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Ethical problems in international purchasing and supply

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Major International business (purchasing involved) ethical problems are as
follows:
• Traditional Small Scale Bribery- involves the payment of small sums of money, typically
to a foreign official in exchange for him/her violating some official duty or responsibility or
to speed routine government actions (grease payments, kickbacks).
• Large Scale Bribery- a relatively large payment intended to allow a violation of the law or
designed to influence policy directly or indirectly (eg, political contribution).
• Gifts/Favours/Entertainment- includes a range of items such as: lavish physical gifts, call
girls, opportunities for personal travel at the company`s expense, gifts received after the
completion of transaction and other extravagant expensive entertainment.
• Pricing – includes unfair differential pricing, questionable invoicing – where the buyer
requests a written invoice showing a price other than the actual price paid, pricing to force
out local competition, dumping products at prices well below that in the home country,
pricing practices that are illegal in the home country but legal in host country.
• Products/Technology – includes products and technology that are banned for use in the
home country but permitted in the host country and/or appear unsuitable or in appropriate for
use by the people of the host country.
• Tax Evasion Practices - used specifically to evade tax such as transfer pricing (i.e.where
prices paid between affiliates and/or parent company adjusted to affect profit allocation)
including the use of tax havens, where any profit made is in low tax jurisdiction, adjusted
interest payments on intra-firm loans, questionable management and service fees charged
between affiliates and /or the parent company.
• Illegal/Immoral Activities in the Host Country – practices such as: polluting the
environment, maintaining unsafe working conditions; product/technology copying where
protection of patents, trademarks or copyrights has not been enforced and short weight in
overseas shipments so as to charge a country a phantom weight.
• Questionable Commissions to Channel Members – unreasonably large commissions’ of
fees paid to channel members, such as sales agents, middlemen, consultants, dealers and
importers.
• Cultural Differences – between cultures involving potential misunderstandings related to
the traditional requirements of the exchange process (e.g., transactions) may be regarded by one culture as bribes but be acceptable business practices in another culture. These practices
include: gifts, monetary payments, favours, entertainment and political contributions

Titany answered the question on November 26, 2021 at 12:21

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Ethical problems in international purchasing and supply

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