Chapter 8: ETHICS AND

INTERNATIONAL BUSINESS
AND TRADE
Presented by”

Maira Kresseth Ritchelyn

Mercado Bacatano
Kurt Adrian
Saquilayan
ETHICS
LESSON 8.1

Presented By:
Kurt Adrian Saquilayan
Ethics and Virtue
The field of ethics, also called moral
philosophy, is a discipline, a branch of
philosophy that seeks virtue.

Virtue is conformity of one's life and

conduct to moral and ethical principles. It
deals with morality about what is
considered "right" and "wrong" behavior
for people, organizations, governments,
and countries.
Business Ethics
Business ethics is the set of moral rules,
principles, and standards that govern how
businesses operate, how business decisions
are made, and how people are treated. It
refers to the rules, principles, for deciding
what is morally right or wrong when doing
business; the system of moral and ethical
beliefs, values, and principles that guide
behaviors and decisions of a business
organization and the individuals within that
organization.
International Business Ethics
International business ethics emerged
quite late globally compared to the
business ethics that came up in the 70s. It
was only in the late 1990s, when economic
developments occurred on a worldwide
scale, that international business ethics
came to the fore. International business
ethics is important to aid in regulating
international business and trade and create
winning situations for international
marketing participants.
International Business Ethics
Ethical decision-making is tricky;
therefore, it is imperative that
there be a specific decision-
making framework that will help
decision makers make ethical
decisions. Generally, this
framework is embodied in a
company's code of ethics.
Code of Conduct/ Code of Ethics
Organizations have their code of conduct or code of
ethics that embodies principles defined by the
organization, reflecting the organizational culture of
the company, to help employees conduct business
properly and any violation may mean disciplinary
remedies like suspension or even termination. An
organization may also extend its code of
ethics/conduct to partners, suppliers, customers,
subcontractors, and contractual counterparts.

If the violation of a company's code of conduct

violates a law or a governments regulation, it can be
punishable by the government agencies concerned
like the Securities and Exchange Commission (SEC) or
the Bureau of Internal Revenue (BIR).
Code of Conduct/ Code of Ethics
Professionals like doctors, accountants,
lawyers, and teachers have their code of
ethics and violation will mean banning the
violator from practicing the profession. If
the violator violates a law or a government
regulation, it can be punishable by the
government agencies concerned like the
Professional Regulation Commission (PRC),
Board of Accountancy (for accountants).
Philippine Bar Association, Inc. (for
lawyers), and other government agencies in
charge of the different professions.
Code of Conduct/ Code of Ethics
Groups within the government, like
parliamentary and other legislative bodies,
also adopt a code of conduct or a code of
ethics. The enforcement and sanctioning is
separate from any other actual legal
proceedings. Thus, someone may be both in
violation of the law and in violation of
company ethical standards. Alternatively,
someone may be in violation of company
ethical standards, but not in violation of the
law.
Issues handled falling under
Business Ethics in the IME
Child labor involves using children to do jobs for companies or
small business owners. Some cottage industries employ
children as part of their labor force.

Transfer pricing involves how entities price products/services

that they market to affiliates and subsidiaries. Most of these
affiliates and subsidiaries are in other countries.

Fair trade movement involves agreement between and among

countries to encourage free trade and remove barriers to entry.
Issues handled falling under
Business Ethics in the IME
Bioprospecting is defined as the collection, research, and
commercialization biodiversity for new medicines and other useful
I natural products (perfumes, cosmetics, agro-chemicals, and
functional foods). Bioprospecting projects are meant to facilitate
scientific and technology transfer between global pharmaceutical
firms and source-country public and private laboratories.

Biopiracy refers to the usage of bio-resources by foreign

corporations and other organizations without appropriate
authorization from the countries and individuals concerned
without compensation, It is the practice of exploiting naturally
occurring genetic or biochemical material in commerce.
Ethics
Ethics is not the same as feelings, Feelings provide important information
for our ethical choices. Some people have highly developed habits that
make them feel bad when they do something wrong, but many people feel
good even though they are doing something wrong. And often our feelings
will tell us it is uncomfortable to do the right thing if it is hard.

Ethics is not following the law. Being ethical does not always mean being
legal. While a good system of law does incorporate many ethical standards,
law can deviate from what is ethical. Law can become ethically oppressive,
as some totalitarian regimes have made it.

Totalitarianism, an extreme form of authoritarianism, isa system of

government with the state holding absolute control and under which the
people are allowed virtually no authority.
Ethics
Ethics is not religion. Many people are not religious, but ethics applies to
everyone. Another factor worth considering for international marketing
participants is ethical traditions. Ethics, tradition, and religion do not always
concur.

Ethics is not following culturally accepted norms. Some cultures are quite
ethical, but others are blind to certain ethical concerns. Slavery is not ethical,
but was practiced centuries ago. Doing what is the norm may not be ethical.

Ethics is not science. Social and natural science can provide important data to
help us make better ethical choices. But science alone does not tell us what we
ought to do. Science may provide an explanation for what humans are like. But
ethics provides reasons for how humans ought to act. And just because
something is scientifically or technologically possible, like biotechnology
advances (cloning), it may not be ethical to pursue and do it.
RIMBERIO

ETHICAL APPROACHES TO
DECISION
MAKING
LESSON 8.2

Presented By:
Ritche Lyn Bacatano
 Utilitarian Approach
Which action results in the most good
and least harm.

Right-based Approach
Which action respects the rights for

DIFFERENT everyone involved.

ETHICAL Fairness or Justice Approach

Which actions treats people fairly
APPROACHES Common Good Approach
Which actions contributes most to the quality
of life of the people affected
Virtue Approach
Which actions embodies the character that
strengtens value
UTILITARIARISM

Utilitarianism is an ethical theory that

determines right from wrong by
focusing on outcomes. It is a form of
consequentialism. The theory was
conceived in the nineteenth century
by Jeremy Bentham and John Stuart
Mill to help legislators determine
which laws were morally best.
RIGHT-BASED APPROACH

The second important approach to ethics is

the rights-based approach, which has its
roots in the philosophy of the eighteenth-
century thinker Immanuel Kant who focused
on the individual's right to choose for himself
or herself. According to Kant, what makes
human beings different from mere things is
that people have dignity based on their free
will and they have the right to make choices
and they have a fundamental moral right to
have these choices respected.
FAIRNESS OR JUSTICE
APPROACH

The fairness or justice approach or

the social justice approach to ethics
has its roots in the teachings of
Aristotle, Plato, and Cicero. The
theory hypothesizes that everybody
should be treated fairly or in the
same way and not showing favoritism
and discrimination.
COMMON GOOD
APPROACH
More recently, contemporary ethicist
John Rawls defined the common
good as "certain general conditions
that are...equally to everyone's
advantage." The common good
approach refers to actions that are
taken or policies that are put into
place in order to benefit not only a
certain group of individuals, but the
society as a whole.
VIRTUE APPROACH

Virtue ethics (or virtue theory) is an

approach that emphasizes an
individual's character as the key
element of ethical thinking, rather than
rules about the acts themselves
(deontology) or their consequences
(consequentialism). Virtue ethics is a
philosophy developed by Aristotle and
other ancient Greeks. It is the quest to
understand and live a life of moral
character.
RICH AND
POOR
COUNTRIES
LESSON 8.3

Presented By:
Maira Kresseth Mercado
Trade relations between developed and underdeveloped countries
have always been the bone of contention and controversy. The
business orientations of the multinational companies (MNCs)
which establish manufacturing and selling in countries where
labor and resources are cheaper is seen as a form of exploitation.

Giovanni Efraín Reyes Ortiz (2012), in his International

Trade Conditions: Challenges for Less Developed Countries,
has extensively studied the relations between less
developed countries and the rich industrialized countries.
According to him, most underdeveloped and developing
countries are rich in natural resources— agriculture,
metals, and minerals—they excel in the production of
primary products, but due to the highly competitive and
volatile nature of market conditions for primary products,
these underdeveloped and developing countries claim they
are exploited by buyers in the highly developed world.
RESEARCH AND
DEVELOPMENT (R&D)

Research and development (R&D) gives

rise to technological innovation, but less
developed and developing countries have
limited resources to spend on R&D. In
addition, the governments of the less
developed and developing countries have
other priorities—the war against narcotics,
the war against poverty, and the war
against civil struggles in the countryside.
R&D, education, and science and
technology are not included in these
priorities.
International Reyes also highlighted the role played by various
international organizations which are concerned with

Organizations the process of economic development. These

organizations include the World Bank (WB) the
International Monetary Fund (IMF) and the World
Trade Organization (WTO), as well as the United
Nations Conference on Trade and Development
(UNCTAD) and numerous others.

The UNCTAD is the United Nations' body responsible

for dealing with development issues, particularly
International trade— the main driver of economic
development.
International
Monetary Fund
The flow of aid from developed to developing countries is another
issue worth taking into consideration. Developing countries are
claiming a right to a more stable share of the gross national product
(GNP) of developed countries in the form of aid, preferably
administered multilaterally and with no strings attached.

When a country joins the IMF, it pays a subscription, the amount of

money it pays into the IMF as a member. Based on its subscription,
a country is granted a quota which defines how much money it can
borrow from the IMF.

The gold tranche is the proportion of a member's line of credit at

the lMF that can be automatically borrowed. It equals 25% of the
country's Subscription to the IMF. The remaining portions of a
country's line of credit called credit tranches, are more difficult to
obtain.
New International
Economic Order
The New International Economic Order (NIEO) was a
transnational governance reform initiative promulgated as
a United Nations declaration in 1974. Its fundamental
objective was to transform the governance of the global
economy to redirect more of the benefits of transnational
integration toward "the developing nations"— thus
completing the geopolitical process of decolonization and
creating a democratic global order of truly sovereign
states
General Agreements
to Borrow (GAB)
The General Agreements to Borrow (GAB) was a standing
agreement that was established by the IMF in 1962 that
allowed them to borrow money from 11 (not 10, but called the
G-10) of the world's strongest economies, including Belgium,
Canada, France, Germany, Italy, Japan, the Netherlands,
Sweden, the United Kingdom, and the United States and
Switzerland, which plays a minor role.

The GAB countries that faced financial difficulties that

threatened to stall economic growth or harm the international
monetary system, were able to turn to the IMF for
supplemental liquidity. The IMF, in turn, relied on funds offered
through the GAB to help those in need of capital.
Difficulties Faced by
Developing Countries
The difficulties faced by commodity exporters in general,
and by developing countries, in particular, are heavily
dependent on commodity export earnings. For these less
developed countries, the expansion in supply has also
reflected the pressure to increase a wide range of
commodities exports to answer the need to service large
foreign debts.

In the capital markets, the developing countries have paid

extremely high real interest rates because of their economic
weakness and because of perceptions of the risks of lending
to them. They were viewed as default risks.
 Weaknesses of
Developing Countries
The weakness of developing countries is also evident in the markets for
services, where they would probably earned a lot, if they did not lack the
necessary access to capital and finance to be able to compete on an equal
footing.

In the labor market, immigration controls were instituted. In addition, tariff

and non-tariff barriers restricted the flow of goods and services. Technology
markets are also closely guarded.
ETHICAL
VIRTUES
LESSON 8.4

Presented By:
Kurt Adrian Saquilayan
Business ethics laws and regulations dictate
a standard of conduct that represents going
beyond doing what is legally right and going
to acting what is morally right. Moral norms
are imperative; legal norms are mandatory.
It is our moral obligation not to do harm to
others and the environment. Legally, people
are punished for doing harm to others and
the environment. Morally, people are
expected not to harm anyone, even animals
and the environment. Slapping someone
may not be legally punishable, but it is
morally irresponsible.
According to encyclopedia2.thefreedictionary.com (2021), a legal norm
consist of three parts:

1. the hypothesis, which sets forth the conditions under which a person
should be guided by the given legal norm;

2. the disposition, which indicates the rights and duties of the participants in
relations arising under the circumstances envisioned in the hypothesis; and

3. the sanction, which defines the consequences for persons who violate the
prescriptions of the particular legal norm.

In criminal law, a legal norm usually consists of two parts:

1. a disposition (the elements of a criminally punishable action); and;

2. a sanction (the penalty for committing the particular act).

The main function of any legal rule is
to suggest a certain behavior; to try
to guide and regulate human
activity, as well as to press upon the
human conscience the threat of
punishment or the actual
punishment that must merit any
conduct contrary to what has been
established by it. In general, legal
arguments are not applicable to
ethical discussions.
On the other hand, the prescriptions of morality
refer only to the conscience of each individual.

Moral norms are a guide to good behavior, based

on the customs, habits, and beliefs that guide the
behavior of people, about what should be done
because it is good and right and what should not
be done because it is bad and wrong. Moral norms
are spontaneous and have a subjective character,
arising from the subject's own consciousness; so
they are unilateral and autonomous.

Ethicists generally discuss morality, not legality.

The word itself, "ethics," is derived
from the Latin word "ethos," which
defines the moral values and
characteristics of a society. It means
more than merely following the letter of
the law, because laws can always be
changed, but instead following the
codes of conduct developed through a
culture's religious beliefs, philosophies,
and even the special requirements of
specific
Integrity as a firm adherence to a code of
especially moral or artistic values:
incorruptibility. It is the quality of being
honest and having strong moral principles
that you refuse to change.

Brenda Barnes, CPA, of b2-mgmt.com

says that integrity should be the basic
building blocks for doing business.
However, she says that it is not that
simple for two reasons:
1. The innate human ability to rationalize
behavior
2. Everyone defines integrity differently
More than just a corporate
responsibility, integrity is a personal
responsibility as well. Integrity is
the quality of being honest and
having strong moral principles;
moral uprightness. Having integrity
means being straightforward and
honest in all relationships, business
or otherwise. A person with
integrity consistently adheres to
ethics and moral principles
Truth is in accordance with fact or reality. A fact is verifiable and
cannot be denied. Truthfulness breeds trust. No one can trust a liar.

Truth-telling relates to the disclosure of information in a respectful

and compassionate way. Generally, when someone tells the truth,
people trust him.

Louei Ali (tradeready.ca 2021) holds that it comes down to "trust"

for building long-term international business relationships. He
maintains that trust is the result of behaving credibly, setting the
right expectations, listening and adapting, and sharing knowledge.
It leads to successful business transactions which are repeated for
many years. It is the foundation for long-lasting and fruitful
relationships.
Justice, equity, or fairness means treating everyone
fairly, equally, and the same, regardless of origin, race,
creed, sex, age, culture, and the like. There is equity if
there is an equitable distribution of opportunities so
that no one is left behind.

Justice is a principle with the following four

components:

a. distributive justice equitable allocation of resources

b. respect for the law whether an act is or is not against
the law
c. rights special advantages with correlative duties
d. retributive justice making right when a wrong has
been perpetrated
Prudence is the act of being careful,
wisdom in the way of caution and
provision; discretion; carefulness. The
word originates from the Old French
word "prudence," which derives from
the Latin word "prudential" meaning
"foresight" or "sagacity"

Foresight means the ability to

anticipate what might happen in the
future. Sagacity means the quality of
being discerning, sound in judgment,
and farsighted; wisdom.
In accounting, prudence is
associated with conservatism
which means that an entity
should not overestimate its
gains, but should always provide
for all possible losses. It means
an entity must not overestimate
its revenues, assets, and profits
and must not underestimate its
liabilities, losses, and expenses.
 Fidelity
Fidelity is faithfulness to a person, cause, or beliet,
demonstrated by continuing loyalty and support. In business,
whether domestic or international. stakeholders are looking
for fidelity on those they interact with. Companies want
customers who are loyal. Customers are loyal when they trust
the company. Fidelity refers to meeting reasonable
expectations regarding respect, competence. subscribing to a
professional code of conduct, following policies and
procedures. and honoring agreements
 Transparency
Transparency in science means the quality that makes it possible to see
through something. A transparent glass shows what is inside the glass.
Transparency in ethics means not hiding something from parties engaged
in a transaction. Everything is laid out on the table.

Jolene Lampton (sfmagazine.com 2021) believes that transparency is the

bedrock of ethics. She believes that transparency can be challenging for
leaders when their company faces adversity, but it is essential for
fostering an ethical culture.
In accounting and finance, transparency means companies are
responsible for certain disclosures in their financial statements. The
general accounting principle of full disclosure means all material
information that will affect the decision of the reader of the financial
statements should be disclosed.
 Social
Responsibility

Social responsibility means that businesses, in addition to

maximizing shareholder value, should act in a manner that
benefits society. Social responsibility in business, also
known as corporate social responsibility (CSR), pertains
to people and organizations behaving and conducting
business ethically and with sensitivity towards social,
cultural, economic, and environmental issues
THAT'S ALL
THANK YOU!