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MGMT 1040 Chapter Notes -Relativism, The Body Shop

Course Code
MGMT 1040
William(bill) Woof

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Chapter 12 - Ethics and Multinational Corporations
A multinational corporation (MNC) or enterprise (MNE), is a corporation or an enterprise that
manages production or delivers services in more than one country. It can also be referred to as an
international corporation. The International Labor Organization (ILO) has defined an MNC as a
corporation that has its management headquarters in one country, known as the home country,
and operates in several other countries, known as host countries.
Some multinational corporations are very big, with budgets that exceed some nations' GDPs.
Multinational corporations can have a powerful influence in local economies, and even the world
economy, and play an important role in international relations and globalization.
Businesses look to go global for a variety of reasons including cheaper labor and low costs on
health and safety standards. This ensures them higher profits and a higher competitive edge
against their competitors.
It also helps them provide goods to their consumers (in North America and beyond) at cheaper
Global trade encourages specialization and trade, which helps under-developed and/or
developing countries grow and progress.
Ethics and Relativism
Many MNCs have a proven record of lowering ethical business standards in other countries in
order to maximize profits. Many corporations have been accused to sex violations, child labor,
improper working conditions, assassinations (Coca Cola), long working hours and employee
exploitation in other countries.
From a relativist point of view, any immoral behaviour conducted by companies outside of
Canada would be considered ethical. Relativists ask us to measure and perform our ethical
standards in conjunction with the standards accepted in the country that we are conducting
business in.
As a result, a relativist would approve any action committed by a MNC as long as it is approved
by the local regulatory body in that country.
However, according to the course material and Shaw, we are expected to take a non-relativist
approach to business outside North America. As managers doing business globally, we are
expected to abide by the moral standards we use in Canada and stick to them when we go global.
From a utilitarian point of view, Global trade would be considered good as it does contribute to
the overall good of the greatest number of people;
1) Consumers in North America that get goods at cheaper prices
2) Workers in developing countries that get jobs
3) Citizens of developing countries who get an opportunity to grow and progress.
Some other criticisms of global trade are:
It makes people in those countries even poorer as it widens the divide in the rich and
poor. For example, a person working in a nike factory in China, stitching shoes are
earning more than a professor at Beijing University.
As most government in developing countries are corrupt and have low ethical standards,
MNCs are also seen influencing business standards, policies and regulations in those
countries. MNCs do start lobbying and changing policies that fit their best interests.
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