Ethics in International Business

This essay explores the impacts of ethics on international business organizations and the ethical dilemmas they face. It focuses on the Rana Plaza incident in Bangladesh as an example and discusses ways to mitigate ethical dilemmas. The importance of ethics in maintaining reputation and sustainability is emphasized.

Running head: ETHICS IN INTERNATIONAL BUSINESS
ETHICS IN INTERNATIONAL BUSINESS
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Author Note

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Introduction
As opined by Brenkert (2016), ethics is considered to be an important part of the
operations of modern business organizations as they need to fulfil their social responsibilities
in order to maintain its reputation in the industry. The social responsibilities are considered to
be highly important for the collaboration of local communities with the operations that are
performed by different business organizations. The ethical issues that arise in the business
environment can have a major impact on the operations of a modern company (Cuervo-
Cazurra 2016). The sustainability of an organization is also affected in a negative manner by
the lack of proper ethics that need to be followed. The essay will be mainly based on the
analysis of impacts that ethics have on the international or global business organizations. The
example that will be taken into consideration for the analysis of ethical dilemmas and issues
is Rana Plaza in Bangladesh.
Part A – Description of ethics in the international business context
Ethics can be defined as the moral principles that are able to govern the moral
behaviour of a person or an organization that is based on conducting different activities. As
discussed by Dion (2017), the core values that are followed by large organizations which
operate in multiple countries are considered to be a part of the “corporate legacy”. The
corporate culture that is developed within an organization is considered to be highly
important for its operations in the competitive industry. The modern organizations need to
provide effective levels of importance to both the profits and ethics. The self-interest of the
company and needs of a market need to be fulfilled by the organization in order to maintain
its sustainable operations in the industry.
According to Greenwood (2016), corporate social responsibility or CSR has become
an important part of the operations that are performed by the international organizations. The

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social responsibility based factors and theories have been provided with high levels of
importance by Professor Michael Porter. The growth of international organizations and
globalisation is able to play a major role in increasing the importance levels of CSR and
ethical behaviour in the organizations (Greenwood 2016).
As discussed by Hamilton and Webster (2018), many ethical and moral dilemmas are
faced by the international organizations as they find it difficult to balance the ethical
behaviour with levels of profitability that can earned in the market. The business objectives
and goals that are set by the organization cannot always be met efficiently along with ethical
operations. However, in the modern business environment it is highly important for the
organizations to depict ethical behaviour in order to maintain their reputation in the
respective industries (Kolk 2016). The modern business organizations need to include ethics
at the heart of its business operations that have been conducted and the policies that have
been implemented as well. The implementation of ethical policies within the company
statement is highly important for its sustainable operations and development of a loyal
customer base. The organizations need to face different types of situations that are based on
effective ethical behaviour (Kumar and Steinmann 2015).
Ethical dilemma can be defined as the decision making based issue that is
faced by the organizations when there are two possible alternatives available to choose from.
The complexity mainly arises from the situation based conflict that is faced by the
organizations based on accepting one alternative and rejecting the other (Kumar and
Steinmann 2015).
Corruption and bribery is an area of high ethical dilemma that is faced by the
organizations. Corruption is considered to be criminal act and bribery is also able to major
part in the ways by which the employees in an organization can behave in an unethical

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manner. The different types of corruption based acts include, attempts of securing the
contracts by offering bribes and payments that are made based on extortion (Markman et al.
2016).
In case of the Rana Plaza disaster the organizations like Primark that had their
factories in the building had faced major levels of ethical dilemma. The dilemma that was
faced by the organizations was between the choice of reducing the costs of production by
making less investments on the factories and the wages of employees working there or
increasing the investment amounts to provide fair remunerations and infrastructure to the
factory employees. The ethical issue was thereby based on making high profits at the cost of
the wages provided to employees or gaining moderate profits by taking care of the employees
and their needs (Abc.net.au 2019).
Drivers of unethical behaviour – The managers are able to play a major role in the
ways by which unethical behaviour within the organizations can be reduced. Managers are
able to affect the decisions based on ethical aspects that are taken by the organization (Meyer
and Peng 2016). The major drivers of unethical behaviour within organizations are as
follows,
The operations of business organizations are framed in such a manner that is
considered to be value-free and autonomous in nature. The overall profitability of
organizations is considered to be the only factor that is considered in making the important
decisions. The ethical dimensions and moral standards are not considered to be a major part
of the operations and strategies that are developed by the business (Murphy, Laczniak and
Harris 2016).

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The organizations sometimes consider themselves to be invisible and they start
believing that will never be caught and their reputation will also remain intact. The moral
standards are not followed by the organizations in this case (Meyer and Peng 2016).
The passiveness of the employees and management of an organization are important
factors that can drive the unethical operations. They tend to accept the activities that are
going on and start engaging in unethical behaviour (Kumar and Steinmann 2015).
The fulfilment of expectations of the organization and gaining incentives are also
considered to be major drivers of unethical behaviour that is depicted among the employees.
The employees sometimes depict unethical behaviour and implement wrong activities in
order to fulfil the goals that are provided to them (Meyer and Peng 2016).
As discussed by Kolk (2016), ethical dilemmas are considered to be quite common in
the modern business environment. The organizations that have developed the effective
policies and procedures by following the regulations and laws also have to face a risk based
on unethical behaviour. The senior managers or leaders in the organizations are sometimes
guilty of depicting unethical behaviour. The leaders also have an irrational sense based on
entitlement. The employees who are a part of the organization may take different steps to
gain incentives. The obedience of employees towards the leaders or authority of the
organization are able to affect the operations of organizations and the ways by which ethical
dilemmas that can be faced (Ogbari et al. 2016).
The example of Rana Plaza in Bangladesh can be considered in order to analyse the
ethical dilemmas that are faced by the organization and the reasons behind the issue that had
taken place. The major ethical issue that has been highlighted due to the collapse of the
building named Rana Plaza in Bangladesh is based on the wrong usage of cheap labour and
sweatshops in fashion industry. Greater than 380 people had died in the incident when the

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building had collapsed on outskirts of Bangladesh in the year 2013. Around 2500 people had
been rescued from the building and more than hundreds of people have died
(Theguardian.com 2019). Major fashion based brands like, Mango and Benetton have been
accused for the incident that has taken place. Many other organizations had also sourced the
products from Bangladesh that is considered to be the workhorse of international fashion
based industry. The conditions that had been developed in the factory were deadly in nature
and the workers were also exploited. The driver that of this unethical behaviour of the
organizations is based on the need of increasing profitability levels by making less amounts
of investments (Theguardian.com 2019). This incident had been a major wake-up call for the
organizations that are a part of the fashion industry. This incident had also affected the
reputation of the fashion organizations that were sourcing their products from the Rana Plaza
based factory. The organizations that were involved in the Rana Plaza based incident include,
Benetton (Italy), Cato Fashions (USA), Primark (UK), Mango (Spain), Texman (Denmark).
Part B – Ways of mitigating ethical dilemmas in international business
The Deontological ethical theory can be considered for the analysis of different
modern organizations that need to fulfil their moral and ethical duties. Deontological ethics
are based on ethical theories which provide emphasis to relationship between the morality
and duty of the human actions. Deontological ethics are considered to be an action that is
morally obligatory (Trevino and Nelson 2016). The duties that need to be fulfilled by the
organization and the management are considered to be important for the ways by which
morality standards can be maintained by the organization. The deontological theories are
formalistic as the central principle is based on conformity of the action to a rule of the law.
The lack of proper fulfilment of duties based on deontological theories can lead to unethical
behaviour in the modern organizations (Weiss 2016).

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The issue of Rana Plaza is also based on the ways by which different international
fashion organizations have provided importance to the levels of profits rather than the
working conditions of the employees. The organizations have aimed at sourcing the products
at lowest prices and have not provided attention to the ways by which the employees in the
factory are working. The reputation of the organizations has been at stake due to the issues
that have been faced by the employees in the factories (Abc.net.au 2019). The organizations
which their production facilities in the building had gone against the ethics of workplace and
labour rights. The profitability of organizations has been provided maximum levels of
importance in this case and the organizations have neglected the demands and needs of the
employees in the process (Abc.net.au 2019).
The ethical issues that have been faced by the organizations in Rana Plaza could have
been mitigated effectively in order to take care of the employee needs and make profits in an
ethical manner. The organizations could have taken five major steps that are related to the
mitigation of ethical risks. First – The resources and needs have to be assessed in a detailed
manner. Second – A strong foundation needs to be established. Third – Developing a culture
related to integrity in different parts of the organization. Fourth – Keeping the focus on values
of the organization in the small and big organizations (Trevino and Nelson 2016). Fifth –
Revaluation and revision as required. The first step could have been implemented effectively
by understanding the needs of employees or workers. Second step is based on the
establishment of effective foundation of ethical frameworks in order to maintain the
organizational operations. Third step is based on the development of a culture that is related
to effective implementation of ethics within the organizations. Ethics would have played a
major role in supporting the organizations to develop their strategies for managing the
employees (Ethics.org 2019).

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The values of different organizations would play a major role in the ways by which
the organizations can maintain their ethical operations. This would have helped the
organizations to make investments in development of perfect working conditions for the
employees. The wage rates will also be based on the industry based norms that have been
developed in the country. The fifth step that has been discussed in this case will be
implemented in different stages of operations of the organizations. The organization will be
successful in managing the employees and fulfilling their needs and demands in an effective
manner (Ethics.org 2019).
Conclusion
The essay can be concluded by stating that the modern organizations can operate in a
successful manner only by the proper development of ethics. The values of organizations are
considered to be important for the ways by which employees can be managed. The issues
related to Rana Plaza in Bangladesh that have been discussed in the essay have depicted that
lack of ethical considerations can lead to huge issues in organizational operations. The
multinational fashion based organizations that had their factories in Rana Plaza had to face
ethical allegations due to the incident. The implementation of strategies based on ethics could
have however developed the operations of the international organizations that outsource the
production based activities to different countries. The proper implementation of ethics will
also help in increasing the sustainability levels of the organizations that operate on a global
basis in different industries.

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