China.

Answer: A

Diff: 3

Chapter: 2

Skill: Application

Objective: 3

AACSB: Analytic skills

17) Which of the following is one of the standards of SA8000?

A) reducing environmental footprints

B) providing a safe work environment

C) not allowing workers to unionize

D) regularly require more than 48-hour workweeks

Answer: B

Diff: 3

Chapter: 2

Skill: Concept

Objective: 3

AACSB: Ethical understanding and reasoning abilities

18) According to the international codes of conduct, the MNE behavior toward the host government is related to ________.

A) economic and developmental policies, laws and regulations, and political involvement

B) political involvement, technology transfer, and environmental protection

C) political involvement, communication practices, and laws and regulations

D) laws and regulations, technology transfer, and communication practices

Answer: A

Diff: 2

Chapter: 2

Skill: Concept

Objective: 5

AACSB: Ethical understanding and reasoning abilities

19) According to the international codes of conduct, MNEs should ________.

A) resolve disputes according to the domestic law of the home country

B) dominate the capital markets in which their operations are based

C) use inexpensive, imported sources for components and raw materials

D) conduct research and development activities in developing countries

Answer: D

Diff: 3

Chapter: 2

Skill: Concept

Objective: 5

AACSB: Ethical understanding and reasoning abilities

 

Chapter 2

MANAGING INTERDEPENDENCE

SOCIAL RESPONSIBILITY, ETHICS, and Sustainability

LECTURE OUTLINE

General Outline

Opening Profile: McDonald’s CSR Experience in China: Interview with Bob Langert, VP for Corporate Social Responsibility

The Social Responsibility of MNCs

Under the Lens: Shareholders Pressure WalMart for Transparency about How its Suppliers Treat Workers

CSR: Global Consensus or Regional Variation?

From CSR to Shared Value?

MNC Responsibility Toward Human Rights

Ethics in Global Management

Comparative Management in Focus: Doing Business in China—CSR and the Human Rights Challenge

Ethics in Uses of Technology

Bribery

Making the Right Decision

Managing Interdependence

Foreign Subsidiaries in the United States

Managing Subsidiary–Host Country Interdependence

Managing Environmental Interdependence and Sustainability

Under the Lens: BP’s Sustainability Systems Under Fire

Management in Action: TerraCycle—Social Entrepreneurship Goes Global

Implementing Sustainability Strategies

Conclusion

Summary of Key Points

Discussion Questions

Application Exercises

Experiential Exercise

Internet Resources

Case Study: Nike’s CSR Challenge

The Video correlation guide can be downloaded from the Instructor

Resource Center. To obtain a user name and password please contact your

local Pearson sales representative.

Learning Objectives

1. To appreciate the complexities involved in the corporation’s obligations toward its various constituencies around the world.

2. To understand the changing perceptions of and demands on corporations doing business in other countries, in particular their responsibilities toward human rights.

3. To acknowledge the strategic role that CSR and codes of ethics must play in global management.

4. To provide guidance to managers to maintain ethical behavior amid the varying standards and practices around the world.5. To recognize that companies must provide benefits to the host country in which they operate in order to maintain cooperation.

6. To discuss the need for corporations to consider sustainability in their long-term plans in order to manage environmental impacts on host locations.

7. To identify the challenges involved in human rights issues when operating around the world.

Opening Profile: McDonald’s CSR Experience in China

The profile explains how difficult it is to create an image of a corporation that runs counter to public perception, especially when that perception is negative on a variety of levels such as promoting waste, unhealthy lifestyles, and a destruction of local culture.

Bob Langert, VP of McDonald’s for CSR remarks that McDonald’s has become proactive in promoting a CSR agenda and that CSR has worked out well for McDonald’s in terms of their image and cost reductions. McDonalds works with NGOs such as the World Wildlife Fund which helps to increase their credibility. The trust factor for McDonalds in China has gotten better as a result.

I. The Social Responsibility of MNCs (see slide 2-6)

A. Global interdependence is a compelling factor of the global business environment, creating demands on international managers to take a positive stance on issues of social responsibility and ethical behavior, economic development in host countries, and ecological protection around the world. Managers today are usually quite sensitive to issues of social responsibility and ethical behavior because of pressures from the public, interest groups, legal and governmental concerns, and media coverage.

B. The United Nations published guidelines for the responsibilities of transnational corporations and called for companies to be subject to monitoring, verification, and censure for unethical business practices.

C. Though many companies agree with the guidelines, they resist the notion that corporate responsibility should be regulated and question where to draw the line between socially responsible behavior and the concerns of the corporation’s other stakeholders. Issues of social responsibility continue to center on poverty and lack of equal opportunity around the world, the environment, consumer concerns, and employee safety and welfare.

D. The concept of international social responsibility is the expectation that MNCs concern themselves about the social and the economic effects of their decisions regarding activities in other countries.

E. The opinions on the level of social responsibility that a domestic firm should demonstrate range from two extremes—one is that the only responsibility of a business is to make a profit, and the other that companies should anticipate social needs and try to solve them. Exhibit 2-1 (page 42) shows that managers are faced with not only considering stakeholders in host countries, but also with weighing their rights against the rights of domestic shareholders.

Under the Lens

Illustrating that shareholders are not always focused only on profits, the New York City Pension Funds, a minority shareholder in Walmart, is pressuring the company to require its suppliers to give annual reports about working conditions in their factories. Labor activists in China, for example, state that Walmart makes suppliers compete for the company’s business on the basis of price. “Walmart pressures the factory to cut its price, and the factory responds with longer hours or lower pay,” said a Chinese labor official, who declined to be named for fear of punishment. “And the workers have no options”. For its part, Walmart contests these claims, saying that suppliers are required to meet Walmart’s standards or lose their contracts; and also that it would be very difficult to get suppliers to give comprehensive annual reports on working conditions.

CSR: Global Consensus or Regional Variation?

A. With the growing awareness of the interdependence of the world’s socioeconomic systems, global organizations are beginning to recognize the need to reach a consensus on what should constitute moral and ethical behavior around the world. Some think a consensus is forming due to the development of a global corporate culture (see slide 2-9)—“corporate activity should be motivated in part by a concern for the welfare of some non-owners, and by an underlying commitment to basic principles such as integrity, fairness, and respect for persons.”

B. Corporate Social Responsibility (CSR)—an integration of the business environments in which the firm operates. Although it is very difficult to implement a generalized code of morality (see slide 2-11) and ethics in individual countries, such guidelines do provide a basis of judgment regarding specific situations. Bowie used the term moral universalism to describe a moral standard that could be accepted by all cultures. Under the ethical approach of ethnocentrism, a company would apply the morality used in its own home country. A company subscribing to ethical relativism would take the local approach to morality appropriate in whatever country it is operating.

C. Creating Shared Value (CSV)—that is, expanding the pool of economic and social value—“leverages the unique resources and expertise of the company to create economic value by creating social value.” By viewing the growth, profitability, and sustainability of the corporation as intermeshed with societal and economic progress in the markets in which it operates, companies such as Walmart, Google, and Intel are creating shared value by: “reconceiving products and markets; redefining productivity in the value chain; and enabling local cluster development” (clusters of related business in a local area in which the company operates). Walmart, for example, has reduced its environmental footprint through its revamping of the plastic used in its stores, and by reducing its packaging; it also has cut 100 million miles from its delivery routes, saving $200 million even as it shipped more products.

D. MNC responsibility toward human rights

1. What constitutes “human rights” is clouded by the perceptions and priorities of people in different countries (see slide 2-12). Although the United States often takes the lead in the charge against what they consider human rights violations around the world, other countries point to the homelessness and high crime statistics in the United States.

2. The best chance to gain some ground on human rights around the world would be for large MNCs and governments around the world to take a unified stance. A number of large image-conscious companies have established corporate codes of conduct for their buyers, suppliers, and contractors, and have instituted strict procedures for auditing their imports. Reebok and Levi have established codes of conduct for their buyers, suppliers, and contractors. In addition some companies are uniting with others in their industry to form their own code for responsible action. One of these is the Electronic Industry Code of Conduct (EICC) which comprises H-P, Dell, IBM, Intel and 12 other tech companies who have agreed on policies banning child labor, excessive overtime, and so forth.

Comparative Management Focus: Doing Business in China—CSR and The Human Rights Challenge (see slide 2-14, 2-15)

China’s growth engine continued to drive the global economy in 2012 (albeit more slowly), propelled by China’s $586 billion economic stimulus plan enacted during the global economic downturn. However, although this growth has lifted millions of Chinese out of poverty, many people and their basic rights remain largely behind, and there has been a heavy cost to the environment as energy usage increases and causes pollution. Growth in higher skilled jobs and in services is now well under way. However, there is continuing concern among MNCs about the pitfalls of operating in China—among them are the uncertain legal climate; the difficulty of protecting intellectual property there; the repression of free speech; and the difficulty of monitoring, let alone correcting, human rights violations in factories.

Freedom of information took a particularly hard hit in October 2011 when the media reported that “Whether spooked by popular uprisings worldwide, a coming leadership transition at home or their own citizens’ increasingly provocative tastes, Communist leaders are proposing new limits on media and Internet freedoms that include some of the most restrictive measures in years.”

The latest censorship moves come as a disappointment because it had seemed as though China was becoming more conscious of the need to improve its image regarding CSR as it takes a larger economic role on the world stage; indeed, its membership in the WTO obliges the country to act in concert with the policies and values of a free market.

Country/Culture—China: A series of extremely useful DVDs giving insight about Chinese business is “On the Frontlines: Doing Business in China”: www.chinadoingbusiness.com

Teaching Tip: An interesting movie to explore Chinese culture is the Chinese produced Beijing Bicycle (2001) directed by Wang Xiaoshuai.

E. Codes of conduct

1. A considerable number of organizations have developed their own codes of conduct; some have gone further to group together with others around the world to establish standards to improve the quality of life for workers around the world. Companies such as Avon, Sainsbury Plc., Toys ‘R’ Us, and Otto Versand have joined with the Council on Economic Priorities (CEP) to establish SA8000 (Social Accountability 8000, on the lines of the manufacturing quality standard ISO9000). Their proposed global labor standards would be monitored by outside organizations to certify if plants are meeting those standards, among which are the following:

a. Do not use child or forced labor.

b. Provide a safe working environment.

c. Respect workers’ rights to unionize.

d. Do not regularly require more than 48-hour work weeks.

e. Pay wages sufficient to meet workers’ basic needs.

Teaching Tip: Send your students on an electronic scavenger hunt. Ask students to find firms’ statements on ethics or codes of conduct from corporate Websites. To make it more interesting for students you may choose companies with operations near your school or those companies that produce your students’ favorite brands. Have students assess the codes of conduct given the guidelines in Exhibit 2-2.

Teaching Resource: Have students visit the Website of Social Accountability International (www.sa-intl.org) to learn more about the SA 8000 standards.

2. There are four international codes of conduct (see slide 2-10) that provide some consistent guidelines for multinational enterprises (MNEs). These codes were developed by the International Chamber of Commerce, the Organization for Economic Cooperation and Development, the International Labor Organization, and the United Nations Commission on Transnational Corporations. Getz has integrated these four codes and organized their common underlying principles, thereby establishing MNE behavior toward governments, publics, and people. This synthesis of guidelines is shown in Exhibit 2-2 (page 48)

II. Ethics in Global Management (see slide 2-17)

A. Globalization has multiplied the ethical problems facing organizations. However, business ethics have not yet been globalized. Attitudes toward ethics are rooted in culture and business practices. For an MNC, it is difficult to reconcile consistent and acceptable behavior around the world with home-country standards. One question, in fact, is whether it should be reconciled. Perhaps more scrutiny should have been applied to those global MNCs headquartered in the United States such as Enron and WorldCom that so greatly defrauded their investors, employees, and all who had business with them.

B. International business ethics refers to the business conduct or morals of MNCs in their relationships to all individuals and entities. Such behavior for MNCs is based largely on the cultural value system and the generally accepted ways of doing business in each country or society. Those norms are based on broadly accepted guidelines in religion, philosophy, professions, and the legal system.

C. The American approach is to treat everyone the same by making moral judgments based on general rules. Managers in Japan and Europe tend to make such decisions based on shared values, social ties, and their perception of obligations.

D. The biggest single problem for MNCs in their attempt to define a corporate-wide ethical posture is the great variation of standards of ethical behavior around the world. U.S. companies are often caught between being placed at a disadvantage in doing business in some countries by refusing to go along with accepted practices, or being subject to criticism at home for going along with them to get the job done. Exhibit 2-3 (see slide 2-18) provides a conceptual model explaining important elements of this challenge.

E. Transparency International, a German organization, conducted research on the level of corruption among public officials and politicians in various countries as perceived by business people, academics, and risk analysts. The 2010 Corruption Perceptions Index (see slide 2-19) is provided in Exhibit 2-4.

Teaching Resource: Have students visit the Website of Transparency International

www.transparency.org and have them find out how the corruption index is determined.

F. Ethics in Uses of Technology

1. The ethical use of technology around the world poses a considerable challenge for companies to have consistent practices because of the varied expectations about the use of technological devices and programs as they intersect with people’s private lives. This conflict is illustrated by the electronic data privacy laws in Europe. The EU Directive on Data Protection guarantees European citizens absolute control over data concerning them. A U.S. company wanting personal information must get permission from that person and explain what the information will be used for. The company must also guarantee that the information won’t be used for anything else without the person’s consent.

G. Bribery (see slide 2-22)

1. A specific ethical issue for managers in the international arena is that of questionable payments. These are business payments that raise significant questions of appropriate moral behavior either in the host nation or in other nations. Such questions arise out of differences in laws, customs, and ethics in various countries, whether the payments in question are political payments, extortion, bribes, sales commissions, or “grease money”—payments to expedite routine transactions. For the sake of simplicity, the text categorizes all these different types of questionable payments as some form of bribery.

2. The dilemma for Americans operating abroad is how much to adhere to their ethical standards in the face of foreign customs, or how much to follow local ways in order to be competitive.

3. Americans must be able to distinguish between harmless practices and actual bribery, between genuine relationships and those used as a cover up. To help them make this distinction, the Foreign Corrupt Practices Act (FCPA) of 1977 (see slide 2-24) was established, which prohibits U.S. companies from making illegal payments or other gifts or political contributions to foreign government officials for the purposes of influencing them in business transactions. The goal was to stop MNCs from contributing to corruption in foreign government and to upgrade the image of the United States and its companies operating overseas. The penalties include severe fines and sometimes imprisonment.

4. There are three questions (see slide 2-25) to ask of ethical corporate actions:

a. Is it legal?

b. Does it work (in the long run)?

c. Can it be talked about?

Bribery fails each test.

5. Many MNCs have decided to confront concerns about ethical behavior and social responsibility by developing worldwide practices that represent the company’s posture. (see slide 2-26)

-Having a global compliance system that shows that employees have understood, and signed off on, the legal obligations regarding bribery and corruption in the countries where they do business.

-Making employees aware of the penalties and ramifications for lone actions, such as criminal sanctions.

-Having a system in place to investigate any foreign agents and overseas partners who will be negotiating contracts.

-Keeping an effective whistle-blowing system in place

Among those policies (see slide 2-27) are the following:

a. Develop worldwide codes of ethics.

b. Consider ethical issues in strategy development.

c. Given major, unsolvable, ethical problems, consider withdrawal from the problem market.

d. Plan regular assessment of the company’s ethical posture.

H. Making the right decision

1. What is the right decision for a manager operating abroad when faced with questionable circumstances of doing business? The first step would be to consult the laws of both the home and host countries. If legal consultation does not provide you with a clear answer, you should consult the company’s code of ethics. If you are still unsure of what to do you have the right and obligation to consult your superiors. When the situation is not clear-cut, ask yourself what are the rights of the various stakeholders involved and how those rights should be weighed. In the end, follow your own conscience and try to operate with integrity.