- Global ethical risks
- Bribery
- Antitrust activity
- Internet security and privacy
- Human rights
- Health Care
- Labor and Right to Work
- Compensation
- Consumerism


[SLIDE 1]

There are many issues that affect multinational corporations and complicate efforts to do business across national borders. Corruption is just one issue that businesses have to deal with on an ongoing basis. In many countries, bribing officials to keep the wheels of business turning is considered normal and expected. Complicating the matter is that fact that bribery is illegal in many company's home countries. If a multinational corporation is based in a country where bribery is illegal but it also does business in countries where bribery is culturally accepted, it has to balance the laws, regulations, customs, and expectations of both countries. 

Because every country has its own set of laws and regulations on commerce, it can often be very difficult for international businesses to comply with the laws and regulations of every country they operate in. Laws and regulations are often complex, and organizations may need to hire many lawyers to navigate the legal intricacies. An example of the differing laws and regulations involves Google, which has been charged with antitrust violations by the European Union but continues to avoid antitrust issues in the United States. 

Another major issue that international businesses face is the problem with human rights violations in some companies. Unfortunately, these violations can often be difficult to detect in the supply chain. An example of a human rights violation is the use of child labor to manufacture products and mine resources. 


[SLIDE 2]

As previously mentioned, bribery is illegal in some countries but culturally accepted and expected in others. Further complicating the matter is the fact that what constitutes a bribe may sometimes be difficult. It is not always clear. For example, in Japan it is customary to present a small gift before doing business. Is the gift a bribe, or is it merely a courtesy based on the local culture? 

The U.S. Foreign Corrupt Practices Act was passed by Congress and signed into law in 1977. The law prohibits American companies from making payments to foreign officials to obtain business. In 1998, the United States and 33 other countries signed an agreement to end the practice of bribing public officials in international business transactions. The U.S. Justice Department has made violations of the U.S. Foreign Corrupt Practices Act a top priority. Because of this, prosecutions of bribery have increased in recent years. 

The U.K. Bribery Act is a sweeping law against bribery for companies based in the United Kingdom. Although it is similar to the U.S. Foreign Corrupt Practices Act, it goes even further to address bribery. Under the law, if bribery occurs, companies with operations in the U.K. can be held liable, even if the bribe occurred in another country.


[SLIDE 3]

Competition in business is generally considered to be a good thing, as long as it is fair. However, when businesses grow to a point where they dominate their markets and use tactics to drive out their competition, it becomes a problem for society. These practices lead to higher prices for consumers and fewer options. The United States passed the Sherman Antitrust Act in 1890 to prevent anticompetitive business practices and level the playing field. Many other countries have antitrust laws, too. The European Union, for example, has antitrust laws that are even stricter than the United States. 

A vertical system is when a manufacturer, wholesaler, or distributor has control over an entire business system. Large multinational companies can become vertical systems if they are unregulated. Because of their size and influence, large multinational companies can coerce other companies to do business exclusively with them, thus creating a vertical system. 


[SLIDE 4]

The use of computer hackers to commit corporate espionage, launch cyber-attacks, and steal information has become increasingly more common in recent years. Many nations, in fact, have militarized the internet and have state-sponsored hackers that are used to launch attacks against rival countries. The Stuxnet virus is one example. Stuxnet was believed to be a joint American/Israeli cyberweapon that was used to sabotage Iran's nuclear weapons program. Cyberattacks are also increasingly being used to target businesses to steal confidential trade information and cause harm. For example, Sony Pictures was the recipient of a cyberattack in 2014 from a group that identified themselves as the "Guardians of Peace." In the attack, Sony Pictures' computer infrastructure was erased. 

Tracking consumers for advertising purposes is a relatively new ethical issue involving internet privacy. Many companies use ad networks to advertise their products. However, some of these networks track consumers across the internet to learn about their shopping preferences and habits. This information is then used to target consumers with ads the companies believe will most likely appeal to them. Although legislation on the issue currently does not exist, the Federal Trade Commission is reviewing the issue to see if it is a violation of consumer privacy.  

Some countries, like China, Iran, and Saudi Arabia, heavily censor the use of the internet. Social media platforms may be banned, and firewalls may be used to prevent citizens from accessing certain information. Such censorship makes it very difficult for technology companies to do business in those countries because they rely on the internet for the transfer of information.


[SLIDE 5]

Human rights are moral principles that are based on standards of human behavior that are protected by international law. The concept of human rights is a fairly recent development in history. The first concepts for human rights developed in the aftermath of World War II and the Holocaust. The United Nations described human rights as "an inherent dignity with equal and inalienable rights and the foundation of freedom." Examples of human rights that most countries adhere to include the right to a fair trial, the prohibition of enslavement, free speech, the prohibition of genocide, and the right to an education. Not all countries adhere to basic human rights, however. In some countries, for example, free speech against the government is not allowed. 

Although much progress has been made on the issue of human rights throughout the world, one issue that continues to be a major problem is child labor. In some poor countries, many children work to help support their families out of necessity. Child labor is also difficult to track through the supply chain. Companies could source materials or parts from countries without even realizing that child labor was used to produce those items. Many special interest groups are working to address the issue of child labor through education and public policy.


[SLIDE 6]

Health care is another global ethical issue of concern. It is estimated that approximately a billion people throughout the world lack access to health care systems. And each year, approximately 7.5 million children under the age of five die from preventable diseases and malnutrition. Because many consider access to health care to be a basic human right, the profit motives of pharmaceutical companies are often questioned. Many believe the business practices of pharmaceutical companies to be unethical because research is often aimed at producing drugs for western markets instead of curing common global ailments like malaria and HIV. Increasing health care costs are a major challenge throughout the world. It is an issue that affects both developed and developing countries. In the United States, for example, many citizens are either uninsured or underinsured. A medical emergency that requires a stay in the hospital can result in bankruptcy for those without adequate health care coverage. Although many companies offer health insurance to their employees, the rising costs of coverage have forced many companies to either stop offering health insurance plans or switch to lower cost plans that offer fewer benefits. 

Another major issue involving health care is fraud. It's an issue that deprives individuals of the necessary funds for needed care and drains the resources of governments and businesses. Losses from global health care fraud and error are nearly $500 billion annually. Examples of health care fraud include filing false insurance claims, providing less medication in packages for the same price, and kickbacks for services. 


[SLIDE 7]

Labor is a global business issue that all international companies face. The issue of gender pay inequality, in particular, is a global problem that companies cannot ignore. In the European Union, for example, women earn 16 percent less than men on average. The issue is being addressed, however. Pay equality has been recognized as a right by the UN Human Rights Declaration. Gender pay inequality is also illegal in many countries. 

The issue of joining trade unions is another labor issue that international businesses must consider. Trade unions are considered a right in some countries. Article 23 of the UN Human Rights Declaration, for example, includes the right to work and join trade unions. However, in other countries, like North Korea, Cuba, and Iran, those who attempt to start trade unions risk imprisonment. 

The treatment of pregnant women and new mothers by employers varies greatly throughout the world and is another issue that companies engaged in international business must consider. In Europe, the UN Human Rights Declaration specifically mentions rights related to expecting mothers. The United States currently guarantees 12 weeks of unpaid leave. The debate for how much time off is necessary and whether that time off should be paid or unpaid continues. There are also some who argue that men should also get time off from work to care for newborn babies. 


[SLIDE 8]

The issue of employee compensation is another issue that companies doing business globally must consider. In the Great Recession, many employees witnessed company executives receiving high compensation and bonuses as their companies contracted or ceased to exist. In contrast, many employees' incomes have remained flat for many years. Therefore, the living wage and executive compensation have emerged as major issues.A living wage is the minimum wage workers need to meet basic needs. What constitutes a living wage varies around the world because some countries are more affordable to live in than others. Some countries have minimum wage laws that dictate how much employers must pay their employees. Some multinational corporations choose to outsource labor to countries that don't have minimum wage laws to save money and benefits. The practice can become a problem for the company if stakeholders believe the company is exploiting workers in poor parts of the world.

Executive compensation refers to the total compensation package top management receives. It can include salaries, bonuses, ownership of company stock, and other forms of compensation. During the Great Recession, many companies received bailouts from the U.S. government. The public was outraged when these companies used some of the bailout money to pay millions to their executives. As a result, many have since demanded a greater alignment between executive performance and compensation.


[SLIDE 9]

Consumerism is the belief that the interests of consumers, instead of the interests of producers, should dictate the economic structure of a society. In the theory of consumerism, it is desirable for a society to experience the consumption of goods at an ever-increasing rate. There are those who argue, however, that consumerism harms the environment and others. The environment is harmed, they state, by the increased emissions from the burning of fossil fuels. And people are harmed because the poor is often exploited to make products for people living in wealthier parts of the world.

Made-to-break is a term that refers to when companies make products that, by design, need to be replaced within a certain period of time or use. Made-to-break is also referred to as planned obsolescence. The idea behind made-to-break is to never fully satisfy consumers wants and needs so they will become repeat customers, thus creating more revenue for the company.