Ethics in international business

a reality check

Wim Wilms
Lecturer, MM-CE

What comes to your mind when you hear

Ethics in international business?

Wim Wilms?

One of my first international projects

Objective of this presentation

If something can be regarded as
(un)ethical, depends!...
on the circumstances

Topic of this presentation:
circumstances, or reality, in business

circumstances simple examples

Look at me!
Netherlands
vs Morocco
Burping:
China vs
Netherlands

First conclusion
Before judging about (un)ethic
behaviour, look at the
circumstances = check reality!
Reality in business = .?

An example: customs

at boarder Jordan-Iraq (2000)

Is this ethical or not?

And this?

What is the reality, or driving force, in

international business?

Money. As a means to an end,

or an end in itself

An example. Imagine
You sell very environmental-friendly
products: energy saving lamps (ESL)

ESLs ARE A CLEAN ALTERNATIVE

FOR NEW POWER PLANTS

Benefits ESLs
There are some 150 Million households in Europe. Suppose
in each of these, three 60W incandescent lamps were
replaced by CFL 11 watt and an average burning time of 5
hours per day .....
That would lead to an annual saving in energy equal to
10 x 600 MW power stations!
Enormous savings would also be achieved in reduction of
CO2 emissions and pollution.

Which benefits would you

communicate to
customers and stakeholders?
Short assignment!

1.
2.
3.
4.

Electric Utility
Consumers
Manufacturer/Trade
Government

This one? Atmospheric pollution

1)

A 60W bulb consumes

@ 1500 hours of usage / year

90.0 kW Hrs

2)

a CFL 11W consumes

=
16.5 kW Hrs
----------------

3)

Energy saved per year per lamp

4)

Energy saved per year for 1 Mln PLEU 11W

73.5 Mln kW Hrs

5)

In thermal generation, every 1000kW Hrs leads to

1 Tone of CO2 emission. Hence the pollution
reduction / year

73500 Tons CO2

6)

Additional SO2 reduction

1470 Tons SO2

73.5 kW Hrs

Or this one? About 90% of a lamps effect on the

environment is through its energy consumption.
INTEGRAL ENVIRONMENTAL EFFECT

90% (by energy consumption)

MATERIALS

PRODUCTION

USAGE

DISPOSAL

All other elements (materials, production, disposal)

contribute to remaining 10%. That includes chemicals,
energy used during production, the pollution by spent
products, packaging, transportation, etc.

1. Electric Utilities BENEFITS (1/2)

Less problems
with peak
load
(blackouts)

1. Electric Utilities BENEFITS (2/2)

Better image
Information about energy saving : whom do you trust most? (1991)
Before Utility CFL
campaign
June 1991

After
December 1991

45%
30%
9%
5%
7%
4%

52%
28%
8%
4%
8%

Utility
Consumer guide
Municipality
Shop
NOVEM *
Other

2. Consumers BENEFITS: MONEY!

Load reduction per point (60W - 11W)

49W

Monthly energy saving at 5 hrs / day

= 30 x 5 x 49 Watt hrs

7.35 kw Hrs

@ US$0.08 / kW Hr, his monetary savings per month

Savings for 24 months of use

=
=

US$0.59
US$14.16

Installment charge per month (eg.) to ESC

US$0.45 only !

Consumers initial payment to Philips Dealer

US$2.00

Total installment recovery @12 x 0.45 to ESC

US$5.40

ESCs final revenue/ lamp

US$7.40 !

With our guarantee of 2 Yrs, the consumer will save another US$ 7.08
in second year as well. So the lamp is virtually free to him !

3. Manufacturer/trade
BENEFITS:
HIGHER SALES
= MORE
PROFITS

Consumer
US$5.40

US$2.00

Philips Dealer

ESC
US$4.50

BENEFITS customers/stakeholders
are all related to money
Utility

decrease peak load, better

image

Government

delay investments in new

powerplants,
less hard currencies needed,

Consumers

lower electricity bills, less direct heat

Manufact.
Trade

more Sales, more profitability

and prominence in society

less use of fuel

What can we learn from this?

Before you start communicating your
ethical messages
first find out the driving forces in
business,
you might want to adapt your
message

We regard Development aid as ethical.

Is it effective?

Downside of giving money

WHO gets the money?!
If you treat people like patients,
they will act like it
It is not sustainable; when you stop
giving, the project usually stops

Good example: microfinance

(Making) money makes the world go
round
If you treat people like competent
business people, they will act like it!
Sustainable, because money is earned,
not merely given away
http://www.youtube.com/watch?v=tE
1l2_j0hDk&feature=related

What happened in Honduras;

can you set up a clean project?

Last but not least:

be careful with judging!

Why did he not want to fight in Vietnam?

China & Olympics: are we not

allowed to judge?!

How does the East look at the West?

2 examples (August 2008):
Russia
Georgia
China and human rights

Listen to Mr. Kishore Mahbubani

http://www.uitzendinggemist.nl/index.php/afleveri
ng?aflID=7867159&md5=d9175f8b99423500e95df
abfb34330c8
Start 23:10 - 27:30 of -29:30 of - 30:10 of - 31:10 of 32:00

Joint conclusion: if you want to improve ethics in

international business, what should you (not) do?