Ethics in international businessa reality check

Wim Wilms

Lecturer, MM-CE

What comes to your mind when you hear

Ethics in international business?

Wim Wilms?

One of my first international projects

Objective of this presentation

If something can be regarded as (un)ethical, depends!...

on the circumstances

Topic of this presentation: circumstances, or reality, in business

circumstances simple examples

Look at me!Netherlands vs Morocco

Burping: China vsNetherlands

First conclusion

Before judging about (un)ethicbehaviour, look at the

circumstances = check reality!

Reality in business = .?

An example: customs

at boarder Jordan-Iraq (2000)

Is this ethical or not?

And this?

What is the reality, or driving force, in international business?

Money. As a means to an end, or an end in itself

An example. Imagine

You sell very environmental-friendly products: energy saving lamps (ESL)

ESLs ARE A CLEAN ALTERNATIVE FOR NEW POWER PLANTS

Benefits ESLs

There are some 150 Million households in Europe. Suppose in each of these, three 60W incandescent lamps were replaced by CFL 11 watt and an average burning time of 5 hours per day .....

That would lead to an annual saving in energy equal to 10 x 600 MW power stations!

Enormous savings would also be achieved in reduction of CO2 emissions and pollution.

Which benefits would you communicate to customers and stakeholders?

1. Electric Utility

2. Consumers

3. Manufacturer/Trade

4. Government

Short assignment!

This one? Atmospheric pollution

1) A 60W bulb consumes 90.0 kW Hrs@ 1500 hours of usage / year

2) a CFL 11W consumes = 16.5 kW Hrs----------------

3) Energy saved per year per lamp = 73.5 kW Hrs

4) Energy saved per year for 1 Mln PLEU 11W = 73.5 Mln kW Hrs

5) In thermal generation, every 1000kW Hrs leads to1 Tone of CO2 emission. Hence the pollution reduction / year = 73500 Tons CO2

6) Additional SO2 reduction = 1470 Tons SO2

Or this one? About 90% of a lamps effect on the environment is through its energy consumption.

All other elements (materials, production, disposal) contribute to remaining 10%. That includes chemicals, energy used during production, the pollution by spent products, packaging, transportation, etc.

INTEGRAL ENVIRONMENTAL EFFECT

MATERIALS PRODUCTION USAGE DISPOSAL

90% (by energy consumption)

1. Electric Utilities BENEFITS (1/2)

Less problems

with peak

load

(blackouts)

Information about energy saving : whom do you trust most? (1991)

Before Utility CFL

campaign June 1991

After

December 1991

Utility Consumer guide Municipality Shop NOVEM * Other

45% 30% 9% 5% 7% 4%

52% 28% 8% 4%

8%

1. Electric Utilities BENEFITS (2/2)Better image

Load reduction per point (60W - 11W) = 49W

Monthly energy saving at 5 hrs / day = 30 x 5 x 49 Watt hrs = 7.35 kw Hrs

@ US$0.08 / kW Hr, his monetary savings per month = US$0.59

Savings for 24 months of use = US$14.16

Installment charge per month (eg.) to ESC = US$0.45 only !

Consumers initial payment to Philips Dealer = US$2.00

Total installment recovery @12 x 0.45 to ESC = US$5.40

ESCs final revenue/ lamp = US$7.40 !

With our guarantee of 2 Yrs, the consumer will save another US$ 7.08 in second year as well. So the lamp is virtually free to him !

2. Consumers BENEFITS: MONEY!

3. Manufacturer/trade

BENEFITS:

Consumer

Philips Dealer ESC

US$5.40

US$4.50

US$2.00

HIGHER SALES

= MORE

PROFITS

BENEFITS customers/stakeholdersare all related to money

Utility - decrease peak load, better image

Government - delay investments in new powerplants, less hard currencies needed,

less use of fuel

Consumers - lower electricity bills, less direct heat

Manufact. - more Sales, more profitability Trade and prominence in society

Before you start communicating your ethical messages

first find out the driving forces in business,

you might want to adapt your message

What can we learn from this?

We regard Development aid as ethical. Is it effective?

Downside of giving money

WHO gets the money?!

If you treat people like patients, they will act like it

It is not sustainable; when you stop giving, the project usually stops

Good example: microfinance(Making) money makes the world go round

If you treat people like competent business people, they will act like it!

Sustainable, because money is earned, not merely given away

http://www.youtube.com/watch?v=tE1l2_j0hDk&feature=related

What happened in Honduras;can you set up a clean project?

Last but not least:be careful with judging!

Why did he not want to fight in Vietnam?

China & Olympics: are we not allowed to judge?!

How does the East look at the West?

2 examples (August 2008): Russia Georgia China and human rights

Listen to Mr. Kishore Mahbubani http://www.uitzendinggemist.nl/index.php/afleveri

ng?aflID=7867159&md5=d9175f8b99423500e95dfabfb34330c8

Start 23:10 - 27:30 of -29:30 of - 30:10 of - 31:10 of -32:00

Joint conclusion: if you want to improve ethics in international business, what should you (not) do?