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ETS Business Major Field Test: International Business Ethics

Cultural Factors

Cultural differentiation may exist when two (or more) cultures interact and experience incongruence and disparity on many levels.  These may include: 

1. Language - There may be enormous discrepancies in teh meaning of words when translated.  This is especially the case in advertising slogans which rely on slang expressions which may translate awkwardly or offensively. 

2. Body Language - Everyday gestures, mannerisms, and even personal space varies greatly based on culture.

3. Punctuality - Acceptable margin of tardiness may vary greatly from culture to culture.

4. Conversational Etiquette - The subject matter and length oftime of a discussion can have extreme cultural variation.

5. Ethnocentricism - The notion that one's own culture is superior in some respect to another culture.

Areas of Ethical Conflict

Problems may arise when a corporation attempts to conduct business abroad in a culture whose practices are in great discord with that of the corporation's home country.  Potential areas of conflict include:

1.  Transfer of Jobs - Multinational Corporations (MNCs)  will sometimes transfer jobs to overseas locations in an effort to avoid local laws governing workman's compensation, unions, and minimum wage.  

2.  Resource exploitation - Some MNCs have been criticized for plundering local natural resources and then returning only a very small percentage of the profit to the local economy. 

3.  Discrimination - Racial, sexual, religious, or ethnic discirimation may be an expected part of traditional customs and behaviors.  

4. Price discrimination - Can be in the form of gouging (charging exorbitantly higher prices abroad due to the added cost of tariffs, taxes, transportation, and storage fees) or dumping (selling at substantially lower price to drive competitors out of business).

5. Bribery - In many cultures, bribery is standard business practice.  Oten there is a specific percent of the total sale that is the understood rate of the bribe.

6. Dumping Hazardous Products - Corporations try to sell hazardous products in a foreign market with less stringent laws or where local officials can be bribed. 

7.  Compromised Worker Safety - MNCs often favor conducting business in developing nations due to less regulation of labor, worker's rights, unionization, mimimum wage, and worker safety.