Ethics in International Business

Rhea Pancholi
TYC-025
AG-1

What are Ethics in International Business?

Ethics in international business refers to the principles, values, and standards of conduct that
guide the behavior of individuals and organizations engaged in global commerce. It encompasses
a range of considerations, including moral principles, cultural differences, legal requirements,
and corporate social responsibility. Here are some key aspects of ethics in international business:

1. Respect for Local Laws and Regulations: International businesses must adhere to the laws
and regulations of the countries in which they operate. This includes compliance with labor laws,
environmental regulations, tax laws, and other legal requirements.

2. Fair Treatment of Stakeholders: Ethical business practices involve treating all stakeholders
fairly and with respect. This includes employees, customers, suppliers, shareholders, and the
communities in which the company operates.

3. Transparency and Accountability: Companies should strive for transparency in their

business operations, including financial reporting, supply chain practices, and interactions with
government officials. Accountability mechanisms should be in place to address any wrongdoing
or misconduct.

4. Corporate Social Responsibility (CSR): International businesses have a responsibility to

contribute positively to the social, economic, and environmental well-being of the communities
in which they operate. This may involve initiatives such as sustainable business practices,
philanthropy, and community development projects.

5. Respect for Human Rights: Businesses should uphold the fundamental human rights of all
individuals, both within their own operations and throughout their supply chains. This includes
ensuring fair labor practices, preventing discrimination and harassment, and respecting the rights
of indigenous peoples and other marginalized groups.
6. Cultural Sensitivity: International businesses must be sensitive to cultural differences and
norms in the countries where they operate. This includes respecting local customs, traditions, and
values, and avoiding actions that may be perceived as culturally insensitive or offensive.

7. Anti-Corruption Practices: Bribery, extortion, and other forms of corruption undermine the
integrity of international business transactions and can have harmful social and economic
consequences. Companies should implement anti-corruption policies and procedures to prevent
and detect corrupt practices.

8. Environmental Sustainability: Businesses have a responsibility to minimize their

environmental impact and promote sustainable development. This may involve reducing carbon
emissions, conserving natural resources, and implementing environmentally friendly practices
throughout the supply chain.

9. Ethical Marketing and Advertising: Companies should engage in truthful and ethical
marketing and advertising practices, avoiding deceptive or misleading tactics that could harm
consumers or undermine trust in the brand.

10. Ethical Decision-Making: Ethical leadership is essential for fostering a culture of integrity
and accountability within international businesses. Leaders should lead by example, promote
ethical behavior, and provide guidance and support to employees facing ethical dilemmas.

Overall, ethical behavior in international business is essential for building trust, maintaining
reputation, and fostering sustainable long-term success. By prioritizing ethical considerations in
their operations, companies can contribute to positive social and economic outcomes while
mitigating risks and enhancing their competitive advantage in the global marketplace.

Case Study : Unethical Behavior of RyanAir:

Ryanair, one of Europe's largest low-cost airlines, provides an interesting case study for
examining ethics in international business. As with any multinational corporation, Ryanair
operates in a complex environment that presents various ethical challenges and considerations.
Here's an analysis of ethics in Ryanair within the context of international business:

1. Labor Practices: Ryanair has faced criticism for its labor practices, including its treatment of
employees and relationships with labor unions. The airline has been accused of employing
aggressive tactics to prevent unionization among its workforce and of offering low wages
and poor working conditions. These issues raise concerns about fair treatment of
employees and adherence to labor standards, which are critical ethical considerations in
international business.
Ryanair has faced numerous legal challenges and controversies related to its labor practices and
relationships with labor unions. For instance, in 2018, Ryanair pilots in several European
countries went on strike to protest low pay and poor working conditions. The strikes resulted in
flight cancellations and disruptions, leading to legal disputes and negotiations between the airline
and pilot unions. Even in 2023, RyanAir Pilots went on strike for the same reason. RyanAir also
swiftly implemented staff layoffs when the aviation industry began to feel the effects of the
COVID-19 pandemic.

-The Brussels Times

2. Customer Service and Transparency: Ryanair has also been criticized for its customer
service practices, including hidden fees, overbooking, and frequent flight cancellations. While
the company's focus on cost-cutting has enabled it to offer low fares, critics argue that these
practices may compromise transparency and customer satisfaction, raising questions about
ethical business conduct and the balance between profitability and customer welfare. Ryanair has
faced legal action and regulatory scrutiny over its customer service practices, including issues
such as flight cancellations, overbooking, and misleading advertising. For example, in 2018, the
UK's Civil Aviation Authority (CAA) initiated enforcement action against Ryanair for allegedly
failing to properly inform passengers of their rights during widespread flight cancellations.

3. Environmental Impact: Like other airlines, Ryanair faces scrutiny over its environmental
impact, particularly concerning carbon emissions and sustainability. The airline industry is a
significant contributor to greenhouse gas emissions, and Ryanair's high-volume, low-cost
business model has been criticized for prioritizing profitability over environmental concerns.
Ethical considerations in this area include efforts to reduce emissions, invest in sustainable
aviation technologies, and address the environmental consequences of air travel.
4. Corporate Governance: Ryanair's corporate governance structure has also been a subject of
scrutiny. The company's founder and former CEO, Michael O'Leary, has been known for his
outspoken and sometimes controversial leadership style. While strong leadership can be
beneficial for business success, concerns have been raised about issues such as board
independence, executive compensation, and transparency in decision-making, highlighting the
importance of ethical leadership and corporate governance in international business. Michael
O'Leary, Managing Director of Ryanair, which is a testament to the complex interplay between
financial success and ethical responsibility. O'Leary is on the brink of receiving a staggering 100
million euro bonus, a figure that has not only captured media attention across Europe but also
raised questions about the ethical implications of such substantial executive compensation. While
it is undeniable that a contractually agreed bonus should be honored, the magnitude of O'Leary's
potential bonus raises questions about the sustainability and fairness of such executive
remuneration. Good corporate governance necessitates balancing financial incentives and
ecological and sustainable practices.

5. Regulatory Compliance: Like all international businesses, Ryanair must comply with laws
and regulations in the countries where it operates. This includes regulations related to safety,
security, labor, competition, and consumer protection. Ensuring compliance with these
regulations is not only a legal requirement but also an ethical imperative, as it helps to protect the
rights and well-being of employees, customers, and other stakeholders. Paul Polman stated that
Ryanair was among the earliest companies to reject compliance with the Paris Agreement. Also,
every country has some guidelines regarding the fuel requirement in airlines but RyanAir never
adheres to that. It is known for traveling with limited fuel to “save costs”.

6. Corporate Social Responsibility (CSR): RyanAir's approach to corporate social

responsibility has been a subject of debate. While the company has taken steps to improve its
environmental performance and contribute to charitable causes, critics argue that its focus on
cost-cutting and aggressive business tactics may undermine its commitment to social
responsibility. Ethical considerations in this area include promoting transparency, accountability,
and ethical conduct in all aspects of the business, as well as actively contributing to the welfare
of communities and the environment. In June, 2023 RyanAir’s chief pilot was sacked for
unacceptable behavior towards female pilots and flight crew. This questions the reputation of
RyanAir.
-The Independent UK
References:

● Anderseditor. (2020, May 25). Paul Polman: Ryanair is one of the most unethical and

carbon-polluting companies in Europe. A Greener Life, a Greener World.

https://agreenerlifeagreenerworld.net/2020/05/25/paul-polman-ryanair-is-one-of-the-most-

unethical-and-carbon-polluting-companies-in-europe/

● Ryanair Business Ethics. (n.d.). UKEssays.com.

https://www.ukessays.com/essays/business/ryanair-business-ethics-3677.php

● Times, T. B. (n.d.). Ryanair pilots in Belgium threaten to strike on 15-16 July.

Www.brusselstimes.com. Retrieved March 11, 2024, from

https://www.brusselstimes.com/585963/ryanair-pilots-in-belgium-threaten-to-strike-on-july-

15-16

● ‌Davies, R. (2017, September 22). Ryanair staff brand company a “disgrace” over handling of

issues. The Guardian; The Guardian.

https://www.theguardian.com/business/2017/sep/22/ryanair-pilots-michael-oleary-

cancellations

● ‌Ryanair chief pilot sacked for “unacceptable behaviour” towards female pilots. (2023, June

14). The Independent. https://www.independent.co.uk/travel/news-and-advice/ryanair-pilot-

sacked-aidan-murray-b2357299.html