(a) In the area of products and production, managers have responsibility to ensure that the public (consumers) and their own employees are protected from danger. Attempts to increase profitability by cutting costs may lead to dangerous working conditions or to inadequate safety standards in products. In Northland, product liability litigation is so common that this legal threat may be a more effective deterrent than general ethical standards.

Another ethical problem concerns payment by companies to government officials who have power to help or hinder the payers’ operations. Some of the issues which exist in this area are:

(i) Extortion. Foreign officials have been known to threaten companies with the complete closure of their local operations unless suitable payments are made.

(ii) Bribery. This refers to payments for services to which a company is not legally entitled. There are some fine distinctions to be drawn; for example, some managers regard political contributions as bribery.

(iii) Grease money. Multinational companies are sometimes unable to obtain services to which they are legally entitled because of deliberate stalling by local officials. Cash payments to the right people may then be enough to oil the machinery of bureaucracy.

(iv) Gifts. In some cultures (such as Gibbon) gifts are regarded as an essential part of civilized negotiation, even in circumstances where to Western eyes they might appear ethically dubious. Managers operating in such a culture may feel at liberty to adopt the local customs.

(v) Discrimination against an employee or any group of employees based on gender, religion, beliefs, etc.

(vi) Environmental pollution and degradation

(vii) Failure to provide the right working environment and conditions of service for employees (e.g. unfair labor practices on the part of management—which can result in legal actions and avoidable cost for the company).

(b) Physical environmental conditions are important for strategic planning.

(i) Resource inputs. Managing physical resources successfully (e.g. oil companies, mining companies) is a good source of profits.

(ii) Logistics. The physical environment presents logistical problems or opportunities to organizations. Proximity to road and rail links can be a reason for siting a warehouse in a particular area.

(iii) Government. The physical environment is under the control of other organizations.

(1) Local authority town planning departments can influence where a building and necessary infrastructure can be sited.

(2) Governments can set regulations about some of the organization’s environmental interactions.

(iv) Disasters. In some countries, the physical environment can pose a major “threat” to organizations, from natural disasters such as flooding and hurricanes.