Ethical Issues in International Business

A case study from Bangladesh
Prepared For
Assoc. Prof. Dr. Rasidah Arshad

Presented ByNazia Choudhury (ZP01424) N.M.Baki Billah (ZP01431) Zihan Mohamed Jailabdeen (ZP10454)

Savar Tragedy
On 24 April 2013, an eight-story commercial building, Rana Plaza, collapsed in Savar, a sub-district in the Greater Dhaka Area, the capital of Bangladesh. The search for the dead ended on 13 May with the death toll of 1,127. Approximately 2,500 injured people were rescued from the building alive. It is considered to be the deadliest garment-factory accident in history, as well as the deadliest accidental structural failure in modern human history. The building contained clothing factories, a bank, apartments, and several other shops. The shops and the bank on the lower floors immediately closed after cracks were discovered in the building. Warnings to avoid using the building after cracks appeared the day before had been ignored. Garment workers were ordered to return the following day and the building collapsed during the morning rush-hour.

Managers at Ether Tex threatened to withhold a month's pay from workers who refused to come to work. Upper four floors had been built without a permit. The structure was potentially not strong enough to bear the weight and vibration of heavy machinery . but garment workers were forced to return the following day.Reasons for this Tragedy Bangladeshi news media reported that inspectors had discovered cracks in the building the day before and had requested evacuation and closure. The shops and the bank on the lower floors immediately closed. their supervisors declaring the building to be safe.

Before After .

This Factory used to manufacture apparels for following companies .

Ethical Issues in International Business Ethical Issues in International Business Obligation of MNC Ethical Dilemma Corruption & Bribery Environment Pollution Savar Tragedy Sweatshops Employment Practices Humanrights .

To shift from thinking in terms of balancing needs to prioritizing needs.Moral obligations of MNC For corporations to make transparent the potential need to engage in assistance and to specify the limit on resources for assistance before that assistance is offered. We have to make international companies understand that while the workers are physically in Bangladesh. To locate managerial responsibility within a broader framework of moral responsibility. they are contributing their labour to the businesses: they are stakeholders. .

corruption. not society at large." Hsieh said.  Company’s main duty is to maximize wealth of shareholders. and the use of power are not always clear cut.Sad But True!  The ethical obligations of a multinational corporation toward employment conditions. human rights. environmental pollution. "The annual revenue of the five largest corporations is more than double the GDP (gross domestic product) of the poorest 100 countries in the world.  Let shareholders decide what to do with the money!  Multinational corporations often operate in countries characterized by unrelenting poverty. .

Poverty Not Implemen -ting Laws America has stronger labor laws than most undeveloped countries. Many slip under the radar of the U. but it is not free of sweatshops. S.Sweatshop Corporate Greed A process where profits are sweated out of workers by forcing them to work longer and faster. . Department of Labor.

and have.Corruption & Bribery International businesses can. the Foreign Corrupt Practices Act outlawed the practice of paying bribes to foreign government officials in order to gain business . gained economic advantages by making payments to government officials In the United States.

 Export orders worth US$ 2.56 million of 32 factories have so far been cancelled due to frequent strikes…timely shipments of export goods worth US$ 9. allegedly leading member of the local Jubo League. the youth wing of the ruling Awami League political party.28 million through seaway have become uncertain also because of shutdowns .  There is a serious deficiency in terms of implementation of labour laws by the owners and government. was owned by Sohel Rana. Rana Plaza.  The building.Political Aspects  The Savar tragedy is the consequence moral bankruptcy of the politicians.

Do you demand that she be laid off? What if she is the sole support of her younger brothers and sisters? What if working will mean she never gets an education? .Ethical Dilemmas Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable Suppose your subcontractor has hired a 12 year old girl……….

Can you tolerate this??? .

The influential American Federation of LabourCongress of Industrial Organizations (AFLCIO) petitioned the US Trade Representative (USTR) to revoke Bangladesh’s Generalized System of Preference (GSP) facility raising concerns on the poor labour conditions. security and labour rights issues Pope Francis has said buyers are treating the garment workers like slave laborers. .Criticism The EU parliament is examining whether to continue duty-free facility for Bangladesh in view of safety.

Benetton.What do you think? Why did they have nothing to say about the retailers–Walmart. H&M. Mango and so on–that created the conditions for “slave labor” in the first place? . GAP. Disney.

but owned by no one. ethical issues arise. is overused by individuals resulting in its degradation  Ethical issues arise when environmental regulations and/or enforcement are inferior to those in the home nation  This might result in higher levels of pollution from the operations of multinationals than would be allowed at home Should a multinational feel free to pollute in a developing nation and is it theright and moral thing to do? .Environment Pollution  When environmental regulations in host nations are far inferior to those in the home nation. The tragedy of the commons occurs when a resource held in common by all.

The fires occurred in a textile factory in the western part of Karachi and in a shoemaking factory in Lahore. killing 315 people and seriously injuring more than 250 .Similar stories Garment factories in the Pakistani cities of Karachi and Lahore caught fire on 11 September 2012. The fires are considered to be the most deadly and worst industrial factory fires in Pakistan's history.

Human Rights Freedom of speech Right to leisure Freedom from torture (Physical abuse) .

Perhaps no other constitution in the world so eloquently proclaims dignity of the workers. .Employment Practices Low wages The Constitution of Bangladesh is also committed to social justice as article 20 proclaims everyone shall be paid for his work on the basis of the principle “from each according to his abilities to each according to his work” and human labor in every form shall become a fuller expression of the human personality.

• Safety issue *dangerous machinery. no insurance policies for labors • Unhealthy working environment *congested work place. insufficient ventilation • Work Overload *working continuously for 10-12 hours . insufficient emergency exits & fire extinguishers. equipments.Cont. insufficient light.

Impact on Stakeholders Government.financial loss both in terms of losing international orders and factory losses (machines. subsidiary industries would fail. the currency would depreciate as capital flees. the economy will collapse–is put forward by those who cannot envision a worker-run industry. and workers form the backbone of the $18 billion industry. Bangladesh would lose one of its largest contributors to foreign exchange. social loss *Bangladesh is the world’s second largest producer of textiles.economic loss. Employers. equipment) .

refusing ‘slave-labor’ made products *Dozens of consumers in the US spoke out against unsafe working conditions found in the factory building.financial loss *Disney has decided to pull out of Bangladesh • Workers. • Buyers.opportunity for grabbing more customers. death • Customers. People also unleashed their anger at retailers that did not have any connections to that specific building. permanent injury. India .unemployment. gaining profit *Many Canadian apparel firms has decided to move to the markets in Indonesia.Cont. but are known to source from factories located in Bangladesh • Competitors. Vietnam.

 Utilitarian  ‘Kantian’  Rights principles  Justice Theory .

• The philosopher Immanuel Kant (1724-1804) introduced the principle that people should be treated as ends and never purely as means to the ends of others o People are not instruments like a machine o People have dignity and need to be respected .

• Rights theories recognize that human beings have fundamental rights and privileges. which transcend national boundaries and cultures • Rights establish a minimum level of morally acceptable behavior • Moral theorists argue that fundamental human rights form the basis for the moral compass that managers should navigate by when making decisions which have an ethical component .

and to protection against unemployment .The notion that there are fundamental rights that transcend national borders and cultures was the underlying motivation for the United Nations Universal Declaration of Human Rights o All human beings are born free and equal in dignity and rights o They are endowed with reason and conscience and should act toward one another in a spirit of brotherhood o Everyone has the right to work. to free choice of employment. to just and favorable conditions of work.

Job Safety Working Environment Safety Working period or time Relaxation Motivation Factors Minimum Wages Allowances .

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