Transnational corporations and marketing ethics in global market in post globalization.

Mahapatra, S.N. ; Kumar, Jitender

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Introduction

Globalization the process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies has brought rising prosperity to the countries that have participated. It has boosted incomes and helped raise living standards on many parts of the world, partly by making sophisticated technologies available to less advanced countries. Since 1960, for example, life expectancy in India has risen by more than twenty years and illiteracy in Korea has gone from nearly thirty percent to almost zero. These improvements are due to a number of factors, but it is unlikely that they could have occurred without globalization. In addition greater integration has promoted human freedom by spreading information and increasing choices. But in recent years, concerns have grown about the negative aspects of globalization and especially about whether the world's poorest the 1.2 billion people who still live on less than $1 a day--will share in its benefits. The beliefs that free trade favours only rich countries and that volatile capital market hurt developing countries the most have led activists of many strips to come together in an "anti--globalization" movement. The activists highlight the cost of rapid economic change, the loss of local control over economic policies and developments, the disappearance of old industries, and the related erosion of communities(Aninat;2001). Globalization is altering the world economic landscape in fundamental ways. It is driven by a widespread push towards the liberalization of trade and capital markets, increasing internationalization of corporate production and distribution strategies, and technological change that is rapidly dismantling barriers to the international tradability of goods and services and the mobility of capital.

After formation of World Trade Organization in early nineties of twentieth century the barriers in global market crumbled. Many of the developing countries changed their economic policies and adopted market oriented economy in order to invite the transnational corporations. Both transition economy countries (erstwhile communist countries under Soviet Block) and other developing and underdeveloped countries including China. People of the world have high hopes that the globalization will bring better products, services and quality for consumers. The markets are flooded with TNCs products. Transnational Corporations have entered these markets which were earlier closed or partially opened. No doubt consumers have number of brands to select but the companies who brought these products are really bringing ethical products to satisfy the consumers? India also opened its markets in 1991 and after that government gradually removed the hurdles from the markets. Today Indian market is flooded with multinational brands in automobiles, consumer electronics, durables, fast moving consumer goods, toys, agriculture products etc. May be superficially the products looks very good but the question is in the process of globalization of world market are the transactional companies' maintaining marketing ethics? Are they concern for consumerism and protecting the consumers' interest? Are they really selling good quality products every where or the quality differ in between developed and developing countries? Many developing and under developed countries do not have proper law to regulate the marketed goods and services though some countries they have guidelines but it is not sufficient to regulate and control these transnational corporations and because of these loopholes these TNCs are taking advantages.

Globalization in its lateral sense is a social change, an increased connectivity among societies and their elements due to trans cultration; the explosive evolution of transport and communication technologies to facilitate international cultural and economic change. The globalization can mean the formation of a global village closer contact between different parts of the world with increasing possibilities of personal exchange, mutual understanding and friendship between world citizens. Proponents of globalization claim that this leads to lower prices, more employment and better allocation of resources but the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institution involved in the system of globalization have not taken the interest of poorer nations and labour into account. Critics link globalization with corporatization, and the increasing autonomy of corporate entities to force nation--states to bend political policy to the will of corporate entities. Many conferences between trade and finance ministers of the core globalizing nations have been met with large and sometimes violent protest from opponent of "corporate globalism". There is much academic discussion about whether globalization is a real phenomenon or only a myth. Although the term is widespread, many authors agree that the characteristic of the phenomenon have already been seen at other moments in history. Also many note that those features that make people believe we are in the process of globalization, including the increase in international trade and the greater role of multinational corporations, are not as deeply established as they may appear.

Global marketing has become a necessary way of life for firms that want to survive and grow in the dynamic world economy of the new millennium. New markets are opening, and old markets are evolving. The majority of the world's population lives in so called "bottom of the pyramid". They represent an increasingly growing and important market that requires innovative responses by global markets. New competitors are appearing;

and old competitors are growing through alliances, acquisitions and mergers. The global village is becoming a global market place. To paraphrase, "no company is an island unto itself" (Terpstra; 2006).

Purpose of The Paper

The trading world today is rapidly becoming a global village. Various markets and countries continue to open up allowing corporations to transcend international borders. The result is greater competition and opportunities. Businessmen are no longer content with their home markets and venturing abroad to join a share in the global market. The UN estimates the member of transnational corporations has increased from some 37,000 in 1990 to over 60,000 in 2001, with around 800,000 foreign affiliates and millennium of suppliers and distributors along their value chains. In the quest for foreign business, there are ethical minefields. An investor will encounter different styles of practices, different standard of business behaviour and different culture and it lead to ethical questions in business. While seeking business opportunities by transnational corporation in other countries are they maintaining marketing ethics globally and those countries where less restrictive laws apply and unethical behavior is tolerated. This paper tried to explore ethical business practices by transnational corporation in different countries particularly in developing and under developed countries as compared to their home countries.

The main aim of the this paper is to

(i) Discuss the current ethical dilemma in globalization of world market

(ii) Examine how transnational companies violating marketing ethics and the interest of the global consumers

Globalization and Transnational Corporations

Globalization is an economic and political phenomenon profoundly affecting the choices and the consequences of choices of even the most locally determined institutions and individuals. Globalization is not an option we can choose but rather an imperative we can not ignore. However, rather than being an imperative that directly imposes duties, on the contrary it challenges one to discover how moral duty and ethical responsibility are still possible under the influence of these new global forces. It is that globalization as it is defining itself in our times is creating for humanity a new set of ethical challenges for which we have not yet discovered either the intellectual or spiritual resources to address(Sjursen;2003). The global ramifications of the events in East Asia, Russia and Brazil, the fact that national boundaries have often become irrelevant, are just some of the signs that we live in a new reality where globalization is no longer a process but a condition. Over the past decade the forces of economic globalization, political transaction and technical innovation have created new opportunities for improving the living standard of millions of people. For the first time in history most of the world's population lives in democratic societies and market--based economies, with the potential for increased political participation and economic prosperity. There are widespread concerns, however, that this potential is not being met, that many people are still facing high levels of inequality, insecurity and uncertainty, as well as new sources on conflict, environmental decline and lack of opportunity. Leaders from all countries, sectors and level of society need to work together to address these challenges by supporting sustainable human development and ensuring that the benefits of globalization are shared more widely. It is in the interest of business that these benefits continue both for companies and for other in society.

Globalization is the term used to describe the increasing integration of the world, particularly in terms of trade and economic ties between countries. It is characterized by the removal of trade barriers between countries and the creation of free trade blocs with large regions, like NAFTA and the European Union. It is also associated with the domination of world markets by multinational corporations (MNC). While countries align themselves through free trade agreements, multinational corporations bind countries and economies within their corporate webs. MNCs are very large companies which operate in more than one country. Their corporate headquarters usually remain in their country of origin, while subsidiaries carry on their business elsewhere. Typically, the parent company is located in a developed country where decision making is centralized and branch plant profits which flow back to parent company. While the branch plants or subsidiary companies operate in both developed and lesser developed nations, it is their behavior in poorer nation that many global activists and watchdog organization are most concerned about. Lesser developed countries (LDCs), in dire need of economic development and employment opportunities are more at risk of exploitation. Host countries both positive and negative impact by welcoming MNCs. On the 'pro' side MNCs bring some much needed economic benefits to LDCs, like jobs and increased prosperity. Weaker economies also gain when introduced to new skills and technology developed in industrialized world. Foreign investment helps improves infrastructure, like the building of transportations and energy networks, health care and water services. Sometimes, MNCs operate branch plants with better working conditions and less polluting technology than local operations. On the other hand, MNCs are also notorious for participating in the race to bottom that is locating in or out- sourcing to the country with the least environmental controls, lesser standards of health and safety in the workplace, poor records on human rights and the lowest cost for wages. Multinational corporations tend to motivated by profits, not social or environmental consideration. They can easily dominate the economies of LDCs and keep cost and wages low as they siphon profits 'offshore'--back to the parent company. Some multinational corporate are so huge that they have more wealth than some of the countries they operate in. Some are so powerful that they routinely interface with the internal affairs of the branch plant countries, poor and rich alike, to suppress legislation that would lessen corporate profits. And, if some government regulation or public policy does interfere with their bottom line, they simply pull up stakes and locate in or out-source to another country. Branch plants will also be the first ones to be closed by parent company during times of economic recession. Host countries have very little bargaining when threatened by closures or corporate pull-outs. However, multinational corporations also have the potential to use their power and wealth to improve global economic conditions and standards of living, ameliorate working conditions and put an end to sweatshops, take better care of the environment and even ensure that child labourers receive an education. We can all monitor the behavior of MNCs and take action to encourage them to step up to the plate, to help better the world. With the eyes of the world upon them, multinational corporations could make globalization a user-friendly term, rather than the dirty word it often is.

Global interdependence is a compelling dimension of the global business environment, creating demands on international managers to take a positive stance on issues of ethical behavior, social responsibility, economic development in host countries, and environmental protection around the world. However, there were still several large multinational companies indulging in ethically questionable practices. If TNC behaves unethically, it soon comes to the notice of the public and the company's image is tainted. Transnational are often worse off for having behaved unethically in the interest of short term gains, as the bad publicity generated by unethical practices leads to greater losses in the long run. In the challenge of modern society, manager or worker often encounters a situation than challenges one's ethical benefits and standards. Managing across border increasingly includes difficult ethical dilemmas. It is less clear where to draw the line between ethical behavior and the corporation's other concerns, or between the conflicting expectations of ethical behavior among different countries. Transnational corporations (TNC) are one of the most important actors in the global economy, occupying a more powerful position than ever before. In their persistent battle to increase profits, they have increasingly turned to the developing world, a world that holds many actions for them. Fifty years ago only a few hundred transnational corporations existed. Today they are some 65,000 of them with about 850,000 foreign affiliates across the globe. Sometimes called multinational organizations, they operate "across national boundaries in a context of nation states" and are engaged in almost every economic activity, most notably in agriculture food stuff, fishing, forestry, pharmaceuticals, mining, manufacturing, energy, tourism, transport, financial and other services. Mostly based in western economies, TNCs now occupy a powerful position in the global economy, accounting for around two-thirds of international trade. While most are comparatively small, some are huge. In 1999, fifty one of the world's one hundred largest economies were corporations, 49 were government (Madeley; 2003). These transnational corporations have become most powerful economic and political entities in the world today. For example, the combined revenues of just General Motors and Ford the two largest automobile corporations in the world exceed the combined Gross Domestic Product (GDP) for all of sub-Saharan Africa. The combined sales of Mitsubishi, Mitsui, ITOCHU, Sumitomo, Marubeni, and Nissho Iwai, Japan's top six Sogo Sosha or trading companies, are nearly equivalent to the combined GDP of all of South America. Overall, fifty-one of the largest one hundred economies of the world are corporations. The revenue of the top 500 corporations in the US equal about sixty percent of the country's GDP. Transnational corporations hold ninety percent of all technology and product patent worldwide and are involved in seventy percent of world trade. While global in reach, these corporations' home bases are concentrated in the northern industrialized countries. More than half come from just five nations: France, Germany, The Netherlands, Japan and the United States. But despite their growing numbers power is concentrated at the top i.e. the three hundred largest corporations account for one-quarter of the world's productive assets. The United Nations has described these corporations as "the productive core of the globalizing world economy". Their 250,000 foreign affiliates accounts for most of the world's industrial capacity technological knowledge, international financial transactions and ultimately the power of control. In terms of energy, they mine, refine and distribute most of the world's oil, gasoline, diesel and jet fuel as well as build most of the world's minerals from the ground. They manufacture and sell most of the world's automobiles, airplanes, communication satellites, computers, home electronics, chemical, medicines and biotechnology products. They harvest much of the world's wood and make most of its paper. They grow many of the world's major agricultural crops, while processing and distributing much of its food. Transnational corporations are more concerned about their own project than with the welfare of a host country. Corporate efficiency is good for profits but it can drive small scale companies in developing countries out of business. TNC have been powerful enough to lead industrialization in some countries, but there is evidence that such TNC led industrialization in several Asian countries has been achieved at a severe cost to agriculture and rural development. It is significance that the presence of TNCs in poor countries has widespread internal inequalities. Almost all the studies that have done on the effects of FDI have concluded that it has led to an uneven income distribution in developing countries. TNCs produce goods and services for those who have purchasing power; they cannot meet the basic needs of people who do not have the money to express their needs in the market place. The corporations apply their knowledge to make comparatively luxury goods and services. The nature of their products and knowledge may create biases against the poor, very few of whom are its direct customers, employees or source of supply.

International Business Ethics And Global Marketing

Globalization has multiplied the ethical problems facing organizations. Yet business ethics have not yet been globalized. Attitude towards ethics are rooted in culture and business practices. The term international business ethics refers to the business conduct or morals of TNCs in their relationships with individuals and entities. Such behavior is based largely on the cultural value system and the generally accepted ways of doing business in each country or society (Deresky; 2006). Ethics are defined as the process of distinguishing of the right and good from the wrong and bad and they imply a moral duty to pursue the good and the right. Business ethics are concerned with the good and right and the bad or wrong behavior in the business context. International business ethics apply to the varying business ethical issues in diverse country culture. Social responsibility is conceptually allied to business ethics and business should act more responsibly beyond the pure profit or economic motive (Godiwalla and Damanpour; 200 6). Business ethics is concerned for good behavior and obligation to consider not only own personal well being but also that of other human beings. Business ethics involves the capacity to reflect on values in the corporate decision-making process, to determine how these values and decision affect various stakeholder groups, and to establish how managers can use these observations in day-to-day company management (for detail see Business Ethics Timeline in Table-1).

Marketing is typically perceived as something that is "due" to customer; something that customers have to "watch out for". The fundamental of marketing principle and the ethics has said marketer tries to satisfy the consumers. In rapid globalization of world market in nineties it is highlighted dramatic instances of firms' unethical, irresponsible, and illegal activities. This behavior is not good for the firms; their constituents, who include customers and stockholders; or the public at large. In today's scenario the global marketing situation is so worse that it difficult to pickup a newspaper or a magazine without finding some issue in marketing being subject to criticism for lack of ethical sensitivity. In the recent past some typical issues have included, among others, truth in advertising (the old favourite), planned obsolescence product decisions (Product intentionally failing after predetermined amount of time), data privacy, selling practices, price gouging and marketing to minors (alcohol and tobacco). It is somewhat surprising that ethical issues keep arising despite both teleological (customer satisfaction) and deontological (code of ethics) methods adopted by marketing professionals to prevent unethical behaviour (Hartman and Chatterjee; 2007). American Marketing Association code of ethics in marketing insist that marketer must accept responsibility for the consequences of their activities and make every effort to ensure that their decisions, recommendations and actions functions to identify, serve and satisfy all relevant publics; customers, organizations and society (see detail of American Marketing Association(AMA) code of ethics).

AMA Code of Ethics

Honesty and Fairness

Marketers shall uphold and advance the integrity, honor and dignity of the marketing profession by:

1. Being honest in serving consumers, clients, employees, suppliers, distributions and the public.

2. Not knowingly participating in conflict of interest without prior notice to all parties involved

3. Establishing equitable fee schedules including the payment or receipt of usual customary and/or legal compensation for marketing exchanges.

Rights and Duties of Parties in the Marketing Exchange Process

Participants in the marketing exchange process should be able to expect that

1. Products and services offered are safe and fit for their intended uses

2. Communications about offered products and services are not deceptive

3. All parties intend to discharge their obligations, financial and otherwise; in good faith

4. Appropriate internal methods exist for equitable adjustment and/or redress of grievances concerning purchases.

In the area of Product Development and Management

* disclosure of all substantial risks associated with product or service usage

* identification of any product component substitution that might materially change the product or impact on the buyer's purchase decision

* identification of extra cost-added features.

In the area of Promotions

* avoidance of false and misleading advertising

* rejection of high-pressure manipulations, or misleading sales tactics

* avoidance of sales promotions that use deception or manipulation

In the area of distribution

* not manipulating the availability of a product for the purpose of exploitations

* not using coercion in the marketing channel

* not exerting undue influence over the reseller's choice to handle a product

In the area of pricing

* not engaging the price fixing

* not practicing predatory pricing

* disclosing the full price associated with any purchase

In the area of marketing research

* prohibiting selling or fundraising under the guise of conducting research

* maintaining research integrity of avoiding misrepresentation and omission of pertinent research data

* treating outside clients and suppliers fairly

Source: American Marketing Association's Code of Ethics, www.marketingpower.com

Large, expensive automobiles please their owners but increase the pollution in the air, the congestion of traffic and the difficulty of parking and therefore reduce the owners' long term satisfaction. The food industry is oriented towards producing new products which have high taste appeal and nutrition has tended to the secondary consideration. Many young people are raised a diet largely to potato chips, hot dogs and sweets which satisfy their tastes but harm their long term health. The packaging industry has produced many new convenience features for the American consumers such as non-reusable containers, but the same consumer ultimately pays for their convenience in the form of solid waste pollution. Cigarette and alcohol are classic products which obviously satisfy consumers but which ultimately hurt them if consumed in any excessive amount. Business has not worried about this so long as consumers have continued to buy their products. But while consumer buys as consumers, they increasingly express their discontent. The transnational corporations who are operating so many countries are these companies really acting in the best long run interest of consumers and society. The fast food hamburger industry offers tasty but unhealthy food. The hamburgers have high fat content and the restaurants promote fries and pies, two products high in starch and fat. The products are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems. Marketer should build social and ethical consideration into their marketing practices. Companies must balance and juggle the often conflicting criteria of company profits, consumers' want satisfaction, and public interest. Increasing globalization of market the companies are forgetting the social marketing concept which expect that companies should p reserve and enhance the consumers' and the society well being and take the following initiatives(see Marketing and Social Initiatives).

Marketing and Social Initiatives

Corporate social marketing         Supporting behavior change campaign

Cause marketing                    Promoting social issues through
                                   efforts such as sponsorships,
                                   licensing agreements and
                                   advertising.

Cause-related marketing            Donating a percentage of revenues
                                   to a specific cause based on the
                                   revenue occurring during the
                                   announced period of support.

Corporate Philanthropy             Making gifts of money, goods or
                                   time to help non-profit
                                   organization, groups or
                                   individuals.

Corporate community involvement    Providing in-kind or volunteer
                                   services in the community.

Socially responsible business      Adopting and conducting business
practices                          practices that protect the
                                   environment and human and animal
                                   rights.

Source: Philip Kotler and Nancy Lee, 2004 "Corporate Social
Responsibility: Doing the most good for your company and your cause",
Wiley.

TNC and their Global Marketing Practices

Ethical and socially responsible conduct of a multinational corporation is an important concern today. Ethical conduct usually beyond the legal conducts an important requirement for MNCs in most countries. Expectations of both ethical conduct and socially responsible conduct may vary in cultures of different countries (Godiwalla, Damanpour; 2006). The globalization process increasingly brings countries closer on essential issues and that tends to make core values for many ethical issues similar such as honesty, fairness, integrity, protecting, ecology, meeting and raising industry norms. From transnational corporation it is expected globally that they should maintain some moral character (see characteristics of well perceived companies) while doing business in different countries.

Characteristics of Well Perceived Companies

* Make products that are safe

* Does not pollute air or water

* Obeys the law in all aspect of business

* Has a commitment to safe workplace policies

* No misleading / deceptive advertising / marketing

* Packaging / containers are "environmentally friendly"

* Recycling program within company

* Responds quickly to customer problems

* Waste reduction program within the company

* Continually tries to improve quality

Source: Walker, Frank D. (1999): "Corporate Character and Ethics--A Competitive Difference?", Business and Society Review, 104:4, PP.439-458.

Companies should produce safe goods and services for the customers worldwide but the imperial evidence shows the transnational companies are violating these norms. Considering following instances it clearly shows how the marketing ethics is violated in the name of earning profit. Firms increases its sales of cigarettes in countries such as Indonesia because of growing restrictions and liability issues placed on them in markets such as the United States. Pharmaceutical firms rarely focused R&D dollars on developing drugs to fight diseases such as malaria, a disease that kills millions of children around the world, as such disease are not prevalent in the firms principal markets in Europe and the United States. Toy and clothing manufacturers are sourcing their products from suppliers who do not respect labour rights. An independent agency is asking to audit and certify the manufacturing practices of toy firms such as Mattel. In the United States there are many well-documented cases of unethical behavior in the part of individuals and corporations that led to the Sarbanes-Oxley Act of 2002, as well as the antifraud actions being pursued by the European Commission, the OECD and the International Federation of Accounts. The Environmental Investigation Agency has noted that Indonesia is losing an area of forest the size of Switzerland every year. The Indonesian government estimates that illegal logging cost $ 3 billion a year in lost revenues in addition to environmental damage and China is a major market for Indonesian timber, but the country does not assume responsibility for the illegal logging and cutting down of forests in Indonesia. Now here should international marketing managers focus just on making a profit, let governments regulate their behavior and practice compliance with the letter of law? This is an extension of the classic free-market Friedman position that the job of business is to make a profit. However there are several reasons why international business should concern with ethics. All firms need to worry about their legitimacy. Corporations are granted permission by society to operate with legal limited liability, to raise capital etc and if they do not behave responsibly their existence might be threatened (Terpstra; 2006).

Transnational corporations have more power compared to total firms, total consumers and perhaps total governmental authorities. They also have accumulated more knowledge about products, markets, consumer behavior and social consequences of their actions. Therefore transnational must be careful to use this power ethically. TNCs may find that have to balance conflicting total values and corporate values. They must judge, them, when to adapt to total standards and when to hold on to their moral standards which may be western, but they consider to universal.

Corporations need to be ethical because they are creation of society and are allowed to exist, to carry on business, to limited liability and to be granted legal protection in areas such as contract law, all at the sufferance of society. In return, society expects corporations to keep social interests in mind when conducting business. In a sense, business exists in corporation with society and cannot survive for the long term of it practices continual unethical behavior. Such unethical behavior hurts society, consumers, suppliers, workers and the general welfare (Terpstra; 2006). Unethical behavior will result in a gradual erosion of society's acceptance of and patience with the corporation. It is in the long-term self interest of the corporation to practice ethical behavior. Firms have to obey the law and legal compliance in satisfying society's expectation in ethical behavior. Firms need to explore and establish for themselves the ethical standards that will govern their behavior. To conduct business activities in an ethical manner, a firm needs to develop moral standards that will serve as a foundation for all of their behavior. If a MNC has one set of ethical standards in the home country and different ethical commitments in host countries cognitive dissonance will be created. The MNC should include standards that are applied universally i.e. in both the home country and in host country subsidiaries.

Nestle, Swiss multinational company was criticized for using genetically modified (GM) ingredients in its food products, and was accused of dumping products rejected in Europe in developing Asian countries where the laws on GM products were either absent or less stringent. Genetically modified foods are lab-created grains, vegetables, fruits and other primary foods. Their use has been somewhat controversial. Some people are concerned about the consequences to their health of the use of these products. Therefore providing unsafe products standards and ill-informed consumers by Nestle is absolutely wrong. In another case Nestle launched bottled water, called "Pure Life" in some Asian countries like Pakistan and India (in 1998 and 2001 respectively). Nestle introduced bottle water which provided safe clean water but priced it so high that it was unaffordable for the lower income groups. It turned water into a luxury by pricing it around $ 0.4 (in Pakistan) for a one litre bottle. Accordingly to utilitarianism, ethical action is evaluated by looking at its consequences, weighing the good effects against the bad effects on all the people affect by it. Most developing countries lacked basic drinking water facilities. A very high water price was charged by Nestle limiting a number of people to buy it. Nestle's action produces the worse for the greatest number of South Asian because people could not afford for water which is basic human needs and is sporadic and contaminated in South Asian Countries.

Nestle, one of the biggest purchasers of cocoa from Ivory Coast, a country in West Africa. UNICEF studies and International Labour Organization (2002) revealed that the workers on this plantation lived and worked in poor conditions. They were paid minimal wages and exploited by the land-owners. Most of the workers had been trafficked by bought and sold, making them practically slave labour. Nestle purchased cocoa from these farms despite its awareness of the conditions of the labourers, thus making it a party to their exploitation. Child labour was also employed on the plantation. UNICEF and the International Institute of Tropical Agriculture (IITA) studies (2002) revealed that over 200,000 children were shipped to Ivory Coast and other cocoa producing countries in Western Africa from neighboring countries like Mali and Burkina Faso, to work on plantation especially during the harvesting of cocoa or coffee beans. Thomson & Strickland (2003) asserts that a company has ethical duties to owners, employees, customers, suppliers, the communities where it operates and the public at large. The norm of doing no harm requires Nestle's management to look beyond its own interests (i.e. cheap cocoa, and high market-share).

Unethical marketing of infant formula and GM foods in developing countries are example of doing harm knowingly and willingly and of benefiting from the lack of legal restraints to the detriment of the eventual consumers. International business ethics refers to the conduct of MNCs in their relationships to all individuals and entities with whom they come into contact. If business follow Kant's rule, it will provide a quality and safe product to its entire market. Nestle decision to sell unsafe GM foods even it knows that the product is unsafe is unethical. In addition, Nestle's marketing strategy in developing countries was to distribute free samples to nursing mothers, thus getting the baby used to the formula very early in order to get a hold on its competitive market. Unethically, Nestle promoted the use of infant milk formula as a substitute for mother's milk. This unethical manner causes widespread infant malnutrition and susceptibility to infection, which could even load to infant death. For consumer safety, Nestle did not respect the laws and regulations of the countries in which they operate with regard to consumer protection. In China there is a regulation of GM food, which required that all products which were contained GM ingredients be labeled explicitly. Despite consist of GM ingredients, Nestle products were not labeled. Indeed, it could not unilaterally continue with its double standard practice and ignore the concerns and demands of the general public in Asia.

Thirty years ago, most developing countries had in place mechanism aimed at maintaining a relatively constant price for food commodities. Tariffs on imports protected total farmers from fluctuations in global food prices. Government-run grain purchasing boards paid above-market prices for farm goods when prices were low, and required farmers to sell below-market when prices were high. The idea was to give farmers some certainty over price and to keep food affordable for consumers. The most of the developing countries who produced enough food to feed themselves are now 70 percent are net food importer is happening because over the last three decades, the system was completely abandoned in country after country. It was replaced by a multinational dominated, globally integrated food system, in which the World Bank and other institutions coerced countries into opening their markets to cheap food imports from rich countries and reorienting their agricultural systems to grow food for rich consumers abroad. Proponents said the new system was a "free market" approach, but in reality it traded one set of government interventions for another a new set of rules that gave enhanced power to a handful of global grain trading companies like Cargill and Archer Daniel Midland, as well as to seed and fertilizer corporations. Coca-Cola whose products are available in more than 200 countries around the world, eight more than the number of nations that belong to the United Nations is aggressively marketing to children by featuring Harry Potter imagery on packages and in advertising for its carbonated and non carbonated drinks. The purpose of using Potter promotion "Live the Magic" was to entice Kids to drink more soft drinks. Over consumption of Coca-Cola and their sugar-laden soft drinks contributes to obesity and diabetes reduced nutrient intake and tooth decay. Consumption of soft drinks has soared over the past two decades contributing to the doubling in the percentage of obese teenagers and that obesity epidemic in fueling a diabetes epidemic (George Washington University Medical Centre). Globally, the World Health Organization (WHO) reports soaring growth in three non-communicable diseases-heart disease, strokes and diabetes. Unhealthy diets lie at the root of this surge in non-communicable diseases. Worldwide at least 2-6 million people die each year as a result of being overweight or obese. Throughout the world, about 22 million people under the age of five are already overweight. In China, Russia and India alone, the WHO estimates to losses in national income from these diseases alone will cost roughly $1.1 trillion over next decade.

Wendy's International Inc. $2.5 billion company with more than 6,600 restaurants in 21 countries and territories the third largest burger chain in the world after McDonald's and Burger King announced in 2006 that it would almost entirely eliminate trans fat from its fried foods. However, according to the Centre for Science in the Public Interest (CSPI), testing done by Consumers Union in November 2006 found 2.5 grains of trans fat in a large order of fries. CSPI's new tests in 2007 conducted more than a year after Wendy's announcement found even more. Wendy's performance did not live up to its promise.

Mattel Inc. the world's largest toy corporation with $ 6 billion revenues recalled nearly two million of its toy products in 2007 because they contained dangerous levels of lead. In the worst cases, lead paint in Mattel toys was found to be 180 times than acceptable limit. Sucking on or ingesting toys with high lead content can be extremely poisonous for children, causing learning and behaviour problems and even death in some cases. In addition to its lead toy woes, Mattel recalled an additional eighteen million toys because they featured easily swallowed magnets that could damage children digestive tracks.

Today everybody understand that pollution from cars causes global warming so Toyota's low emission forty eight miles-per-gallon (mpg) Prius hybrid-means less global warming pollution. Unfortunately, the overall truth about Toyota is well inconvenient. The carbon foot print of Toyota's overall car fleet remains dinosaur esque, and their lobbyists are working to kill national legislation that would force them to stop selling their gas guzzlers by 2020. Toyota is actively lobbying congress to defeat the proposed measure to increase fuel-efficiency standards to 35 mpg by 2020. The standard would cut more than 200 million metric tons of global warming pollution in 2020 alone.

Enormous power corrupts enormously (Lord Acton) and this applies to Swiss Pharma Company Roche. Roche makes a range of HIV-related drugs. One of them is enfuvirted, sold under the brand-name Fuzeon. Fuzeon is the first of a new class of AIDS drugs working through a novel mechanism. It is primarily used as a "salvage" therapy--a treatment for people for whom other therapies no longer work. Fuzeon brought in $266 million to Roche in 2007 but Roche charges $ 25,000 a year for Fuzeon. It does not offer a discount price for developing countries. Like most industrialized countries, Korea maintains a form of price control the national health insurance programme sets prices for medicines. The Ministry Health, Welfare and Family Affairs listed Fuzeon at $ 18,000 a year. Instead of providing Fuzeon, for a profit, at Korea's listed level, Roche refuses to make the drug available in Korea. Roche insist that Fuzeon is uniquely expensive to manufacture, and so that it cannot reduce prices. According to Korean activist they told them we are not in business to save lives, but to make money. Saving lives is not our business.

Chevron, the world's sixth largest oil corporation is responsible for the world's largest environmental disaster. Between 1972 and 1992 Texaco (since acquired by Chevron) extracted 1.5 billion barrels of oil from Ecuador, at the same time leaving behind nineteen billion gallons of waste and nearly 17 million gallons of crude oil. As a direct result, nearly two and a half million acres of rainforest were destroyed and several indigenous tribes either vanished completely or were uprooted from their ancestral homes and ways of life. In some villages near polluted water sources, children are three times more likely to contract cancer than those living further away from the contamination and miscarriages are common. One of the unresolved issues in Nigeria is Chevron's foot dragging in eliminating gas flaring, which subject the densely populated urban areas surrounding the corporation's production facilities to noise, light and environmental pollution from thirteen foot gas flares that spew particulars into the air, leading to pervasive respiratory problems.

Mining is the world's fifth largest industry and one of the most environmentally destructive activities. In recent years, TNCs have increasingly moved to the Southern hemisphere where the opportunities are larger and the mining industries are less regulated. In the wake of liberalization and privatization, governments of developing countries, which were once suspicious of mining TNCs? Since the beginning of 1990s, 70 countries, including 31 in Africa, have opened their doors to international mining companies. The mining business has removed 100 million people most of them in developing countries from their land where they lived and farmed. Mines produce huge waste dumps are often health and safely hazards is a threat to human life. The mines waste contaminates water sources both near the mine and far away and sometimes very far away from the area of mining activity. TNCs are also accused of relocating production factories to developing countries to evade strict environmental regulations (the so-called pollution havens). From the date 1980, onwards mounting public awareness of global environmental problems such as the destruction of the ozone layer, global warming and the destruction of tropical rainforests, has also led to renewed interest in this issue (Kolk, 1998). It turned out to be a breeding ground for a large-scale mobilization against the dumping of Shell's Brent Spar Oil Platform into the ocean and mounting distrust of oil TNCs in general.

Consequences of Unethical Marketing Practices

Corporations need to be ethical. Corporations are a creation of society and are allowed to exist, to carry on business, to bear limited liability and to be granted legal protection in areas such as contract law, all at the sufferance of society. In return, society expects corporations to keep social interests in mind when conducting business. In a sense, business exists in cooperation with society and cannot survive for long term if it practices unilateral unethical behavior. Such unethical behavior hurts society consumers, suppliers, workers, and the general social welfare. Unethical behavior will result in a gradual erosion of society's acceptance and patience with the corporation. It is in the long-term self interest of the corporation to practice ethical behavior. Firms have to obey the law, and legal compliance may be seen as satisfying society's expectations of ethical behavior. If the home country norms vary widely from host country norms then MNC be likely to fail if it practiced home country norms that were at wide variance with those in the host country and in this situation customers may not buy their product. If such situations occur the MNC must consider how important ethical practice is. If a MNC has one set of ethical standards in the home country and different ethical commitments in host countries, cognitive dissonance will be created. The ethical climate of the MNC will become confused and the ethical climate which had been an asset that provided competitive advantage will be diluted. To prevent the negative consequences of cognitive dissonance, the moral climate of the MNC should include standards that are applied universally i.e. both the home country and in host country subsidiaries. All MNCs should follow the concept of "market morality". Market morality mean a morality that the vast majority of firms would attempt to practice, because adopting those moral practices are either necessary for economic survival or give one a competitive advantage that enhances firm success. The firms are driven by market forces to adopt the ethical commitments which are necessary for economic success or provide competitive advantage. If TNCs behave unethically it will soon come to the notice of the public and the company's image will be tainted. Transnational Corporations are often worse off for having behaved unethically in the interest of short term gains but the bad publicity generated by unethical practices leads to far greater losses in the long run. The consequences of ethical failure are even greater. The cost of ethical failure can be very high not just in financial penalties there can be a loss of trust and trust is important to all constituencies of a business, employees, share holders and customers (Moore; 1999).

References

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S.N. Mahapatra

Reader

Department of Management Studies

Deenbandhu Chhotu Ram University of Science & Technology, Haryana.

Jitender Kumar

Lecturer

Department of Management Studies

Deenbandhu Chhotu Ram University of Science & Technology, Haryana.

Table--I
Business Ethics Timeline

Decade   Ethical Climate

1960s    Social unrest. Antiwar sentiment. Employees
         have an adversarial relationship with
         management. Values shift away from loyalty
         to an employer to loyalty to ideals.
         Old values are cast aside.

1970     Defense contractors and other major industries
         riddled by scandal. The economy suffers through
         recession. Unemployment escalates.
         There are heightened environmental concerns.
         The public pushes to make business accountable
         for ethical shortcomings.

1980s    The social contract between employers and
         employees is redefined. Defense contractors are
         required to conform to stringent rules.
         Corporations downsize and employees' attitudes
         about loyalty to the employer are eroded. Health
         care ethics emphasized

1990s    Global expansion brings new ethical challenges.
         There are major concerns about child labor,
         facilitation payments (bribes) and environmental
         issues. The emergence of the Internet challenges
         cultural borders. What was forbidden becomes
         common

2000s    Unprecedented economic growth is followed by
         financial failures. Ethics issues destroy some
         high profile firms. Personal data is collected and
         sold openly. Hackers and data thieves plague
         businesses and government agencies.
         Acts of terror and aggression occur
         internationally.

Decade   Major Ethical Dilemmas

1960s    * Environmental issues
         * Increased employees*employer tension
         * Civil rights issues dominate
         * Honesty
         * The work ethic changes
           Drug use escalates.

1970     * Employee militancy (employee
           versus management mentality)
         * Human right issues surface
           (forced labour, substandard wages,
           unsafe practices)
         * Some firms choose to cover rather
           than correct dilemmas

1980s    * Bribes and illegal contracting practices
         * Influence peddling
         * Deceptive advertising
         * Financial fraud (savings and
           Loan scandal)
         * Transparency issues arise

1990s    * Unsafe work practices in Third World
           Countries
         * Increased corporate liability for
           personal damage (cigarette companies,
           Dow Chemical etc.)
         * Financial mismanagement and fraud

2000s    * Cyber crime
         * Privacy issues (data mining)
         * Financial mismanagement
         * International corruption
         * Loss of privacy--employee's versus
           employer's
         * intellectual property theft.

Decade   Business Ethics Developments

1960s    * Companies begin establishing codes of
           conduct and values statements
         * Birth of social responsibility movement
         * Corporations address ethics issues through
           legal or personnel departments.

1970     * ERC founded (1977)
         * Compliance with laws highlighted
         * Federal Corrupt Practices Act passed in
           1977
         * Values movement begins to move ethics
           from compliance orientation to being 'values
           entered'.

1980s    * ERC develops the U.S. Code of Ethics for
           Government Service (1980)
         * ERC forms first business ethics office at
           General Dynamics (1985)
         * Defence Industry Initiative established (1986)
         * Some companies create ombudsman position
           in addition to ethics officer roles
         * False Claims Act (Government contracting)

1990s    * Federal Sentencing Guidelines (1991)
         * Class Action lawsuits
         * Global Sullivan Principles (1999)
         * In re Caremark (Delaware Chancery
           Court ruling re Board responsibility for ethics)
         * IGs requiring voluntary disclosure
         * ERC establishes international business ethics
           centers
         * Royal Dutch/Shell International begins issuing
           annual reports on its ethical performance

2000s    * Business regulations mandate stronger
           ethical safeguards (Federal Sentencing
           Guidelines for Organizations; Sarbanes Oxley
           Act of 2002)
         * Anticorruption efforts grow
         * Shifts to emphasis on corporate social
           Responsibility and Integrity Management
         * Formation of international ethics centers to
           serve the needs of global businesses.
         * OECD Convention on Bribery (19972000)

Source: www.ethics.org