Ethical Issues Faced By Multinational Organizations

Both MNC’s and corporations doing international business can run into ethical problems in the course of conducting business on foreign soil. These areas include:

1. Discrimination

Racial, sexual, religious, or ethnic discrimination may not only be tolerated in certain cultures but may be an expected part of traditional customs and behaviors. If each discrimination is not acceptable to a corporation doing business abroad, this could easily mean the failure of its enterprise. For example: Middle Eastern culture may exclude women from participating in business transactions; an American corporation that insisted on sending a female executive to negotiate with Middle Eastern business interest could offend the foreign parties and seriously jeopardize or completely destroy its chances for finalizing the contract.

2. Price Discrimination

This practice can take one of two forms-

1. Price Gouging: Products sold abroad often cost more than the same product sold locally due to the added costs of tariffs, taxes, transportation and storage fees. Sometimes, however, exorbitantly higher prices are charged abroad – far higher than these additional costs can justify. This is known as price gouging. Such practices are especially controversial when the product is critically needed or essential. For example: pharmaceuticals.
2. Dumping: Occurs when a corporation will sell its product abroad at a substantially lower price than cost of production. This may occur as a tactic to drive competitors out of business, and competitors out of business, and to create monopoly in the market for the product.
3. Bribery

In many cultures, bribery, euphemized as “facilitating payments, ” is standard business practice. Often times, there is a specific percent of the total sale that is the understood rate of the bribe, for expediting a specific transaction.

4. Dumping Hazardous Products

In some examples, a corporation’s home country may ban, severely restrict, or regulate its product. A corporation may then try to sell its product in a foreign market with much less stringent laws, or where local officials are amenable to bribe and looking the other way to enter the market. For example: certain pesticides that have been banned in the U. S. A market because they are hazardous to humans marketed to foreign agricultural concerns.

5. Compromised Worker’ Safety

Due to less regulation of labor, workers’ rights, unionization, minimum wage, and workers safety in many developing nations. MNC’s and corporations with foreign interests will favor using such cheap, unregulated labor. Several ethical issues may be raised when the labor performed is under conditions that the hoe cultures views as abhorrent. For example: child labor, “sweat shops” and virtual “slave labor. ” Businesses often defend these practices with the argument that as bad as conditions are, the jobs still afford the people significantly higher standard of living than alternative employment (or lack of) opportunities.