(Textbook) Behavior in Organizations, 8ed (A. B. Shani)

1
(No Transcript)
2

• BADM 633 Wk 13
• International Business Culture

3
Hershey Plots Cadbury Bid
Chocolate Maker Could Link With Italy's Ferrero
to Counter Kraft's 16 Billion Offer

• WSJ 17 Nov 2009
• Chocolate giant Hershey Co. is in talks with
  banks to line up billions of dollars to launch a
  rival bid to Kraft Foods Inc.'s 16 billion offer
  for British candy maker Cadbury PLC, said people
  familiar with the matter.
• Hershey, emboldened by improving financial
  markets, looks much more willing than it did just
  weeks ago to make a run at Cadbury, these people
  said. The Pennsylvania maker of Hershey bars and
  Reese's Peanut Butter Cups is considering a bid
  of its own or with a partner such as Ferrero SpA,
  the Italian maker of Tic-Tacs, Nutella hazelnut
  spread and Ferrero Rocher chocolates.
• Hershey Chief Executive David West in the last
  two weeks has spoken with Ferrero bankers at
  least twice about teaming up to buy Cadbury, one
  person familiar with the matter said. Those
  discussions are in preliminary stages and
  financial specifics haven't been discussed

4
Heinz Seeks to Tap Mexico's Taste for
Ketchup Food Giant Pours It On to Promote
Flagship Product in Fast-Growing Emerging Market

• WSJ 24 Nov 2009
• Mexicans eat more ketchup by sales value than
  consumers in all but eight other countries. Many
  of them slather the thick red sauce on chicken,
  pasta and eggseven pizza. At the start of 2007,
  U.S. ketchup giant H.J. Heinz Co. held less than
  1 of the Mexican ketchup market. In fact, Mexico
  was such a low priority that Heinz had fewer than
  10 salespeople in the country, which is nearly
  three times as large as Texas.
• Tuesday, when Heinz releases quarterly earnings,
  its executives plan to boast that Heinz now
  accounts for 12 of the ketchup poured in Mexico,
  where a spokesman says the company now has 150
  ketchup sales and marketing employees.
• The shift illustrates Heinz is positioning itself
  for growth in emerging markets.
• Heinz's management, which CEO Wm. Johnson said
  overlooked Mexico while chasing sales in China,
  Russia, Indonesia and other emerging markets,
  didn't begin focusing on the country until the
  mid-2000s. Few restaurants in Mexico carried
  Heinz ketchup and, at retail, it was mostly sold
  in the imported-goods sections of grocery stores.
  Even so, Mexico's overall retail sales of ketchup
  had climbed more than 70 since 2000.

5
Heinz Seeks to Tap Mexico's Taste for
Ketchup Food Giant Pours It On to Promote
Flagship Product in Fast-Growing Emerging Market

• WSJ 24 Nov 2009

6
Changing Demographics in a Global Economy

• United States dominance in world trade
• United States dominance in Foreign Direct
  Investment
• Dominance of United States multinational firms
• Centrally planned economies off-limits

7
Changing Demographics -contd

• Anti-globalization debate
• Jobs
• Income
• Environment
• Spread of democracy
• Global terrorism
• Economic transformation
• Deregulation
• Privatization
• Legal systems

8
What are Laws ?
Slide 4-7
9
Laws
Laws are societys values and standards that are
enforceable in the courts.
Slide 4-47
10
What are Ethics?
Slide 4-7
11
Ethics
Ethics are the moral principles and values
that govern the actions and decisions of an
individual or group. They serve as guidelines
on how to act rightly and justly when faced with
moral dilemmas.
Slide 4-7
12
UNDERSTANDING ETHICS

• Ethical principles vary from religion to
  religion. True or false?

• FALSE - The five fundamental ethical
• principles are
• Do no harm
• Make things better
• Respect others
• Be fair
• Be loving

Slide 4-10
13
UNDERSTANDING ETHICS

• What is right in one part of the world might not
  be right in another part. True or false?

• FALSE - What people believe to be right may
• differ from one country to another, but this
• does not mean that what actually IS right
• differs.
• Ethics attempts to discover what IS right
• and wrong, regardless of accepted practice.

Slide 4-10
14
UNDERSTANDING ETHICS

• Ethical principles change over time. True or
  false?

• FALSE - The aforementioned five ethical
• principles have existed since the beginning
  of
• civilization and will remain so until its
  end.

Slide 4-10
15
UNDERSTANDING ETHICS

• Being honest is the most important ethical rule
  of all. True or false?

• FALSE - In some situations, rare as they
• may be, other ethical considerations may
• take precedence.
• For example, during WWII, courageous
• men and women in Europe who hid Jews
• from the Nazis had to lie to the Gestapo.

Slide 4-10
16
UNDERSTANDING ETHICS

• Sometimes, one not only has a right to keep
  private things private, but has a duty not to do
  so. True or false?

• TRUE - As with the example of lying above,
• the duty to maintain confidentiality is not
  an
• absolute moral obligation. When a patient
• tells his psychiatrist that he intends to
• commit murder, the psychiatrist has the
• right to not keep this information to
  herself,
• but has a duty not to do so.

Slide 4-10
17
UNDERSTANDING ETHICS

• Avoiding harm is a moral imperative, but being
  loving is not ethically required. True or false?

• TRUE - Whatever a persons relationship is
• to you, you have a duty to not harm him or
• her. Being loving, kind or compassionate
• might be better viewed as ideals to which we
• should aspire, rather than as principles of
• duty. If you fail to act charitably toward
  the
• driver who chops you off, you are not acting
• unethically (although you may be expressing
• the deepest aspects of your humanity).

Slide 4-10
18
UNDERSTANDING ETHICS

• People often disagree about what is important in
  life. True or false?

• TRUE - This is a sociological fact and says
• nothing about what should constitute the good
  
• life. Even if most people that you encounter
  
• believe acquiring wealth is their main
  objective,
• it does not follow that becoming rich and
• famous is a worthwhile goal. What they
• might be saying is that being famous will
• make me happy.

Slide 4-10
19
Business Ethics

• Ethical issues in international business
• Foreign Corrupt Practices Act (FCPA)
• Moral obligations
• Ethical perceptions across cultures

20
A framework for understanding ethical
behavior
Slide 4-9
21
Global Competition

• Ethics is it good business?
• Going Green
• vs.
• Increasing tockholder Equity

22

• Rockefeller Rebellion Turns Up Heat on Exxon
• John D.'s Heirs Seek Change -- and Respect
• WSJ - May 24, 2008 Page A1
• Two decades ago, Neva Goodwin Rockefeller grew so
  tired of all the baggage that came with her
  fabled family name that she changed it and became
  plain Neva Goodwin. But now, Ms. Goodwin, 63
  years old, is embracing the powerful Rockefeller
  name as she publicly challenges the management of
  Exxon Mobil Corp., successor to the oil company
  founded by her great-grandfather, John D.
  Rockefeller. As Neva Rockefeller Goodwin, she has
  marshaled four generations of Rockefellers to
  join her in a campaign to force major changes at
  one of the most profitable companies in the
  world. The battle will come to a head at Exxon's
  annual meeting Wednesday in Dallas. (Scheduled
  for 28 May.)
• Some members of the family joined the fight out
  of a passionate belief in the threat of global
  warming others were concerned that Exxon is
  overlooking business opportunities or risks. Many
  seem offended that the company appears impervious
  to the wishes of its shareholders, including
  those named Rockefeller.

Slide 4-7
23

• Exxon Withstands Activist Proposals
• Chairman, CEO Jobs To Remain Joined Environment
  Still Issue
• WSJ - May 29, 2008 Page B3
• DALLAS -- Exxon Mobil Corp. shareholders rejected
  a proposal to create an independent chairman in a
  heated proxy fight over the future of the giant
  oil company . . . The proposal to create an
  independent chairman, which would have stripped
  Chairman and Chief Executive Rex Tillerson of one
  of his titles, drew 39.5 of the votes cast at
  Wednesday's annual shareholder meeting. Support
  for the measure edged down from last year, when
  it received 40 of the votes cast.
• The shareholder unrest also reflected some
  concerns that Exxon isn't doing enough to prepare
  for climate change or develop a more robust
  renewable-fuels strategy. (The chairman)
  acknowledged activists' environmental concerns
  without offering any concrete promises. He said
  Exxon must continue to generate needed energy
  while taking steps to "lower our environmental
  footprint." But he also said he didn't think
  non-fossil fuels would make a significant dent in
  global energy demand until 2050 or so.

Slide 4-7
24
Global Competition

• Ethics is it good business?
•  The Question
• Companies spend billions of dollars doing good
  works -- such as developing eco-friendly
  technology -- and then trumpeting them to the
  public. But does it pay off?

25
Global Competition

• Ethics is it good business?
•  The Test
• In a series of experiments, consumers were shown
  the same products -- coffee and T-shirts -- but
  one group was told the items had been made using
  high ethical standards and another group that low
  standards had been used.

26
Global Competition

• REWARD AND PUNISHMENT
•  What consumers were willing to pay for a pound
  of coffee based on what they were told about the
  company's production standards
• Ethical standards . . . . . . . . . 9.71
• Unethical standards . . . . . . . . 5.89
• Control (no information) . . . . 8.31
• Source Remi Trudel and June Cotte

27
Global Competition

• A MATTER OF DEGREE
•  How much consumers were willing to pay for
  all-cotton T-shirts based on what they were told
  about the proportion of ethical production
• 100 organic cotton . . . . . . 21.21
• 50 organic cotton . . . . . . . . 20.44
• 25 organic cotton . . . . . . . . 20.72
• Unethical behavior . . . . . . . .17.33
• Control (no information) . . . . 20.04
• Production harms environment

28
Global Competition

• ATTITUDE ADJUSTMENT
•  Consumers with high ethical expectations of
  companies doled out bigger rewards and
  punishments than consumers with low expectations.
  What each group was willing to pay for a pound of
  coffee based on production standards
• Consumers with high expectations
• Ethical standards . . . . . . . 11.59
• Unethical standards . . . . . . . 6.92
• Consumers with low expectations
• Ethical standards . . . . . . . 9.90
• Unethical standards . . . . . . 8.44

29
Global Competition

•  The Results
• Consumers are willing to pay a small premium for
  ethically produced goods. But they'll punish an
  unethically made product even more harshly, by
  buying it only at a steep discount.

30
Global Competition

•  Six Products, Six Carbon Footprints
• Everybody's talking about it. But what exactly is
  a carbon footprint? And how is it calculated?
• By JEFFREY BALL  WSJ 06
  Oct 2008
• A new concept is entering the consumer lexicon
  the carbon footprint.
• First came organic. Then came fair trade. Now
  makers of everything from milk to jackets to cars
  are starting to tally up the carbon footprints of
  their products. That's the amount of carbon
  dioxide and other greenhouse gases that get
  coughed into the air when the goods are made,
  shipped and stored, and then used by consumers.
• So far, these efforts raise as many questions as
  they answer. Different companies are counting
  their products' carbon footprints differently,
  making it all but impossible for shoppers to
  compare goods. And even if consumers come to
  understand the numbers, they might not like what
  they find out.
• For instance, many products' global-warming
  impact depends less on how they're made than on
  how they're used. That means the easiest way to
  cut carbon emissions may be to buy less of a
  product or use it in a way that's less
  convenient.

31
Global Competition

•  

32
Carbon Footprints

• CARS -The simplest statistic in the
  carbon-footprinting game may be this For every
  mile it travels, the average car in the U.S.
  emits about one pound of carbon dioxide. Given
  typical driving distances and fuel-economy
  numbers, that translates into about five tons of
  carbon dioxide per car per year.
• The vast majority of those emissions -- 86 --
  came from the car's fuel use, the study found.
  Just 4 of emissions came from making and
  assembling the car. That means consumers can
  lower their footprint by buying a car with better
  fuel economy.
• The Prius, the hybrid gasoline-and-electric car
  that averages 42 miles per gallon, has a lifetime
  carbon footprint of 44 metric The Corolla, a
  small sedan with 29 MPG, has a footprint of 64
  tons. The Camry (23 MPG) has a footprint of 95
  tons. And the 4Runner, an SUV rated at 16 MPG,
  has a footprint of 118 tons.
• SHOES -You may think you're at one with nature
  going for a walk in the woods in your sturdy
  hiking boots. But those boots pack a lot of
  carbon. The big reason the leather.
•  
• Timberland Co., a shoe company with an outdoorsy
  image, has assessed the carbon footprint of about
  40 of the shoe models it currently sells. The
  results range from about 22 pounds to 220 pounds
  per pair. Each of the shoes that has been
  carbon-footprinted comes with a label assessing
  its greenhouse-gas score on a scale of zero,
  which is best, to 10, which is worst.

33
Carbon Footprints

• LAUNDRY DETERGENT - The recipe for a low-carbon
  load of laundry Use liquid detergent instead of
  powder, wash your clothes in cool water and hang
  them out to dry.
• But consumers who care about their carbon
  emissions should do more than switch detergent
  forms, the labels advise. Doing the wash in
  cooler water -- 86 degrees Fahrenheit instead of
  104 degrees -- will shave the carbon footprint of
  each load by 0.3 pounds. That's as much of a
  reduction as you get from switching to liquid
  from powder.
• The biggest way to cut the environmental impact
  of cleaning clothes, however, is to stop using a
  clothes dryer. Drying laundry outside on a line,
  Tesco says, will cut the carbon footprint of
  every load by a whopping 4.4 pounds.
• JACKETS Patagonia Inc.'s Talus jacket looks
  like a naturalist's dream. In fact, its carbon
  footprint is 66 pounds. That is 48 times the
  weight of the jacket itself.
• Over the past year the outdoor-equipment maker
  has computed and posted on its Web site the
  carbon footprints of 15 of its products. Because
  most of Patagonia's products are made overseas
  and sold in the U.S., the company that a big
  chunk of the carbon footprints came from
• The fabric for the Talus is made in China, the
  zippers come from Japan, and the jacket is sewn
  in Vietnam. Yet all that transportation adds up
  to less than 1 of the product's total carbon
  footprint, Patagonia says. The majority of the
  footprint -- 71, or about 47 pounds -- comes in
  producing the polyester, which originates with
  oil.

34
Carbon Footprints

• MILK - Several studies of milk's carbon footprint
  are under way in the U.S. Each has come up with a
  different number, largely because each is
  counting things differently.
• A recent study by National Dairy Holdings, a
  Dallas-based dairy, found that the carbon
  footprint of a gallon of its milk in a plastic
  jug is either 6.19 pounds or 7.59 pounds. The
  difference rests in what kind of cases the jugs
  are placed in during transport from the
  milk-processing plant to the distribution center.
  Plastic cases, because they take more energy to
  produce, yield more carbon-dioxide emissions than
  do cardboard ones.
• BEER - When New Belgium Brewing Co. set out last
  year to compute the carbon footprint of a
  six-pack of its Fat Tire Amber Ale, it figured it
  would find transportation was the biggest
  problem. That's the emission source New Belgium
  thinks about most often. The microbrewer has been
  expanding into more states, necessitating more
  trucking of its beer.
• When the numbers came in this summer, they showed
  that a six-pack's carbon footprint was about
  seven pounds. The real surprise was where the
  bulk of that number came from the refrigeration
  of the beer at stores. Transportation came in
  fourth, behind manufacturing the glass bottles
  and producing the barley and malt. Refrigeration
  poses a tougher problem. Stores selling Fat Tire
  aren't owned by New Belgium, so even if the
  brewer wanted them to stop refrigerating the
  beer, they might not do so. Many stores could
  switch from less-efficient, open-front beer
  chillers to more-efficient models enclosed by
  clear doors. But that presents its own hurdle,
  Ms. Orgolini notes "People don't want to have to
  open the door."

35
Carbon Footprints

• S-o-o-o, as you can see, measuring carbon
  footprints is a very complex issue. It goes well
  beyond SUVs vs. sub-compacts, McMansions vs.
  apartments/condominiums or coal vs. solar-power
  for electricity generation.
• Regarding your personal choices, based on what
  weve have just seen, do you choose . . .

MILK or BEER ???
36
FORD AND FIRESTONE WHOS TO BLAME?
Slide 4-42
37
Now, lets compare and contrast this PR debacle
with . . .
Slide 4-10
38
Johnson Johnson TYLENOL
Slide 4-42
39
Implications for Global Managers

• The most common ethical issues that one may
  encounter in an international business setting
  are
• employment practices,
• human rights,
• environmental regulations,
• corruption and
• the moral obligation of multinational
  corporations.
• Ethics Trust do the hard right thing

40

• Have a Happy Thanksgiving !