Chapter 7 - pages 208

7-1 Define the deontological theory of ethics. On the basis of this theory and a reading of the Union
Carbide case synopsis, do you think that Union Carbide acted ethically after the Bhopal incident?
Explain.

Deontological theory of ethics – is basically a type of ethics that regulates theories regarding
which choices are morally forbidden, required or permitted.

The Union Carbide acted unethically after the breakdown in their factory because they
shifted the blame of the tragedy to the low-class workers.

7-2 List the differing views on whether corporations should act in a socially responsible manner.
Explain each one and show how they differ (contrast).

Economic Model is where the company exist for the purpose of just earning money,
producing comedies, and providing jobs. This model is fully funded by shareholders looking to earn
profits from their investments.

Socioeconomic Model is the model that believes the company is not only looking to please
the shareholders but the customers as well. This model focuses on the community the company is in
not the earnings of the company.

7-3 How are professional codes of ethics different from individual codes? Explain.

Personal ethics are self-created values made for yourself.

Professional ethics are values or principles introduced by an organization.

7-4 When someone tell you he or she is a “professional,” what characteristics are expected of the
individual and his or her profession? Explain.

Professional really is just someone who earns a living from the job. The required
characteristics of someone called a professional are as follows.

Formal Training

Follows written set of ethical standards.

Has the responsibility to carry licenses for their job.

Required to meet with a group of people.

7-5 What is meant by a profit-oriented school of responsibility? Explain.

It is based on the concepts of market orientation. This is to say that individual businesses are
organizations of the society. The purpose of this is to maximize the shareholder’s profits. It is much
like the economic model of companies.

7-7 Indra Wu, a sales rep at Rite Engineering, attended a trade show and conference at company
expense. Main exhibitors donated prizes, which were awarded to attendees based on a drawing of
free tickers given to all attendees upon registration. Wu won a $12,000 plasma television in one of
the drawings. The winner’s certificate included the winner’s name with no mention of the company.
What should Wu do? What should Wu’s supervisor do if she learns of the prize from someone other
than Wu? Explain.

Indra should hand over the TV and let the company decide what should be done with the
prize.

The supervisor should ask Indra if they were hiding the fact. They should also just let him
know what the effects that their actions could have been on the company.

7-9 You are hiring a new manager for your department. You have several good applicants. Assume
that the one who is best suited for the job in terms of training and experience has also been found to
have done one of the things in the following list. How would knowing what this person has done
affect your decision? Would your answer be the same regardless of which theory of ethical thought
you applied? Examine each factual situation in the list and explain how your answer is affected. 1.
The individual listed on his résumé that he had an MBA from Rutgers. He does not have an MBA.
2. The individual listed that his prior salary was $40,000. The prior salary was $43,000.

Knowing that he lied about getting the MBA this organization and I would never hire that
person. This is because that person has done something unethical. My decision would be the same
regardless of any theory of ethics. As most of them care about your actions and how you treat other
people.

1 He say he got an MBA from Rutgers on his resume. The just does not have one so this is a
lie that can not be excused. There are surely other people on the list that were booted off because he
had that MBA on this resume and now, they have lost their opportunity to gain employment because
of his lie.

2 He said that his prior salary was 40,000. The salary really was 43,000. This is not so bad in
my eyes and does not really affect my decision at all. This is because he most like was not saying
this to be misleading and was most likely just ball parking the number. In my experience most
people do not know how much they made during the year until they do taxes and even then some
will not even know after that as they just have someone else do all of the work for them.
7-10 You are a purchasing manager for Alpha Corporation. You are responsible for buying two $1
million generators. Your company has a written policy prohibiting any company buyer from
receiving a gratuity in excess of $50 and requiring that all gratuities be reported. The company has
no policy regarding whistleblowing. A salesperson for a generator manufacturer offers to arrange it
so that you can buy a $20,000 car for $7,000 from a third party. You decline the offer. Do you now
report it to your superior? To the salesperson’s superior? How would the various schools of social
responsibility influence your decision? Pick one school and use its tenets to justify your decision.
Explain.

You should report this your both your superior and the salesperson’s superior.

I think the main school that would affect judgement in this situation is the Institutional
school that says to treat everyone fairly and be honest. Justify your actions for safety to everyone.
Do not be deceptive when you are advertising of products or service. Trained personnel should be
employed, and the quality of the product should be sacrificed because of it.

Chapter 8 page 244-245

8-1 Contrast the common-law family with the socialist-law family.

Common-law family – Major family of law under legal dimensions. It is important to use
managers to study the potential impact on contracts, investment, and corporate law. Common law
deals with reliance on case law and not statutory law.

Socialist-law family – Major family of law under legal dimensions. It is important to use
managers to study the potential impact on contracts, investment, and corporate law. This family of
law is based on the teaching of Karl Marx. It is encouraged to make arrangements to acquire goods
and the means of production for those goods.

Common law was developed by people like judges and courts relying on case law to build it
up. Socialist law works on techniques of Karl Marx and states that the court of law is ineffective in
an educated society. The biggest difference between the two is the judicial opinions. Common is
based on primary importance where socialist is predominated statuses.

8-2 Which of the methods of engaging in international business discussed in this chapter is least
risky for a foreign multinational company? Explain.

I would say trade is the least risky method for multinational companies to undertake.

This is because of two theories.

Theory of absolute advantage – you sell surplus goods via trade to other countries

Theory of comparative advantage – This theory says that you do not need to make more of
something that someone else to have it be a good trade good. You just need to be more efficient at
making it than other countries. It is a good system because you do not have to deal with the foreign
powers much when trading. You sell to 3rd parties more than anything so it has little risk to your
company when it comes to stepping on someone’s toes politically.

8-3 Define the following: a. expropriation b. doctrine of sovereign immunity c. act-of-state doctrine
d. arbitration clause e. choice-of-forum clause

Expropriation – This is when a host country takes a private property for either economic or
political reason.

Doctrine of sovereign immunity – This means that the private property that was expropriated
is immune from jurisdiction from courts in the first owner’s home country.

Act of state doctrine – This is the act that states the obligation of each sovereign nation to
regard the freedom of all other free sovereign states.

Arbitration clause – This refers to a dispute resolution process. In this process the
disagreeing parties are required to submit to a private individual decision making that agree on.

Choice of form clause – This is a form that tells the parties about that family of law being
used in the case of their dispute and the nation’s court that is going to be used.

8-4 Why was the GATT Pact, creating the World Trade Organization, so important to doing
international business? Explain.

The importance of this is they would do the following for international business.

Expansion of international trade

Increase in the worlds production ensuring more jobs for countries participating in the program.

Full utilization and development of world resources

Raise in the standards of living for the world as a whole

Dispute solving when it comes to trade between two countries that are participating

8-5 Why is arbitration preferred to litigation as a means of resolving international business disputes?
Explain.

The reason why is because of five reasons: time, cost, flexibility, expertise, and Appeal
rights. All of those reasons are why Arbitration is preferred to litigation.

Time – Arbitration is much quicker thus providing a faster resolution to disputes that courts.

Cost – Arbitration cost must less than ligation. This is because most of the cost of trial is the pre-
trial discovery processes that require a lot of scheduled time.
Flexibility – normal court proceedings require you to follow a specific schedule and they also make
you follow every rule. Arbitration allows you to set your own rules and limits for the exchange.

Expertise – Arbitration allows the arbitrators to hold a lot of power as they are selected with a
specific task in mind and are professional on the topic they are selected for.

Appeal rights – The Arbitration judgment is binding and final. There is a very limited right to
appeal in this situation.

8-6 Royal Bed and Spring Company, a U.S. distributor of furniture products, entered into an
exclusive distributorship agreement with a Brazilian manufacturer of furniture products. Under the
terms of the contract, Royal Bed was to distribute in Puerto Rico the furniture products
manufactured by Famossul in Brazil. The contract contained forum-selection and choice-of-law
clauses, which designated the juridical district of Curitiba, State of Parana, Brazil, as the judicial
forum and the Brazilian Civil Code as the law to be applied in the event of any dispute. Famossul
terminated the exclusive distributorship and suspended the shipment of goods without just cause. As
a matter of public policy, Puerto Rican law refuses to enforce forum-selection clauses specifying
foreign venues. In what jurisdiction should Royal Bed bring suit? Explain.

Royal Bed and Spring Company should bring up the dispute in Brazilian manufacturer of
furniture products jurisdiction. This is because the both agreed that they had the right to set the
forum and the law to which the cases would be disputed. They both agreed on something and thus
should stick with it.

8-8 Zapata entered into a contract with a German corporation to use one of Zapata’s oil-drilling rigs
off the coast of Italy. The contract stated, “Any dispute arising must be treated before the London
Court of Justice.” A severe storm damaged the oil rig as it was being towed through the Gulf of
Mexico. Zapata filed suit in federal district court. Does the U.S. court have jurisdiction to decide
the dispute? What is the purpose behind a choice-of-forum clause, and should the clause be
enforced?

The U.S. does not have the jurisdiction to decide the dispute. The Choice of forum clause
allows the parties to decide the court for the settlement of their disputes. This is something that must
be decided before the dispute occurs. It should be enforced as the U.S court does not have the
jurisdiction to try the case. It was agreed that they would have the trial with a forum.

8-11 U.S. Company (USC) owned a subsidiary in France that had a contract to deliver compressors
for use in the Soviet natural gas pipeline then under construction. The U.S. government banned the
export of goods to the Soviet Union by U.S. companies or U.S.- controlled foreign companies, and
USC complied with the ban by ordering its French subsidiary to stop delivery of the compressors.
The French government, however, ordered delivery. USC delivered the compressors. The U.S.
government thereupon instituted a criminal action against USC. What is USC’s defense? Explain.
 The USC can defend itself by using the Sovereign immunity doctrine. This doctrine states
that the foreign company is immune from the jurisdiction of the courts in the host country. The
foreign company is protected from both criminal and civil cases so this document should protect
them.