IBUS 311 1st Edition Lecture 7Outline of Last Lecture I. What is Ethics? How is Ethics Understood in International Business?II. What is corporate social responsibility? III. What is the role of sustainability in international operations? Outline of Current Lecture I. Wal-MartII. What to do when the Phone Rings? Current LectureManaging Reputational Risks of Global Sourcing By: Richard J. Coyle I. Wal-Mart Wal-Mart gets caught in the Blaming and Shaming Game. Wal-Mart owns no factories. Wal-Mart places a direct order with a supplier and states they want X amount of shirts are in the store by a specific date. Now it is up to the supplier to make the product and send it to Wal-Mart. Wal-Mart has the right in their agreement to social audit the supplier’s factory. Make sure there is no child labor, pollution or undercut wages. But Wal-Mart has no agreement or right to social audit sub-suppliers and that is where these social and ethical problems may arise. NGO made a poster of a picture of a child in China in a factory making Christmas ornaments that will be sent to Wal-Mart. II. What to do when the Phone Rings?- Introduction: Global sourcing relationships have come under intense scrutiny by non-governmental organizations (NGOs) and socially responsible investor (SRIs) groups. Some want to improve working conditions, while others simply want to makea name for themselves and attract more funding. Still others are funded by external interests with the goal to destroy corporate reputations. These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Know whom you are dealing with! Don’t believe what they say, pay attention to whatthey do!- What to do: If confronted with allegations, establish a single point of contact for the media and begin your own investigation. Form an internal team with the legal, corporate communications, ethics, purchasing and investor relations, - Pay Attention To:  Who is claiming to be the author? Analyzing the quality of writing. Study the pictures. Take not of the sources for statistics. - Check your purchase orders.- Check prior audits. - Investigate the Claims: Can the conditions in the report be readily observed? Do the photographs look like the factory? Do the workers interviews in the report really exist?- Take Prompt Action:  If the claims cannot be substantiated, prepare a statement for the media to be used for any follow-up stories. If the claims prove to be legitimate, swift remedialaction is needed. Your company reputation can be enhanced by working with factory management to rectify the problems.- Enlist Local Assistance: You should also assess whether local government or law enforcement can assist. *Caution: Local officials can often be very corrupt.- Stay Focused and Calm: Some activists will intentionally try to get under your skin.- Future Horizons: Future debated regarding social and environmental concerns will move from the factory floor where raw materials are harvested: Cotton, wool, cocoa, palm oil, sugar, seafood, minerals,