3.

1Globalisation
3.2 Global Business Network
3.3 Developing Business Ethics in
Global Economy
3.4 Relationship-Among Business,
Business Ethics and
Business Development
3.5 Role of Business Ethics in
Developing Civilized
Society
 Introduction

 Globalisation is a process which diminishes the necessity of a common and

shared territorial basis for social, economic, and political activities, processes,
and relations.

 The implications of globalisation for a national economy are many. Globalisation

has intensified interdependence and competition between economies in the
world market.

 This is reflected in Interdependence in regard to trading in goods and services

and in movement of capital.

 Globalisation of business is something that has been debated for years. The
ethical questions that arise are part of the problem with globalisation.
 3.1Globalisation
A) Meaning :
Globalization implies the opening of local and nationalistic perspectives to a broader outlook
of an interconnected and interdependent world with free transfer of capital, goods, and
services across national frontiers. Globalisation in a literal sense is international
integration. It can be described as a process by which the people of the world are unified
into a single society.

B) Definition :

1) Shrawan Kumar Singh :

"Globalisation means the global reach of capital to all the world's resources and markets.“

2) Russi Mody :
"Globalisation in a two way traffic first it means free competition high productivity using new
technology and second, selling goods in a single market of the whole world."
 3.1Globalisation

C) Factors affecting Globalization:

 3.1Globalisation
C) Factors affecting Globalization:
1) Falling Trade Barriers :
Liberalization of trade has been recently accelerated as a result of free trade agreements,
emergence of trade blocs and the facilitating roles played by international organizations such
as the WTO, International Monetary Fund (IMF) and the World Bank.

2) Political Reforms have Opened up New Frontier :

The former communist nations of Eastern Europe are now open to doing business around the
world. Millions of people in these countries are now able to take advantage of goods and
services that global commerce provides in an open and free market.

3) More Developing Nations Joining the Bandwagon of Global Business :

Several countries such as Taiwan, Thailand, Malaysia, Singapore and Indonesia have been
growing rapidly in recent years in addition to the industrial prowess of Japan and South Korea
in the Asia-Pacific region.

4) Emergence of New Technologies and Businesses Spanning Continents :

New technologies and business based on them such as computer hardware
and software, pharmaceuticals, and communications that have worldwide
investments and markets.
 3.1Globalisation

D) Ethical Issues Related to Globalization

 3.1Globalisation
D) Ethical Issue Related to Globlisation :
1) Intense Competition :
At the same time, competition is becoming more and more intense. How can individuals act
ethically under these conditions? It is beyond dispute that the social framework or social order is
important for acting ethically.

2) Jobs :
One of the main issues concerning the globalisation of the planet is that it has put many jobs in
first world countries in jeopardy. "Mind workers," such as engineers, lawyers and doctors,
generally have the ability to find jobs and demand high prices for their work in first world
countries.

3) Brain Drain :
The "brain drain" effect of globalisation is another ethical issue; it refers to talented or educated
people in third world countries who leave their countries of origin for better opportunities in first
world countries.

4) Natural Resources :
Tropical rainforests around the world, predominantly in Brazil, Indonesia and Papua New Guinea,
are being felled for fuel and cattle-grazing pastures. Apart from wildlife concerns, this reduction
in rainforests will have a huge effect on oxygen levels for the entire planet.
 3.1Globalisation
D) Ethical Issue Related to Globlisation :
5) Health Issues :
Easier means of transportation can easily lead to the spread of highly infectious diseases. This
is, however, no modern phenomena; in the 14th century, the Black Death spread from Asia to
Europe, wiping out approximately 50% of Europe's population.

6) Financial Issues :
Due to an increasingly globalized world, there is a growing market and financial
interdependency between nations.

7) Corruption :
Companies making payments to secure business that they would not otherwise obtain are guilty
of illegal actions under the U.S. Foreign Corrupt Practices Act.

8) Human Rights :
The country into which a company is expanding may not respect basic human rights. The
ethical issue facing company is need to know whether their presence supports the current
abusive regime or it can serve as a catalyst for human rights improvements.

9) Pollution :
Not all foreign countries have environmental legislation that makes it illegal to pollute. Companies
may discharge harmful materials into the environment and avoid costly anti-pollution measures.
 3.1Globalisation
E) Measures to Prevent Ethical Issues in the way of Globalization
1) Need to Develop Universal Ethical Standards :
The growth of international business urged the multinational
corporations to develop universal ethical standards. One
fundamental reason underlying this fact may be the continuous
search for new competitive advantages by multinational companies.

2) Establish Codes of Ethics :

To establish codes of ethics are essential but not sufficient to
conduct ethical behavior. Managers and employees must have
the ability, motivation and organisational support to learn and
implement the code of ethics as well as international law and
codes of conduct and therefore must be trained for this purpose.
 3.1Globalisation
E) Measures to Prevent Ethical Issues in the way of Globalization
3) Need of Legal Framework :
Globalization must now be regarded as a fact. But for business ethics, this fact poses a severe
problem: a legal framework that would be able to govern the interactions within the global society
in both an efficient and ethical way is only beginning to be developed.

4) Try to Use Ethics More Positively :

Rather than emphasizing on unethical behaviors organizations must try to use ethics more
positively by setting principles such as those dealing with justice, freedom, honesty, beauty, order
and loyalty and employee training must include all these topics, whether the country is
economically developed or underdeveloped.
 3.1Globalisation
F) Business Ethics in Global Economy

1)

2)

3)

4)

5)

6)
 3.1Globalisation
F) Business Ethics in Global Economy
1) Culture as a Factor in Business :
One of the most difficult concepts to understand and apply to the global business
environment is culture. Because customs, values, and ethical standards vary from person to
person, company to company, and even society to society, ethical issues that arise from
international business activities often differ significantly from those that evolve from domestic
business activities.

2) Global Values :
Many theorists have tried to establish a set of global or universal ethical standards. Values
such as truthfulness, integrity, fairness, and equality-across the globe. When applied to global
business, these values suggest a universal set of ethics.

3) Role of the Multinational Corporation in Global Economy :

Multinational corporations (MNCs) are public companies that operate on a global scale
without significant ties to any one nation or region. MNCs represent the highest level
of international business commitment and are characterized by a global strategy of
focusing on opportunities throughout the world.
 3.1Globalisation
F) Business Ethics in Global Economy
4) Human Rights :
Corporate concern for global human rights emerged in the 1990s as news stories depicting the
opportunistic use of child labor, payment of low wages, and abuses in foreign factories helped
reshape our attitudes about acceptable behavior for organizations.

5) Price Discrimination :
A major ethical issue in international business is how products sold in other countries are
priced. When a firm charges different prices to different groups of customers, it may be
accused of price discrimination. Differential pricing is legal if it does not substantially reduce
competition or if it can be justified on the basis of costs.

6) Bribery :
In many cultures, giving bribes-also known as facilitating payments-is an acceptable
business practice. In Mexico, a bribe is called la mordida, and South Africans call it dash.
In the Middle East, India, and Pakistan, baksheesh, a tip or gratuity given by a superior,
is widely used.
 3.1Globalisation
G) Impact of Globalisation on Indian Economy :
1) Common Impact:
a) Economic Growth :
India's economic growth has been high, exports have boomed, incidence of poverty has been
reduced, employment has surged, begging by India for economic aid has stopped, long-term
inflation rate has gone down, scarcity of goods have disappeared, the quality of products
available have improved substantially and overall India has become progressively vibrant and
internationally competitive.

b) Growth of Service Sectors :

Service sector is the lifeline for the social economic growth of a country.

c) Urbanization and Privatization :

The real reason for the growth of the service sector is due to the increase in urbanization,
privatization and more demand for intermediate and final consumer services.

d) Growth of Primary and Secondary Sectors :

In advanced economies the growth in the primary and secondary sectors are directly dependent on
the growth of services like banking, insurance, trade, commerce, entertainment, etc.
 3.1Globalisation
G) Impact of Globalization on Indian Economy :
e) Liberalization And Globalization :
Major measures initiated as a part of the liberalization and globalization strategy in the early
nineties included scrapping of the industrial licensing regime, reduction in the number of areas
reserved for the public sector.

2) Positive Impact of Globalization in India:

a) Greater Competition:
Greater competition among producers resulting from Globalization is a great advantage to
consumers as there is greater choice before them. Consumers now enjoy improved quality and
lower prices for several products.

b) Investment of MNC :
Due to globalization many MNCs have increased their investments in India. This means
thousands of people are getting highly paid jobs and, enjoy much higher standards of living
than was possible earlier.

c) Supply of Raw Material :

Local companies supplying raw materials, to these industries have prospered.
 3.1Globalisation
G) Impact of Globalisation on Indian Economy :
d) Investment in new Technology :
Top Indian Companies have benefit from increased competition. They have invested in newer
technology and production methods and raised their production standards.

e) Emergence Of New Companies :

Some Indian companies have gained from successful collaborations with foreign companies.
Large Indian companies have emerged as multinationals like Tata Motors.

f) Opportunity For Indian Companies :

Globalization has also created new opportunities for Indian companies providing services,
particularly in the IT field. Services such as data entry, accounting, and administrative tasks,
are now being done cheaply in India and exported to the developed countries.
 3.1Globalisation

G) Impact of Globalisation on Indian Economy :

3) Negative Impact of Globalization in India :
There is also a negative side to globalization in India. For a large number of small producers
and workers globalization has posed major challenges. Let us look into reasons for this
negative impact:
a) Rising Competition :
Liberalization of Foreign Trade policies allowed the import of electronic goods at a very
cheap cost. Local producers of electronic goods were not able to meet with this challenge.
MNC’s flooded the market with quality products at a cheap price.

b) Uncertain Employment :
In order to compete in the world market exporters try and cut labour costs. Workers are
denied their fair share of benefits as manufacturers are always on the look out for cheaper
labour.
 3.2 Global Business Network
A) History:

GBN was founded in Berkeley, California in 1987 by a group of friends including Peter
Schwartz, Jay Ogilvy, Stewart Brand, Napier Collyns, and Lawrence Wilkinson.

The company grew to include a core group of "practice members", and over a hundred
"network members," provocative thinkers from a diverse number of fields, such as social
media expert Clay Shirky, anthropologist Mary Catherine Bateson, economist Aidan Eyakuze,
musician Brian Eno, biotechnologist Rob Carlson, and China scholar Orville Schell.

For its first 15 years, corporate clients would pay up to $40,000 annually in order to gain
access to this network of advisers through a private website, attend meetings on emerging
rends and training seminars, and receive a selection of literature about future issues each
month.
 3.2 Global Business Network
B) Concept :
Global Business Network (GBN) is a web site of a consulting firm the Global Business Network for
users interested in planning corporate management strategies. The Network was created to offer
members consulting, scenario developments for business strategies and learning opportunities on
current issues which influence business management.

C) Benefits From Global Business Network:

1) Access to resources and capabilities,
2) Access to knowledge,
3) Increasing the innovativeness of the company and its products,
4) Cost reduction,
5) Reducing operational risk,
6) Increasing bargaining power against other entities,
7) The benefits of specialization,
8) Economies of scale and increased market range
 3.3 Developing Business Ethics in Global
Economy
A) Developing Business Ethics in Global Economy
1) Universal Ethical Standards:
The growth of international business urged the multinational
corporations to develop universal ethical standards. One fundamental
reason underlying this fact may be the continuous search for new
competitive advantages by MNC.

2) Emerging for Agreement:

Global ethics is supposed to emerge from agreement among societies,
corporations and other organizations regarding the appropriate ethical
frameworks and behaviors in a given situation.

3) Relativism or Absolutism:
Business ethics behavior of firms in a global context can be
described in two different frameworks: relativism or absolutism.
Relativism refers to behave which is applicable to the saying "when
in Rome, do as theRomans do".
 3.3 Developing Business Ethics in Global
Economy
B) Importance of Business Ethics in Global Economy
 3.3 Developing Business Ethics in Global
Economy
B) Importance of Business Ethics in Global Economy:
1) Ethical Awareness :
Ethical awareness spread during the era when companies' frauds are seen very often appearing
in the newspaper and media around the globe including major stock listed corporations.

2) Common Policies :
Different nations now share common policies of interest to strengthen ties with other nations and
their businesses then tend to grow more rapidly with the understanding of mutual trade
agreements to help them in economic growth and development.

3) Improve Quality Of Production And Services :

Global impact of changing business trends to improve quality of production and services costs
the companies their skilled workers and resources available at high cost, which are covered by
ripping off the unwanted labour from their human resources.

4) Emergence of Young Entrepreneurs :

Young entrepreneurs have emerged in the business highline voluntary to express their
concerns for changing the way of thinking and approach to solutions of problems faced
around the world.
 3.3 Developing Business Ethics in Global
Economy
B) Importance of Business Ethics in Global Economy:
5) Compensation for Employees :
The boards of directors of a company are keen to provide some compensation for their
employees but rather are interested in giving out extra packages to the executives of the
company.

6) Entrepreneurs and Business Values :

The entrepreneurs more often believe that: business is business. So they believe in those
ethical values where they have high profit earnings to fill the pockets of stakeholders and the
pampered executive officers.
 3.4 Relationship-Among Business,
Business Ethics and Business
Development
The relationship between business and ethics is intrinsically entwined. A successful company is one
which can effectively recognize and cultivate the relationship which exists between the two.
Businesses that exhibit and promote strong corporate codes of ethics are more prosperous in the
long run because they show a commitment to an expectation of sound moral behavior.
 3.4 Relationship-Among Business,
Business Ethics and Business
Development
A) Relationship-Among Business, Business Ethics and Business Development Business :
1) Business:
Business refers to a form of activity conducted with an objective of earning profits for the benefit
of those on whose behalf the activity is conducted.

2) Business Ethics :
Business ethics are important for managing a sustainable business mainly because of the serious
consequences that can result from decisions made with a lack of regard to ethics.

3) Business Development :
Business development is the process of marketing, sales, and development strategies for your
company. All businesses need to focus attention on the creation of marketing and business
expansion.

4) Business Ethics and Business Development :

In business today, there are countless examples to study when examining the effects of
unethical business practices on the overall economy. In addition, companies that make
these respectable lists gain impressive bragging rights, which can be included on their
website and on investment/marketing literature.
 3.4 Relationship-Among Business,
Business Ethics and Business
Development
a) Company and Ethics :
Being an organization that is committed to a high ethical standard is not only the right
thing to do, it is also profitable, even for smaller and mid-size companies. Money
scandals, weak leadership and unscrupulous business practices are costly and
potentially lethal for any organization.

b) Leadership Development in Company :

Leadership development in today's diverse business settings requires ongoing training
and communication in order to stay on top of the hottest topics and most important
business trends.
 3.5 Marketing Ethics in Foreign Trade

A) Ethical Issues in Foreign Trade:

Business firms produce goods and services by utilizing scarce resources to satisfy customer
needs. In their activities, companies should be innovative, cost effective, productive and effective.
If they become successful, in the long run, they should contribute positively to the societies'
welfare objectives.

B) Ethical Approaches in International Marketing:

Due to the globalization of markets and production, ever increasing number of international
marketing personnel has to deal with ethical issues in cross-cultural settings.

1) Descriptive Ethics Approach:

Descriptive ethics describe the values and moral reasoning of individuals and groups and
attempt to provide an understanding of the ethical decision-making process.

2) Normative Ethics Approach:

Normative ethics suggest an answer to the general moral question of what ought to do. These
researchers are concerned with the justification of moral norms and ethical values.

3) Dialogic Ethics Approach:

Dialogic idealism combines moral universalism with moral relativism by suggesting
universally valid rules that prescribe how an ideal dialogue is to be conducted
without imposing moral core values or hyper norms.
 3.5 Marketing Ethics in Foreign Trade

C) Ethical and Social Responsibility Problems in International Marketing:

The moral question of what is right or appropriate poses many dilemmas for domestic marketers.
Even within a country, ethical standards are frequently not defined or always clear International
Marketing Ethical Problems derived from applied researches by Armstrong (Ibid) are presented
with their short definitions as follows:

1) Traditional Small Scale Bribery:

It involves the payment of small sums of money, typically to a foreign official in exchange for
him/her violating some official duty or responsibility or to speed routine government actions.

2) Large Scale Bribery:

It is a relatively large payment intended to allow a violation of the law or designed to influence
policy directly or indirectly.

3) Gifts/Favours/Entertainment:
It includes a range of items such as: lavish physical gifts, call girls, opportunities for personal
travel at the company`s expense, gifts received after the completion of transaction and other
extravagant expensive entertainment.

4) Questionable Commissions to Channel Members:

It is unreasonably large commissions of fees paid to channel members, such as
sales agents, middlemen, consultants, dealers and importers.
 3.5 Marketing Ethics in Foreign Trade

5) Pricing:
It includes unfair differential pricing, questionable invoicing - where the buyer requests a written
invoice showing a price other than the actual price paid, pricing to force out local competition,
dumping products at prices well below that in the home country.

6) Products/Technology:
It includes products and technology that are banned for use in the home country but permitted in
the host country and/or appear unsuitable or inappropriate for use by the people of the host
country.

7) Tax Evasion Practices:

It is used specifically to evade tax such as transfer pricing including the use of tax havens,
where any profit made is in low tax jurisdiction, adjusted interest payments on intra-firm loans,
questionable management and service fees charged between affiliates and /or the parent
company.

8) Illegal/Immoral Activities in the Host Country:

It practices such as: polluting the environment, maintaining unsafe working
conditions; product/technology copying where protection of patents, trademarks
or copyrights has not been enforced.
 3.5 Role of Business Ethics in Developing
Civilized Society
1) Grouping:
Those societies which lived in closest harmony with the evolutionary
ethic would be the most cohesive, inventive, and dynamic. This would
enable them to group together into the largest cooperative groups,
thereby laying the foundations for civilization.

2) Inventions:
What enhanced civilization was a complex of inventions. Language
and large-scale organization were clearly important inventions. The
others were new tools for cultivating, processing, and defending food.

3) Defense:
The early agricultural communities required strong, well-organized defenses since they were
highly vulnerable to attacks from marauding bands of hunters and, later, from nomads. Nomadism
is an evolutionary step somewhere between a hunting society and an agricultural society in
complexity, but it does not have the potential for engendering civilization.

4) Planning for Future:

It is this notion of long-range planning and concern for the creativity of future
generations which distinguishes the civilized person from the barbarian, who
typically never has any vision beyond tomorrow, or the savage, who lives entirely
in the present.