1. A visiting American executive finds that a foreign subsidiary in a less devel
ID: 1142924 • Letter: 1
Question
1. A visiting American executive finds that a foreign
subsidiary in a less developed country has
hired a 12-year-old girl to work on a factory
floor, in violation of the company’s prohibition
on child labor. He tells the local manager to replace
the child and tell her to go back to school.
The local manager tells the American executive
that the child is an orphan with no other means
of support, and she will probably become a street
child if she is denied work. What should the
American executive do?
2. Drawing on John Rawls’s concept of the veil
of ignorance, develop an ethical code that will
(a) guide the decisions of a large oil multinational
toward environmental protection and
(b) influence the policies of a clothing company
in their potential decision of outsourcing its
manufacturing operations.
3. Under what conditions is it ethically defensible
to outsource production to the developing world
where labor costs are lower when such actions
also involve laying off long-term employees in
the firm’s home country?
4. Do you think facilitating payments (speed payments)
should be ethical?
5. A manager from a developing country is overseeing
a multinational’s operations in a country
where drug trafficking and lawlessness are rife.
One day, a representative of a local “big man”
approaches the manager and asks for a “donation”
to help the big man provide housing for the
poor. The representative tells the manager that in
return for the donation, the big man will make
sure that the manager has a productive stay in his
country. No threats are made, but the manager is
well aware that the big man heads a criminal organization
that is engaged in drug trafficking. He
also knows that the big man does indeed help the
poor in the rundown neighborhood of the city
where he was born. What should the manager do?
6. Milton Friedman stated in his famous article
in the New York Times in 1970 that “the
social responsibility of business is to increase
profits.” Do you agree? If not, do you prefer
that multinational corporations adopt a focus
on corporate social responsibility or sustainability
practices?
7. Reread the Management Focus on Unocal, and
answer the following questions:
a. Was it ethical for Unocal to enter into a
partnership
with a brutal military dictatorship
for financial gain?
b. What actions could Unocal have taken,
short of not investing at all, to safeguard the
human rights of people affected by the gas
pipeline project?
Explanation / Answer
1. Child labour is one of the many problems in many less developed countries and it is harmful to the physical and mental development of the children. Child labour also leads to the vicious circle of poverty or the poverty trap where the poor parents can't afford to give good education and healthcare to their children which leads to low levels of human capital which in turn leads to low productivity and low income. Here, the company's rules are against child labour too. Hence, making a child working on a factory should not be a option to be considered. Instead, the child should be sent to an orphanage home and a social initivate can be taken by rich people or the government of the less developed country should give grants so that these children can study and have adequate meals to stay healthy. Working in factories should not be the option for these children, instead they can be taught to do small activities such as helping elders in the household such as cleaning the house, washing clothes, etc and taught small skills like sewing, cooking etc so that they can become productive when they grow up.
3. The conditions under which it is ethically defensible to outsource production to the developing world are:
(a) Higher Unemployment in the home country.
(b) Legal Problems can arise between the Company and the outsourced party if the terms and conditions are not properly defined.
(c) There is also higher chance of information breach as the Company has lower control on the outsourced party.
(d) Their is also a higher chance of lower productivity and lower loyal of the employees in the home country if they get a lower pay.
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