GLOBALIZATION, GLOBALIZATION, GLOBALIZATION, GLOBALIZATION,

GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT

RELATION, AND RELATION, AND RELATION, AND RELATION, AND RELATION, AND RELATION, AND RELATION, AND RELATION, AND

ETHICAL ISSUES IN ETHICAL ISSUES IN ETHICAL ISSUES IN ETHICAL ISSUES IN

BUSINESSBUSINESSBUSINESSBUSINESS

TOPIC OUTCOMES

At the end of this chapter, students should be At the end of this chapter, students should be At the end of this chapter, students should be At the end of this chapter, students should be

able to:able to:able to:able to:

Explain the impact of globalization over Explain the impact of globalization over Explain the impact of globalization over Explain the impact of globalization over

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�Explain the impact of globalization over Explain the impact of globalization over Explain the impact of globalization over Explain the impact of globalization over

businesses.businesses.businesses.businesses.

�Explain the relationship between Explain the relationship between Explain the relationship between Explain the relationship between

government regulation and business government regulation and business government regulation and business government regulation and business

practices & ethical conduct of businesses.practices & ethical conduct of businesses.practices & ethical conduct of businesses.practices & ethical conduct of businesses.

GLOBALIZATION IN TODAY'S BUSINESSGLOBALIZATION IN TODAY'S BUSINESSGLOBALIZATION IN TODAY'S BUSINESSGLOBALIZATION IN TODAY'S BUSINESS

� GlobalizationGlobalizationGlobalizationGlobalization refers to the increasingmovement of goods, services, and capitalacross national borders.

� Transnational and multinational companies exceed borders, making everything from product conception, design, manufacturing to product conception, design, manufacturing to assembly truly international.

� Think of an iPod. It was designed in the USA, its parts were produced in Taiwan, the Ukraine, Thailand, it is assembled in China and is shipped into the world. The label shouldn't read "Made in China", but "Made in the World". Globalization

FACTORS THAT DRIVES GLOBALIZATIONFACTORS THAT DRIVES GLOBALIZATIONFACTORS THAT DRIVES GLOBALIZATIONFACTORS THAT DRIVES GLOBALIZATION

1.1.1.1. TechnologicalTechnologicalTechnologicalTechnological innovationinnovationinnovationinnovation –––– internet,,,, sophisticated software,fiber optics, wireless, and satellite technology, amongothers, have made it easier and faster for companies tocommunicate with employees, partners, suppliers, andcustomers all over the globe in real time.

2.2.2.2. TransportationTransportationTransportationTransportation systemsystemsystemsystem –––– improvement in transportation,from air freight to ocean vessels, enable fast and cheapmovement of goods and services from one place tomovement of goods and services from one place toanother.

3.3.3.3. TheTheTheThe riseriseriserise ofofofof majormajormajormajor transnationaltransnationaltransnationaltransnational companiescompaniescompaniescompanies –––– big, well-capitalized firms are better equipped to conduct businessacross national borders than smaller, local companies.

4.4.4.4. SocialSocialSocialSocial andandandand politicalpoliticalpoliticalpolitical reformsreformsreformsreforms –––– critical has made productsand services accessible to the entire computerized world,creating a wish to buy things irrespective of where they areproduced. E.g. When China opens its economy, thisaccelerate globalization process.

HOW GLOBALIZATION AFFECT BUSINESS?HOW GLOBALIZATION AFFECT BUSINESS?HOW GLOBALIZATION AFFECT BUSINESS?HOW GLOBALIZATION AFFECT BUSINESS?

� Multi national companies (MNCs) need todeal with government in variouscountries, thus prune to ethical businessconduct.

� Corporations and individuals, especially� Corporations and individuals, especiallycorporations doing business globally, mustunderstand and evaluate the cultures ofthe people with which it wishes to dobusiness in order to ensure smoothtransactions and negotiations.

HOW BUSINESS & GOVERNMENT RELATE?HOW BUSINESS & GOVERNMENT RELATE?HOW BUSINESS & GOVERNMENT RELATE?HOW BUSINESS & GOVERNMENT RELATE?

� Governments create the rules &

frameworks in which businesses are able to

compete against each other. From time to

time the government will change these

rules and frameworks forcing businesses to rules and frameworks forcing businesses to

change the way they operate.

� Business is thus keenly affected by

government policy. Key areas of

government policy that affect business are:

HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)

1.1.1.1. Economic policies Economic policies Economic policies Economic policies – Government interferes the

country’s economy for reason to rectify economic

cycle. But some had triggered issues such as:

� E.g. some claimed that privatisation of government

agencies or institutions made workers lost their agencies or institutions made workers lost their

pensions.

� E.g. according to a statement made by a Public

Works Minister, the NSE was built for a projected use

of 160,000 vehicles per day, but is now being used

by 1,200,000 vehicles per day.

HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)HOW BUSINESS & GOVERNMENT RELATE? (CONT.)

2.2.2.2. Legal changes Legal changes Legal changes Legal changes – Government changes the laws regularly in

line with its political policies. As a result, businesses are

continually having to respond to changes in the legal

framework:

� E.g. The requirement for businesses to cater for disabled

people, by building ramps into offices, shops etc.people, by building ramps into offices, shops etc.

� E.g. Creating tighter antiantiantianti----competition law competition law competition law competition law on what

constitutes fair competition between businesses. [Further

reading material: Competition policies in Malaysia]

� E.g. Imposing requirements to reduce “glass ceiling”“glass ceiling”“glass ceiling”“glass ceiling” for

women and preventing sexual harassment at workplace.

ISSUE 1: BRIBE VS. GREASE PAYMENTISSUE 1: BRIBE VS. GREASE PAYMENTISSUE 1: BRIBE VS. GREASE PAYMENTISSUE 1: BRIBE VS. GREASE PAYMENT

Grease PaymentsGrease Payments

Relatively small sums of money given for the purpose of getting minor officials to:Relatively small sums of money given for the purpose of getting minor officials to:

• Do what they are supposed to be doing• Do what they are supposed to be doing faster• Do what they are supposed to be doing better

BribesBribes

Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might nottake. If the officials considered the merits of the situation only, they might take some other action.

Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might nottake. If the officials considered the merits of the situation only, they might take some other action.

Is “greasing” similar to “bribery”?Is “greasing” similar to “bribery”?Is “greasing” similar to “bribery”?Is “greasing” similar to “bribery”? Anti-Corruption Video

ISSUE 2: ENFORCEMENT OF JAKIM HALAL ISSUE 2: ENFORCEMENT OF JAKIM HALAL ISSUE 2: ENFORCEMENT OF JAKIM HALAL ISSUE 2: ENFORCEMENT OF JAKIM HALAL

LOGO W.E.F. 1LOGO W.E.F. 1LOGO W.E.F. 1LOGO W.E.F. 1STSTSTST JAN 2012JAN 2012JAN 2012JAN 2012

Can the Malaysian government makes it Can the Malaysian government makes it Can the Malaysian government makes it Can the Malaysian government makes it

compulsory for all companies claiming compulsory for all companies claiming compulsory for all companies claiming compulsory for all companies claiming

selling selling selling selling halalhalalhalalhalal product to display no other product to display no other product to display no other product to display no other selling selling selling selling halalhalalhalalhalal product to display no other product to display no other product to display no other product to display no other

than JAKIM certified HALAL Logo? Will this than JAKIM certified HALAL Logo? Will this than JAKIM certified HALAL Logo? Will this than JAKIM certified HALAL Logo? Will this

new requirement be construed as against new requirement be construed as against new requirement be construed as against new requirement be construed as against

the individual rights as what had been the individual rights as what had been the individual rights as what had been the individual rights as what had been

promoted by the Western countries?promoted by the Western countries?promoted by the Western countries?promoted by the Western countries?

ISSUE 3: THE SHARE SWAPPING BETWEEN ISSUE 3: THE SHARE SWAPPING BETWEEN ISSUE 3: THE SHARE SWAPPING BETWEEN ISSUE 3: THE SHARE SWAPPING BETWEEN

MAS AND AIR ASIAMAS AND AIR ASIAMAS AND AIR ASIAMAS AND AIR ASIA

1.1.1.1. List down the affected stakeholders.List down the affected stakeholders.List down the affected stakeholders.List down the affected stakeholders.

2.2.2.2. Has the Malaysia government made Has the Malaysia government made Has the Malaysia government made Has the Malaysia government made

the right decision when instructing the right decision when instructing the right decision when instructing the right decision when instructing

MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since MAS to swap shares with Air Asia since

many parties claiming that it was a many parties claiming that it was a many parties claiming that it was a many parties claiming that it was a

“win“win“win“win----lose” business dealing?lose” business dealing?lose” business dealing?lose” business dealing?

3.3.3.3. If you were the owner of MAS, what will If you were the owner of MAS, what will If you were the owner of MAS, what will If you were the owner of MAS, what will

be your decision then i.e. how will you be your decision then i.e. how will you be your decision then i.e. how will you be your decision then i.e. how will you

rectify the current situation?rectify the current situation?rectify the current situation?rectify the current situation?

ISSUE 4: THE SETTING UP OF LYNAS PLANT AT ISSUE 4: THE SETTING UP OF LYNAS PLANT AT ISSUE 4: THE SETTING UP OF LYNAS PLANT AT ISSUE 4: THE SETTING UP OF LYNAS PLANT AT

GEBENG, PAHANG.GEBENG, PAHANG.GEBENG, PAHANG.GEBENG, PAHANG.

Whose voices has more “right to be heard” Whose voices has more “right to be heard” Whose voices has more “right to be heard” Whose voices has more “right to be heard” Whose voices has more “right to be heard” Whose voices has more “right to be heard” Whose voices has more “right to be heard” Whose voices has more “right to be heard”

over the issue over the issue over the issue over the issue –––– politicians or the residents politicians or the residents politicians or the residents politicians or the residents

nearby nearby nearby nearby GebengGebengGebengGebeng areas? Why? areas? Why? areas? Why? areas? Why?

CONCLUSIONCONCLUSIONCONCLUSIONCONCLUSIONIt is inevitably for government to regulate It is inevitably for government to regulate It is inevitably for government to regulate It is inevitably for government to regulate

laws to control unethical or unlawful laws to control unethical or unlawful laws to control unethical or unlawful laws to control unethical or unlawful

business activities. But, as the laws is business activities. But, as the laws is business activities. But, as the laws is business activities. But, as the laws is

made by human being, there are certainly made by human being, there are certainly made by human being, there are certainly made by human being, there are certainly

few loopholes being manipulated by few loopholes being manipulated by few loopholes being manipulated by few loopholes being manipulated by few loopholes being manipulated by few loopholes being manipulated by few loopholes being manipulated by few loopholes being manipulated by

certain parties for personal interest. To certain parties for personal interest. To certain parties for personal interest. To certain parties for personal interest. To

overcome this risk, organization and its overcome this risk, organization and its overcome this risk, organization and its overcome this risk, organization and its

corporate people should create our own corporate people should create our own corporate people should create our own corporate people should create our own

method as “check and balance” method as “check and balance” method as “check and balance” method as “check and balance”

mechanism to ensure that we run our mechanism to ensure that we run our mechanism to ensure that we run our mechanism to ensure that we run our

business ethically.business ethically.business ethically.business ethically.

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