CHAPTER 1

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Question #1. Please share an example of a company you have some personal experience with (i.e., as a customer or an employee) that has been affected by the globalization forces listed in Chapter 1. This could be a large, medium, or small company, and the effects they've experienced or contributed to could be direct, indirect, or both. Please be as specific as you can about the changes you have observed, incorporating some of the key terms and definitions used in Chapter 1. As a young girl in rural Ohio, nothing was more essential than the acquisition of clothing that made a statement. The “Justice” clothing line manufactured through the Ascena Retail Group was the quintessential brand of clothing that I possessed. While some of academic peers may choose a company that has been positively affected by the globalization forces referred to in our textbook. As I read through the chapter, I determined that there were a couple different indirect forces that affected the well-being of the Justice Brand due to these forces’ effects on the Ascena Retail Group. The ARG had originally operated several different “working women’s” clothing lines (Dress Barn, Lane Bryant, Limited Too, Ann Taylor, Maurice’s). The group expanded their Limited Too line into Tween Brand clothing and developed “Justice.” I believe that Growing Consumer Pressures is one such force. According to multiple sources, there was a steady clothing sales decline globally within a three year time period (prior to the pandemic) - despite these declines, the ARG decided to keep production at all time highs. I don’t believe that ARG was able to “respond to consumers’ demand for increasingly higher quality, more cost-competitive offerings” for many reasons, one being that they had acquired multiple lines and (not to sound so cliche) had their hands in too many pots. ARG’s subsidiaries were basically producing and distributing the same product lines, competing against themselves. The “Justice” brand was just a casualty of ARG’s internal competitive environment. As is written in the text, “But as with the globalization of markets, companies must be careful not to push the globalization of production too far.” Even though there were signs of declines in clothing sales, the ARG components were thriving, they over shot and took a huge hit. Based on this observation, when internet sales began to skyrocket prior to the pandemic (look at multi-store shopping malls demise during the same time period), ARG was unable to continue distribution in the store front facility and according to GlobalData Retail, had an overall net sales decline in 2019, $5.49 billion compared to $5.57 billion in 2018, and an operating loss that widened to $681.4 million in 2019 from $88.9 million in 2018, as well as being hindered by more than $1.2 billion of long-term debt, according to GlobalData Retail.

Question #2. Please share your thoughts on how globalization affected the developments around the COVID-19 pandemic, in your opinion. Please specifically focus on the role of the global economic forces in how the pandemic was handled both internationally as well as domestically in different countries around the world. For a Experts, Researchers, Professionals and everyday normal citizens, have their own perspectives on the role of global economic forces in how the pandemic was handled by the diverse levels of different countries around the world. Many of these perspectives align with specific countries’ level of financial and production control. Yet, there is still a significant population of our world that has exposed the blatant trends of the pandemic that had already played a role in financial and production control limitations. The significant gap between the financially strong and weak was genuinely highlighted during the pandemic shutdowns, but not necessarily widened due to the pandemic. Many upstanding Americans believed that the foreign entities’ impact on our domestic situation was purposeful and manipulative. While the conspiracy theorists were shouting, “We told you so” in regard to their perspectives and predictions. The result, no matter what perspective you have/had, was the same. Primary, financially strong governments were in control of the financial dynamics of just about everyone else. Being dependent on a higher power, no matter the financial environment, will mean giving up control of any recovery from future catastrophe. Regarding China and the world’s dependency on it as the factory floor, the rest of the world is responsible for determining its own demise. History repeats itself and there is a reason why the evolution of financial success includes challenges that are not capable of being overcome. We may deny China some of the control it had in the past, but there are many ways in which its prevalence as a dominating, financial kingpin will remain. Question #1: Please compare the key differences as well as similarities between the economic systems of two different economically advanced countries of your choice (for example, the United States and China). The emphasis of this discussion should be on the economy and the markets; however, you can additionally discuss how ideologies, political regimes, and legal systems might influence economic development in the two countries you chose to compare. For a helpful link, please watch: Alibaba Tries to Go Global With ‘Singles Day,’ China’s Big Shopping Festival (wsj.com) (Links to an external site.) Question 1 The two national economies examined will be Italy and the United Kingdom. These two countries are similar in multiple aspects including the decline of GDP, GDP PPP (both in the trillions) and similarities in infrastructure as far as transport of goods is concerned. There are also some significant differences such as tax rate, manufacturing (% of GDP) and Current Account Balance which is 72.211 in Italy and - 72.578 in the United

Kingdom. The nations’ inflation rate changes in annual % are different, as well. The United Kingdom’s increase (@. 989), while Italy’s is in a decline (@ -.138). The economy of the UK is the fifth largest in the world compared to Italy as the 8th largest. A large percentage of the U.K.’s GDP is made up of services and Italy’s is luxury goods. Italy has risen from the ashes of its’ right-wing totalitarianism that according to the text, “permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism.” Now, Italy, like Great Britain, has established a mixed economy, “but extensive privatization has reduced state ownership of businesses in all three nations.” What strategies do some of the most prominent companies in these countries use to compete with each other (ex., Alibaba vs. Amazon)? I didn’t necessarily find specific, prominent companies within these two countries to compare, but there are components that play a key role in their success or demise. For example, Italy depends primarily on industry, luxury goods, and agriculture. The United Kingdom has a stronghold on the financial industry and is one of the upper echelons of aerospace and pharmaceuticals. Question 2 I chose two countries that I really have very little knowledge of, but I figured it would be worth the research: Saudi Arabia and Cuba. After reading more about these two countries, I have found that despite being one of the most wealthy countries, a large percentage of the population lacks basic needs. Cuba, also, has an unbalanced distribution of wealth, despite its improving fiscal health, there are limitations in place due to the lack of financial freedom (among other things). Both of these countries are controlled by the political institutions that govern the population, trade, investments, wealth, education, etc. Like the reference to China in the text, Saudi Arabia and Cuba both “lack democratic institutions; corruption is widespread and property rights are not always respected.” I felt like Table 1, which refers to the communist legacy, demonstrates the correlations between length of communist rule and indicators of democracy and corruption. Unfortunately, neither Saudi Arabia nor Cuba are mentioned in Chapter 2, therefore I am hoping I am not too far off in my comparison. Question #2: Please describe the key similarities and differences in the political regimes between two autocratic and/or highly corrupt, economically underdeveloped countries of your choice (for example, Iran, North Korea, etc.) Please conduct research online as well as incorporate key terms and definitions from Chapter 2. The emphasis of this discussion is on the political regimes; however, please feel free to discuss how politics, corruption, etc. can affect the culture and the social fabric of the societies in the two countries you chose to compare. For a helpful link, please watch: Ford to exit in India, take $2 billion hit (yahoo.com) (Links to an external site.) .

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Thanks to all who shared many great insights and personal stories here. I also wanted to share some additional thoughts on China, the disruptions to the global supply chain, and the dangers of over-relying on a single export market. China’s emergence as the world’s factory floor has been remarkable, as you all know. With its incredible capacity to meet global demand for low cost, efficient production, China has become the go-to destination for companies around the world, earning it the informal title of being the world’s factory floor. Now though, some are questioning whether China can, or should, hold onto that position. The COVID-19 pandemic has highlighted the vulnerabilities of relying on a single country for so much of the world’s goods. Supply chain disruptions have become the norm across nearly every industry thanks to congestion and closures at ports and temporary shutdowns at factories as the country works to maintain its zero-COVID policy. Early on in the pandemic, when the virus was rapidly circulating through China, closures delayed goods for weeks, and even now, some two years into the pandemic, supply chains continue to experience disruptions. This experience has clearly provided an incentive to companies to reevaluate their production strategies. The disruptions related to the ongoing trade dispute between China and the United States that began during Donald Trump’s term in office had already prompted some companies to reconsider their dependency on China. Now, that question is being raised for more companies across more countries and industries. Because China continues to be unmatched in its ability to produce the goods that companies need at competitive prices, it can be difficult to justify a move to other countries. However, countries like Vietnam, which, while not at the same level as China, have emerged as a competitive alternative in some industries. These alternative countries now have an opportunity to increase their presence as global production destinations. China may continue to be the world’s factory floor for now, but over the next decade, it may be forced to relinquish that title as other countries emerge as attractive production locations and companies seek to diversify production. Here is an important case study of a large company over-relying on China for much of its shipping operations: During the pandemic, the announcement by Danish shipping giant, Maersk, that operations would be temporarily suspended in response to closures at China’s Ningbo port meant further supply chain challenges for companies around the world. Maersk handles about one fifth of the world’s shipping containers suggesting that any disruption in its service could have a domino effect throughout the industry. With global demand for goods produced in China at record levels, any disruption in getting those goods to customers, could be costly. Indeed, just a week’s delay at the port has implications for some $4 billion worth of trade. While some companies may have developed work arounds, disruptions and delays like this ultimately raise the cost of shipping, a cost that then must be factored into calculations of overall production. If the Maersk service suspension results in a shortage of a critical part, factories elsewhere could be forced to temporarily close down as well, creating further ripples in the global economy. Here is another interesting case study of a country such as Vietnam over-relying on China as the largest consumer of its goods: The growth of the dragon fruit industry in Vietnam over the past decade has been notable. With a seemingly inexhaustible demand from China, the industry has grown by some 20 percent just over the last

decade. With a huge market just across the border, growers of dragon fruit and other fruits and vegetables have been able to capitalize on the opportunities that the globalization of markets has presented. Today, about 80 percent of the country’s dragon fruit is exported to China. Now though, China’s zero-COVID policy is wreaking havoc on those exports with truck drivers waiting for weeks at a time at border crossings that have suddenly been forced to close to comply with China’s zero-COVID policy. For Vietnamese dragon fruit growers, the situation can be devasting as the delays mean that their product, rather than being delivered to its destination, slowly rots at the border. Some trucks have been ordered to return with their product with the hope that at least some will be salvageable in the local market, but even then, any profit will probably be negatively impacted. The situation is a wakeup call for Vietnamese farmers that have become overly dependent on China as a market. Farmers look to diversify their markets going forward. However, this is going to be challenging for small farmers with limited resources and experience. Great posts, Everyone! Here is some additional food for thought on the two companies – Alibaba first and then Ford. The decisions and actions of these two companies are illustrative of how global business management decisions are made on the international business arena. In 1983, Theodore Levitt declared, in his now classic Harvard Business Review article, that technology was facilitating the trend toward global markets and standardized consumer products. Levitt claimed that national and regional preferences were disappearing, enabling companies to sell the same products the same way across the world. In a world where purchases can be made 24/7 with a click of a mouse and social media influencers attract armies of followers from around the world united in their shared interests, the influence of national and regional differences is indeed limited. Levitt would likely view Alibaba’s ambitions of making Singles Day a global event, to be entirely realistic and quite achievable. However, while Levitt’s arguments may hold in some situations, national market differences still demand that companies treat markets individually. Even if buying can be done with a click of the mouse, thereby allowing companies to set up standardized websites and marketing campaigns, companies must still, for example, establish country specific distribution channels. While some companies have developed standardized websites, others still tailor theirs to individual markets based on language differences, legal requirements, and so on, suggesting that there is still some way to go before Theodore Levitt’s arguments really hold true. Aside from the economic theory and Levitt’s arguments, there is no doubt that the evolution of online shopping and the emergence of social media have changed international marketing strategy. As you all may know, configuring the marketing mix of product, price, promotion, and place, is the starting point for international marketing. Alibaba’s decision to utilize social media influencers as part of its strategy to reach shoppers in multiple countries is in part a recognition of how the buying process has evolved with the growth of online shopping and social media, and a recognition that even in an era of global e-commerce, personalized experiences still matter. Social media influencers cut across cultural and national differences to focus on specific

customer segments sharing common preferences and interests. Through its use of social media influences, Alibaba will be able to similarly minimize the influence of national market differences and instead tailor its marketing strategy to specific customer groups as defined by the influencers. In China, social media influencers hold live stream shopping experiences to provide potential buyers with more details about the feel of fabrics, ease of use, and other aspects of products that are difficult to convey in a typical online shopping experience. Many Chinese shoppers rely on these personalized shopping experiences when making buying decisions. Alibaba is hoping to use this method to reach customers in other markets as well. By working with influencers from multiple countries, Alibaba will be able to reach potential buyers across the globe and simultaneously provide a customized shopping experience that will resonate with the influencers’ followers. In a more traditional setting that same customized experience would probably incorporate cultural differences. In this scenario however, customization focuses not on cultural or national differences but on differences between influencers and their followers. Should Amazon be concerned about Alibaba? Does Alibaba have any advantages over Amazon? Alibaba, sometimes referred to as the Amazon of China, has made no effort to hide its ambition of becoming the new Amazon of the world. In fact, the company, which is currently less than one third the size of its rival, is probably Amazon’s biggest threat. Alibaba had demonstrated that it has the technology to give Amazon a run for its money and seemingly deep pockets. Alibaba continues to lag behind Amazon in logistics, a situation that will limit Alibaba’s ability to catch its rival, however the Chinese company is working to correct that weakness. While the two companies are not identical in their product offerings, Alibaba, with its reduced fees for merchants, may be able to attract retailers that do not like the terms offered by Amazon or that view Amazon as a competitor. It is not yet clear if Alibaba’s focus on live stream as a selling technique through its platform will resonate with consumers outside of China, helping the company to target a wide range of customers. Alibaba’s domination of the market in China means that it has already cracked one of the largest markets in the world and can take that experience to other markets. Given Alibaba’s lock on China and Amazon’s dominance of the United States, the true rivalry between the two companies will emerge with Europe as the key battleground. Alibaba is currently the bigger player in Eastern European countries, while Amazon has a greater share of the market in Western Europe. Indeed, in a preview of what may be to come, Alibaba has targeted Europe as a key focus for its Singles Day shopping event. As for Ford and American automakers in general, the key question is, why has it been so hard for them to gain traction in the market in India? India, one of the most populous countries in the world with a growing middle class, is, at least on paper, the stuff of dreams for companies looking to expand their overseas revenues. Yet, one by one, America’s automakers, all of which entered the market in India with great enthusiasm, are pulling out after failing to gain any traction in the market. After 25 years, Ford still had less than 2 percent of the market for passenger vehicles and had rung up some $2 billion in operating losses. Ford’s failure is likely related to its inability to build the type of car that most Indian buyers are looking for. As the fifth largest auto market in the world, there is clearly demand for passenger vehicles in India. In contrast, Asian automakers,

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especially Maruti Suzuki and Hyundai have seemingly correctly identified how to build a car that fits the needs of the typical Indian buyer. Ford’s failure in India could potentially be linked to its manufacturing process. While few details are known about Ford’s production facilities in the country, it would seem that the company’s significant operating losses in India indicate a disconnect between the price it is selling its cars for and the cost of their production. Based on this analysis, it is critically important to learn from Ford’s mistakes and recognize the importance of understanding the local culture, consumer, and competitive market conditions when making foreign investments. Twenty-five years ago, India was poised to become the next big destination where demand for products would be strong and growing and where companies could be reasonably sure of success. Indeed, demand for cars was expected to be strong enough that most major automakers felt they had no other choice but to invest. India’s promises of easier access together with its relatively inexpensive workforce made it reasonable to expect that a company could be successful in the country. In the end though, economic growth in India has not been as strong as forecasted and the red tape that had been a barrier to entry has remained in place to some degree. For companies like Ford, these fundamental changes in the market have made it very difficult to successfully compete. Given that the company had a less than 2 percent share of the market, it is unlikely that its departure from India will result in any significant changes in India’s competitive landscape. For India’s consumers though, the departure of Ford and GM represent a loss of choice and possibly pressure on more dominant companies to upgrade their product offerings. More broadly, Ford’s departure from India will free up assets that can be better used elsewhere, potentially resulting in new competitive pressures in other parts of the world. At the same time, automakers from Southeast Asian have been able to dominate the passenger vehicle market in India. What have they learned about what it takes to succeed in India and in foreign markets in general? For example, Maruti Suzuki’s 45 percent share of India’s passenger vehicle market suggests that the company has optimized its competitive strategy in India. With such a dominant share of the market, it is clear that the company knows its customer, understands the price point at which to compete, and has figured out how to build cars that meet that price point while still generating a profit. American automakers failed to adequately make the adjustments they needed to their product design and to their manufacturing process to be able to compete against Maruti Suzuki. Does the Asian automaker designs vehicles specifically targeting Indian buyers while Ford produces stripped down versions of vehicles sold in other markets that fail to meet the needs of Indian buyers? Indeed, because India’s road system is very poor in some areas, cars need to be able to withstand different driving conditions. Additionally, even with the country’s relatively cheap labor force, in a country where price is a dominant factor in the buying decision, manufacturing needs to be as cost efficient as possible. If Ford simply duplicated its U.S. production process, rather than adapting it to better fit the Indian market, it may have missed opportunities to lower its costs. In general, when investing in foreign markets, it is essential to understand the competitive conditions in that market and the market itself if it is to be successful.

Chapter 3 Discussion Questions Please post responses for questions 1-4 below. For questions 2 and 3 below, please conduct some online research as well as reference the case studies and examples in the textbook. Useful sources for information are websites for Transparency International ( https://www.transparency.org/en (Links to an external site.) ), World Economic Forum ( https://www.weforum.org/ (Links to an external site.) ), etc. 1. What is the relationship among property rights (e.g., intellectual property), corruption, and economic progress? How important are anticorruption efforts in the effort to improve a country’s level of economic development? Question 1 As written in the text, “Economic Progress Begets Democracy” and a key component of progress is property rights which are derived during times of increased economic activity such as innovation and entrepreneurship. If an economy system has strong property rights, then there will be limited corruption and more economic progress. Property rights need to be better defined in order for capitalism to succeed. Without property rights, profits from innovative efforts will be expropriated and state owned economies will continue to apply excessive taxes and/or kickback to some “bound” beneficiary (legal corruption?). There were multiple examples given in the text regarding what happens when there is a lack of establishing legal title to properties (Haiti) and massive incidents in China. Anti Corruption efforts majorly improve a country’s level of economic development. These efforts allow planned and mixed economies who have found themselves in a place of stagnant economic progress to move ahead while others remain at a standstill. 2. Provide an example of a country that has been able to curb/ significantly reduce their corruption levels in modern history (i.e., the last 50-100 years). What factors contributed to the ability to accomplish this? How did this positive trend impact the country’s overall development, including its economic development? Question #2

According to the United Nations, about a trillion dollars in bribes are paid each year, and it is estimated that 2.6 trillion dollars are stolen annually through acts of corruption, a sum that is equivalent to more than 5% of world GDP. Costa Rica is an example of a country that has been able to curb its corruption levels in modern history (since the mid 80s). Despite extensive legislation and a regional commitment to control corruption, the Latin American countries continue to be undermined by it. Yet, Costa Rica which was a country intensely affected by corruption during the 60s - 80s has reduced its corruption levels as indicated in 2021’s Corruption Perceptions Index for Costa Rica where it was ranked 39/180. One factor that contributed to this goes back to the 1940s when a Civil War (due to the threat of Communism) broke out. Another factor would be the separation of judicial branch from the executive branch; while another came in the 1980s and 1990s in response to some major political and financial corruption scandals. The changes came when international involvement came about (new mandated institutions with the support of international donors. In 1996 Costa Rica also signed another international anti-corruption instrument, the Inter-American Convention against Corruption. This did not fix all of the issues though that Costa RIca had regarding corruption. In the early 2000s, The Public Ethics Solicitor’s Office provided regular training to public employees on public access to information regarding corruption. According to costarica.org, The country Costa Rica has a GDP of $71 billion, making it the 77th most powerful economy globally and the 10th most influential in Latin America. Considering it has a relatively small population, this is a fairly impressive position. When you adjust the GDP scores to take population into account, Costa Rica moves up to 75th place and sits just above the global average. This means that the country’s development is spread fairly evenly across the population, and that – for the most part – certain regions or sectors of the population have not been left behind. 3. Provide an example of a country experiencing increasing levels of corruption in recent history. What factors influenced this negative trend? How did it impact the country’s overall development, including their economic development? Question #3 An area that is experiencing increasing levels of corruption in recent history is South Africa. According to Bloomberg’s Misery Index and The Conversation, South Africa has seen a continuous increase in corruption which is perceived to be due to mild or nonexistence of consequence management to serve as deterrent to others; this has further emboldened the perpetrators. South Africa is the third-most miserable economy on earth according to Bloomberg’s Misery Index, which ranks major economies by inflation and unemployment expectations.

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Despite the Sustainable Development Goals (SDG) agenda developed by the United Nations, South Africa corruption escalates into unemployment, reduction in tax revenue, decline in business operation and ultimately, collapse of the economy.(Marianne Merten in Daily Maverick) The negative impact of State Capture and grand corruption in South Africa before and after the Zuma-Gupta presidency is what professionals and researchers deem responsible. The area’s overall economic development has been impacted by an increase in unemployment/underemployment, poverty, and crime rates. Corruption also instigates limitations on international investments, reduced government fiscal funding by investors (lenders) and may result in increased taxes which may result in country instability overtime . 4. Please watch the following video clip about Lebanon (especially closer to the end when the speakers talk about how Lebanon reached its current economic condition): Why COVID-19 could be the ‘last straw’ for Lebanon’s fragile economy | PBS NewsHour 5. (Links to an external site.) 6. . How does this clip tie to the reading from Chapter 3, in your opinion? Question 4 In Chapter 3, the primary question, “What determines the level of economic development of a nation?” was presented. This question ties to the clip on PBS NewsHour regarding Lebanon during the onset of COVID 19 and shutdowns due to the pandemic’s strike. Primarily, I believe that the impact of the lack of exports and the significant importing is causing a huge financial gap. Trade and government spending is also causing a deficit. Based on the information in Chapter 3, specifically that the geopolitical forces that are limiting economic progress - governmental conflicts, downturn in oil prices (at the time), bank crisis (mismanaged funds) and Lebanon’s default on loans, it is clear that Lebanon will be in this economic downturn for quite a while. Chapter 4 These examples of cultural differences between countries and differences among consumer preferences worldwide are still valid today. The cultural tendencies are obvious within the videos, and one would think that (as in the Target leaving Canada video) that professionals and masters of economic management would have been able to pinpoint what was going to happen in Canada with their products. When Target first moved into the Northeast Ohio area back in the early 90s, my mom was a reporter for a

newspaper and her bff from college was the person who analyzed data and statistics from areas that Target was planning on opening stores (at that time he worked out of Minneapolis). The local newspaper wanted to know why Target wasn’t going to open a store in Ashtabula (rural, low income levels), but was opening one in Painesville. The statistics were unbelievable because of the proximity of the Painesville Target to the Great Lakes Mall (Mentor), Target pinpointed that businesses were going to have to eventually connect GLM to the most western section of Painesville. The ability to compare business practices helps executives identify how good practices and techniques developed in one firm might be profitably applied to other firms. I feel like this statement from the textbook should be a no brainer for upper management/executives of any company (especially for Fortune 500s). Unfortunately, this is not the case and as with Carlos Ghosn there are numerous examples of top tier leaders failing their stakeholders. Chapter 5 Discussion Questions Please discuss your thoughts on the below three hypothetical scenarios: 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? As the text states, “Many of the ethical issues in international business are rooted in the fact that political systems, the law, economic development, and culture vary significantly from nation to nation.” In this case, the conflict falls into the host nation or the home nation allowances. Here in America, we do not fall into extreme child labor issues like other developing nations. Unfortunately, we do not necessarily take care of our own desperate youth population either. The American executive needs to abide by his company’s ethical standards despite the future that this young girl could have as a consequence. It is also an opportunity for the American executive to assist or initiate the elimination of these circumstances by working cooperatively with the host nation’s administrative staff and political leaders to address community issues like these. This could be an opportunity for a “school to work” transition opportunity for the company to develop a path for young people in this community.

2. 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? Question 1 As the text states, “Many of the ethical issues in international business are rooted in the fact that political systems, the law, economic development, and culture vary significantly from nation to nation.” In this case, the conflict falls into the host nation or the home nation allowances. Here in America, we do not fall into extreme child labor issues like other developing nations. Unfortunately, we do not necessarily take care of our own desperate youth population either. The American executive needs to abide by his company’s ethical standards despite the future that this young girl could have as a consequence. It is also an opportunity for the American executive to assist or initiate the elimination of these circumstances by working cooperatively with the host nation’s administrative staff and political leaders to address community issues like these. This could be an opportunity for a “school to work” transition opportunity for the company to develop a path for young people in this community. Question 2 In reference to the text, “ The Foreign Corrupt Practices Act (FCPA) in the United States…was subsequently amended to allow for “facilitating payments” to ensure that multinational companies were receiving the standard treatment in the host community. The manager should be conducting business as usual and there are multiple reasons for this. One reason is for the safety of his employees who can be targeted as part of a corruption scheme (well, I guess the U.S. doesn’t consider this corruption because it has allowed facilitating payments to exist). While there are no direct indications that the “donation” would be funneled into other aspects of the big man’s practices, the assumption is there. In reality, what effect will the manager denying a donation have on the company or on the community? The big man will continue to be productive in receiving donations from others and will continue to run his business. This could be the manager’s perception. Yet, studies and research shows that corruption reduces returns on investments, leads to low economic growth, reduces business incentives, etc. Unfortunately even here, on the hallowed ground of the United States, corruption has a strong hold within

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every community - whether it is an athletic facility who was strong armed by a local hospital affiliate via a large financial contribution (currently occurring between Spire, ACMC in Geneva, OH) which in turn drives smaller businesses out) or a generational politician who purposefully moves to a different state to forge ahead with his political agenda. It happens everywhere. Question 3 The administrator of the hospital should be directly involved in the revocation of the use of the personal protective equipment. There are numerous ways for the administrator to approach this change. Utilizing the 6 Determinants of Unethical Behavior would be a factual and legitimate way to do so. Each of these determinants allow this administrator to have evidence that would support his/her revocation of the use of the PPE. In my opinion, I believe that it should be easier than ever to determine (prior to purchasing/contract negotiations) proper purchasing agents - who to buy from and why. Looking at the “decision-making” determinant makes me believe that this administrator can refer to the straightforward approach of “Is It Ethical?” 3. An administrator at one of the largest U.S. hospitals finds out that a portion of the personal protective equipment they received was made by a Malaysian company Top Glove. The administrator immediately recalls a recent TV program featuring Top Glove and its terrible treatment of its employees (see the clip here: Revealed: Shocking conditions in PPE factories supplying UK – Channel 4 News ). What should the administrator do? The administrator of the hospital should be directly involved in the revocation of the use of the personal protective equipment. There are numerous ways for the administrator to approach this change. Utilizing the 6 Determinants of Unethical Behavior would be a factual and legitimate way to do so. Each of these determinants allow this administrator to have evidence that would support his/her revocation of the use of the PPE. In my opinion, I believe that it should be easier than ever to determine (prior to purchasing/contract negotiations) proper purchasing agents - who to buy from and why. Looking at the “decision-making” determinant makes me believe that this administrator can refer to the straightforward approach of “Is It Ethical?” Samira Askarova Sep 16, 2022 9:37 AM Not surprisingly, very impressive responses, Everyone! There is essentially a consensus among most of you as to what the ethically correct responses to these moral dilemmas should be. Although there is no one correct answer to various cases that may come up in international dealings (depending on the situation and its severity), most

multinational organizations in the world, like you, decided that zero tolerance to bribery and corruption is the best general way to handle such situations. These multinational organizations spend tremendous resources advertising their zero-tolerance policies and educating their employees to not give or receive bribes no matter how corrupt the countries they operate in are. What zero tolerance accomplishes, in the opinion of these organizations, is that once there is a grey area in an employee’s response to a case of bribery, corruption, etc., then the perpetrators will know that they can come and ask for more. However, if the answer is always “no”, then no matter how corrupt a country is, people there would recognize that the employees of this organization will never give or take bribes and will be forced to deal with the organization’s employees in a straightforward, legal manner. Employees of a multinational company would immediately lose their jobs, if they do not adhere to such policies. Time and time again this general approach proves to be effective although not always enforceable. You can read about an example of a zero-tolerance policy on the ING’s website and can find similar statements on many other company websites (ex., PwC, SSAB, Enel Group, etc.): https://www.ing.com/About-us/Compliance/Zero-Tolerance-Bribery-Statement.htm Here is a great article about “How to Say No” from the Strategy+Business magazine: https://www.strategy-business.com/blog/How-to-Say-No-When-It-Really-Counts

I must say that many of the developing (including emerging) countries in the world are plagued by widely spread corruption issues. It is best to understand this going in and to have proactive strategies for dealing with this issue, as described in the above articles, rather than finding oneself lost in a tough situation. It seems that new companies that enter a corrupt developing country are specifically targeted to figure out their level of tolerance to corruption. Once mistakes are made, they are not only harmful because they expose a company to continued extortions in the future, but they also carry negative PR implications and possible fines by the U.S. government and other governments that enforce anti-corruption legislation: https://www.state.gov/policy- issues/anti-corruption-and-transparency/ In the case of Top Glove that ships products to 195 countries in the world, early in the COVID-19 pandemic, the European Union and Britain pushed for the factory to work 24/7 to increase production. Given the fears with the pandemic, the ethics of the situation were probably not properly considered. The world was facing unprecedented demand for gloves, yet the gloves were being produced in sweatshop conditions. For the executive in our case or anyone buying Top Glove products, is it right to continue to buy them? Are there any alternatives? As you could all see from the video, the conditions at Top Glove were completely unacceptable. Many of you noted that the hospital executive in our case should stop ordering from Top Glove immediately. However, if everyone started to do that, limiting purchases from the world’s top producer of gloves until the company changes its human rights conditions implies that it would be even more difficult to secure the PPE needed by healthcare workers. Limiting the availability of PPE puts the health of doctors and nurses at risk in the middle of a continued global pandemic, and this could even result in reduced care for patients. If just the United States and the European Union, for example, find more expensive alternatives and impose sanctions on importing Top

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Glove’s products, because of the pandemic, glove orders from other, poorer countries would mean that Top Glove’s products would remain in high demand and the human rights violations would continue. Another possible complication is that families that are supported by exploited migrant workers could suffer because of the sanctions, if improving conditions at Top Glove factories means fewer job opportunities. This is a classic example of an ethical dilemma. The truth is that shareholders and stakeholders of any organization, including hospitals and national healthcare systems, like in Britain, have a moral obligation to demand change at Top Glove or at any supplier of products they use. Although this could have a temporary negative impact on families of Top Glove’s workers (by possibly reducing job opportunities), in the longer run, protecting human rights should be upheld as an essential, universal value for our modern civilization. Protecting the families of migrant workers is important (as it is important to protect healthcare workers and their patients), but not at the expense of the workers themselves. The challenge with ethical dilemmas such as this is that grey areas are slippery slopes. Until a line is drawn in the sand for what is acceptable and not acceptable for any one human being on the planet – no matter where they live – human rights violations will continue. Here too, zero tolerance policy does not necessarily mean stopping orders from Top Glove, but it means putting considerable effort into creating an international alliance that puts pressure on Top Glove by drawing the line in the sand and demanding significant changes at the factory. The best solution is a comprehensive, decisive action that can be spearheaded by the developed countries like the United States and Great Britain. Acting as world leaders when it comes to human rights obligations, they should work with other countries and international organizations to push for a solution that ensures that families, factory workers, and health care workers are all protected.

Another question here is why Malaysia is the world’s main producer of gloves. This is because they pay their workers such little wages that their gloves remain price competitive around the world. If better conditions for the employees are demanded, that would increase the price of their products. But then if Top Glove increases their prices, would another country using a production model similar to that of Top Glove step in to undercut higher-priced Malaysian-made gloves? The answer is most likely yes, and this happens all the time. Once again, however, the consumers of products (including governments and healthcare systems, etc.) would need to remain vigilant to ensure human rights violations do not repeat among the new suppliers. Some companies such as Dell, Inc. proactively monitor their supply chains by evaluating adherence to Dell’s policies for human rights among three or more layers of their suppliers (suppliers of suppliers of suppliers.) Once an issue occurs, if the product is linked to Dell or Apple or any other company, it doesn’t matter how many layers below the direct supplier the issue was discovered. If it has the company’s name, it would have negative PR connotations. Dealing with negative PR costs a lot of money (more money spent on advertising, corrective action, etc.) Therefore, being mindful of where their supplies come from (by properly vetting as much of their entire supply chain as possible) organizations and governments are in a position to truly affect how factories around the world are run and how employees around the world are treated. Pandemic – no matter how severe – is not an exception to this. This mindset is not only ethically correct but also helps companies and government agencies save time and money by not having to deal with negative PR issues. Chapter 6 Discussion Questions

Please post your thoughts on the following three questions: Question 1 Military methods, technology advances, trade protocols have all seen significant changes as time has progressed. I believe the impact on international trade was significant, but I don't think it had the same impact as it does today. In the video, the mere image of the sole freighter with the cargo containers is one that has had some of the most extreme consequences that has ever been experienced. Imagine freighters by the thousands, holding goods and essentials that are hindering millions of people's progress. That is the impact and significance of the war in Ukraine. The other part that is quite impactful, is that common public citizens have no idea the intense effect and consequences of this war. For example, just with the video and information about the fertilizer supply, the everyday person who is going to the grocery store to purchase frozen vegetables has no idea why there are no Frozen carrots or corn in the freezer aisle. Even a less direct effect, companies who utilize ingredients that are grown and processed after the use of such fertilizers, no longer have access to those products. Why is it then that cannot have peppers on your pizza? I know it may seem trivial, but that is a direct lasting effect. Question 2 The future trends and long-term effects of the war between Russia and the Ukraine are absolutely insane. Governments are going to manipulate political systems and conflicts in order to maintain control over specific commodities. End of story. Question 3 Some countries may not view international free trade is fair because they don't have access to extreme levels of commodities. For example, prior to watching the video, I really had no clue that that area of the world had control over such an extreme amount of fertilizer. Are business philosophers and researchers really surprised when access to specific commodities are withheld because of the government and political systems of different countries? Describe why some countries may not view international free trade as fair. War in Ukraine Cuts Fertilizer Supply, Hurting Food Prices and Farmers Fertilizer prices have reached record highs, with far-reaching consequences for farmers, agricultural yields and food prices. WSJ’s Patrick Thomas explains the reasons behind the surge and what it could mean for your wallet. Photo: Ryan Trefes Samira Askarova Sep 16, 2022 10:34 AM While an image of a small family run farm producing crops that are largely sold nearby may spring to mind when one thinks of farming, the reality is that much of the world’s food supply is produced on very large corporate farms. This is why, as most of you noted, wars today are significantly more impactful on the global production and trade

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than they were 100 or 200 (or even 50) years ago. Globalization is a continued trend, and the interconnectedness of the flow of goods and services among countries is only growing. Indeed, while the family farm is very much in existence and subsistence farming remains common and is essential to food security in some countries, the farming industry is very much a global one. The ingredients used in the fertilizers that are so essential to successful crop yields for example, are produced and exported from Russia, Belarus, the United States, and Canada. Ukraine is commonly referred to as the breadbasket of the world, a nickname reflecting its importance as a grain exporter. Animal feed is grown and exported from countries like China, the United States, Mexico, and India, while much of the world’s beef and poultry is produced and exported from the United States, China, and Mexico. The notion of out of season fruits and vegetables is no longer a concern for consumers in developed countries. Thanks to advances in transportation that allow ripened products to quickly be moved long distances across borders, consumers can now enjoy a range of fresh produce regardless of harvest schedules. Free trade and globalization have facilitated the development of a global food supply chain, where countries produce and export those products in which they are most efficient, while importing others. Consumers benefit from lower prices and greater choice. However, the global supply chain also means that any disruption to the free movement of goods can create a cascading effect of issues like those that are now threatening the entire global food supply. It is these cascading effects from the war between Ukraine and Russia that are having an impact on the world’s fertilizer or any other food-related supplies. Significant food shortages are especially concerning to those in poor countries where food security can be a daily battle. Prior to the war, Russia was the world’s largest exporter of fertilizer, followed by China, Canada, and the United States, while Ukraine was a huge exporter of grain. Now though, those exports have more or less stopped completely. Food prices have climbed rapidly across the world and thanks to higher prices on fertilizer, it seems likely that the gap in grain production left by Ukraine is unlikely to be filled by farmers in other parts of the world. Indeed, some farmers are choosing to delay planting their usual crops, hoping that fertilizer price will fall, while others are choosing to plant crops that require less fertilizer. Ensuing shortages will persist for some time, and the situation could get worse before it gets better. For those in developing countries, higher prices could mean making difficult spending choices, such as paying for higher priced food rather than education. No matter how tempting it might be for a country to increase its national production of goods and improve internal supply chains to become more self-sufficient and to avoid negative impacts from what goes on in the world, the trend toward globalization and

interconnectedness is likely to continue. What will contribute to its exponential growth is the advances in the speed of computing (ex., increase in affordability of super computing, quantum computing) and what it brings with it (sophisticated AI, proliferation of block-chain based global electronic currencies, proliferation of block-chain based software that can do things better, cheaper, faster than any other enterprise software we use today). Another development – a little more long-term – is the development of wide-spread space travel (ex., increase in affordability of global space tourism, space workers on the bases on the moon, workers to operate equipment to remotely extract minerals and water out of meteorites, workers on Mars, etc.) However, aside from the wide-spread space travel which may be more of the reality for your kids, it is the increase in AI and block chain technologies enabled by better and faster computing power that will have significant implications on your own careers, because it will make global trade easier, faster, and more transparent and will affect every possible business and organization of the future. These technologies, once widely spread, will redefine global economy as we know it today. There is more on some of these technologies in later chapters. Finally, when it comes to the fairness of free trade, new technologies also promise to even out the playing field for all countries, because access to technology will not be limited by the size and buying power of the country in the long term – only initially (ex., AI based software will become cheaper and more ubiquitous and will provide access to markets by helping smaller countries collaborate and communicate and make decisions, combing their efforts and purchasing power). Other factors in this proliferation will also play a role. For example, self-driving cars will be easier to implement in countries where there is not much road infrastructure in existence. Drones will be easier in countries where air travel is not as heavily protected. Countries with existing infrastructure will have a harder time with the changes that are needed. These developments promise to lift people and countries out of poverty in many parts of the world. They will provide easier access to education, goods, services, jobs, healthcare, international markets and negotiations that people living in poverty today do not have access to. AI and newer technologies are not a panacea for everything. However, they will most definitely have significant impact on international trade over the next decade and beyond. Reply

CHAPTER 1

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