Intl Bus Imperative_Spring 2009
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Transcript of Intl Bus Imperative_Spring 2009
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PART 1
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INTERNATIONAL BUSINESS CONSISTS OFTRANSACTIONS THAT ARE DEVISED AND CARRIED
OUT ACROSS NATIONAL BORDERS TO SATISFY
THE OBJECTIVES OF INDIVIDUALS, COMPANIES
AND ORGANIZATIONS.
-Czinkota, Ronkainen and Moffett
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INTERNATIONAL BUSINESS IS A TERM USED TOCOLLECTIVELY DESCRIBE ALL COMMERCIAL
TRANSACTIONS (PRIVATE AND GOVERNMENTAL,
SALES, INVESTMENTS, LOGISTICS, AND
TRANSPORTATION) THAT TAKE PLACE BETWEENTWO OR MORE NATIONS.
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A MULTINATIONAL ENTERPRISE (MNE) IS A
COMPANY THAT HAS A WORLDWIDE APPROACHTO MARKETS AND PRODUCTION OR ONE WITH
OPERATIONS IN MORE THAN A COUNTRY. AN MNE
IS OFTEN CALLED MULTINATIONAL CORPORATION
(MNC) OR TRANSNATIONAL COMPANY (TNC).
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EXAMPLES:-
McDonalds
Yum Brands
General Motors
Ford Motor Company
Toyota
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AREAS OF STUDY
Legal systems Political systems
Economic policy
Language
Accounting standards
Labour standards
Living standards
Local culture Corporate culture
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OPERATIONS
Objectives: sales expansion, resource acquisition, risk
minimization.
Modes: importing and exporting, tourism and
transportation, licensing and franchising, turnkey
operations, management contracts, direct investment
and portfolio investments.
Functions: marketing, global manufacturing and supply
chain management, accounting, finance, human
resources.
Overlaying alternatives: choice of countries,
organization and control mechanisms.
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PHYSICAL AND SOCIETAL FACTORS
Political policies and legal practices
Cultural factors
Economic forces
Geographical influences
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COMPETITIVE FACTORS
Major advantage in price, marketing, innovation, orother factors.
Number and comparative capabilities of competitors.
Competitive differences by country.
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REASONS FOR GROWTH IN
GLOBALIZATION
Technology is expanding, especially in transportationand communications.
Governments are removing international business
restrictions.
Institutions provide services to ease the conduct ofinternational business.
Competition has become more global.
Political relationships have improved among some
major economic powers. Countries cooperate more on transnational issues.
Cross-national cooperation and agreements.
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IMPORTANCE OF STUDYING
INTERNATIONAL BUSINESS
Most companies are either international or competewith international companies.
Modes of operation may differ from those used
domestically.
The best way of conducting business may differ bycountry.
An understanding helps you make better career
decisions.
An understanding helps you decide what governmentalpolicies to support.
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Factors Effecting International Business
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INTERNAL FACTORS
Management structure and nature
Human Resource
Company image
Marketing sources
Financial Factors
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ECONOMIC ENVIRONMENT
This element comprises the nature of the economicsystem and institutions of a particular country or region.
It also takes into account the nature of human and
natural resources within the target market
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POLITICAL ENVIRONMENT
The political environment of a country is influenced by
the political organisations such as philosophy of politicalparties, ideology of government or party in power,
nature and extent of bureaucracy influence of primary
groups etc. political stability in the country, foreign
policy, Defence and military policy, image of the countryand its leaders in and outside the country.
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LEGAL ENVIRONMENT
Legal environment includes flexibility and adaptability of
law and other legal rules governing the business. It may
include the exact rulings and decision of the courts.
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SOCIO-CULTURAL ENVIRONMENT
The social dimension or environment of a nation
determines the value system of the society which, in
turn affects the functioning of the business. Sociological
factors such as costs structure, cultural heritage, viewtoward, respect for seniority, mobility of labour etc. have
far-reaching impact on the business.
Socio-cultural environment determines the code of
conduct the business should follow.
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SOCIAL AND CULTURAL
ENVIRONMENT
Social Environment
The social environment of an individual, alsocalled social context, is the culture that s/he was
educated and/or lives in, and the people
and institutions with whom the person interacts.
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Cultural Environment
Customs, practices and traditions for survival and
development are passed down from one generation to
the next.
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BUSINESS ETHICS
The term business ethics refers to the system of moral
principles and rules of conduct applied to business.
What is ethically wrong or condemned in one nation
may not be in another.
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In the international business setting, the
most common ethical issues involve-
Employment practices
Human rights
Environmental regulations
Corruption
Moral obligation of multinational corporations
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PART 2
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SOCIAL ENVIRONMENT
Introduction
The social environment refers to how people and
communities, behave, their relationships, education
and occupation and the conditions in which they live.
In the context of this report, the well-being and povertyrelated components of the social environment and how
these relate to the physical and natural environments,
are the points of focus. It is important to note that
elements of the social environment overlap and interactwith the natural environment.
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A persons social environment includes their living and
working conditions, income level, educational backgroundand the communities they are part of. All these have a
powerful effect on health.
For ex:-The big differences in social environments within Europe
contribute to wide disparities in health. There are big gaps in
life expectancy and disease rates between rich and poor, the
well and the poorly educated and manual workers and
professionals.
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Social environment of business means all factors which
affects business socially . Every business works in a society,
so societies ' different factors like family , educational
institutions and religion affects
business .
Main elements Of Societies and its effect on Business
1. Family :- Family is basic part of society from the birth of
a person and upto death , he lives in family so personal
decision of buying and selling of goods are affects fromfamily . In the culture of a family , it may happen that parent
does not allow to use anyproduct , then sale of such product
will decrease , so businessman must analyze different
families needs . Many occasion of family like
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marriage of any family member , can increase the demand of
goods .
2. Educational institutions :- Educational institutions are
also main part of societies . They provide good knowledge ,education , awareness , thinking what should students buy or
not to buy . Suppose if a student is habitual to drink the tea
and if his teacher advice him that this is harmful to his health
after his guidance students can avoid to drink tea after this the
sale of tea will decrease .
3. Religion :- Like family and education institution , religion
is also effects the business socially . Religion means thesystem in which group of persons trust in God . They believe
that there is one supernatural power in this earth and its name
is God . They gives many name like Ek onkar sat nam , om
and many more etc. Different religions have.
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different principles , rules and regulations in which they
sacrifice to use some products and to eat some food , in
Hindu religion , they never use leather products . They
affects the sale of leather industries . So, businessman must
analyse the targeted audience and after listening their
religious thoughts , he should produce the goods
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Affluence and education
Awareness through television and the Internet
Revolution of rising expectations
Entitlement mentality
Rights movement
Victimization philosophy
FACTORS IN THE SOCIAL ENVIRONMENT
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SOCIAL CLASS AND LIFESTYLE OF COMMUNITY.
The improvement of level of education and theavailability of good job for people have given the
opportunity to people to move to a higher level
of social class. Since there is a positive
correlation between the social class and the levelof spending, the higher the social class, the
higher the demand for consumer goods, then
there will be more opportunity available forbusiness. Peoples lifestyle may be the source of
good business, especially if the purchasing power
is high.
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The success of products in the market depend upon which
target groups the products aims to. Therefore, understanding
of the social class and its lifestyle would definitely help the
success of business.Social factors:
1.Consumer care
Labeling Quality , quantity, price etc.
2.Environmental care
Upkeep waste, disposal , noise, etc
3.Society care
Contribution to education , health etc4.Community care
Providing water , road , power , job etc
Therefore, defining social ethics as an absolute may be tricky.
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Three aspects of social environments are
discussed
in this article.
o Values held by a community.
o Potential impact of interactions amongsubgroup in a
community (accommodation, cooperation,
assimilation,
and conflict).
o Social change as influenced by
globalization.
Val es of comm nit
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Values of community
To be successful in doing business a businessman
should have sound understanding about the communities
values.1. Relation to nature
The issue of peoples relationship to nature reflects how
people in a society treat the nature and how they orient
themselves to the natural world around them and to thesupernatural power.
2. Time orientation
There are two ways to think about time. The first
has to dowith ones general orientation toward time, rather
than how
one thinks about the use of specific unit of time.
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A i th t ti l fli t
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Assessing the potential conflict.
The potential conflict usually develops in the area
where the community consists of several grouping, such asgrouping of different ethnic groups, religion, political
affiliation and economic activities. Basically if there are two
or more strong groups which struggle for dominance in
Economic,social and political arena, then there will be ahigher chance for group conflict to exist.
Source of conflict
1. Economic factors
2. Political factors and social disorder.
3. Religious factors
4. Norms and values
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GLOBALIZATION
Globalization has influenced people all over the world.
The world becomes borderless with the availability of a high-
speed transportation and the information technology. Since the
modern technology such as television and internet have been
used extensively for marketing products and services, thespread of lifestyle from one country to another becomes so
intensive. One could see a lot of similarities in the product
people use and the foods they eat. The western culture lifestyle
is exported to the developing country and the countries in theeast past of hemisphere.
SOCIAL ETHICS
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SOCIAL ETHICS
Social ethics come from someones collective experience of
people and cultures throughout life. While ethics are typicallydriven by individual morals that determine right or wrong,
ethics within society focus more on what may be considered
appropriate behavior for people as a whole, rather than
individual behavior. However, since people perceive things
differently, and various cultures share different beliefs, what is
deemed right for one may not necessarily be right for another.
You can remove a man from society but you cannot removesociety from the man. Truer words have never been said.
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PART 3
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h t i ti
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characteristics :-Learned Culture is not inherited or biological based, it is
acquired by learning & experience.
Shared People as members of a group, organisation, or
society share culture; it is not specific to specific individuals
Trans-generational Culture is trans-generational, passed
from one generation to the next
Symbolic Culture is based on the human capacity to
symbolise or use one thing to represent another.
Patterned Culture has structure & is integrated;a change inone part will bring changer in another.
Adaptive Culture is based on the human capacity to changer
or adapt, as opposed to the more genetically driven adaptive
process of animals.
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Levels of Culture The inter-national manager needs to be aware of the three
levels of culture that influence all the operations.
These includes
A.National Culture
B.Business Culture
C.Occupational & Organisational Cultures
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Culture
Attitudes Aesthetics
Religion
Education
Supernatural
Beliefs
Language
Customs &
Manners
Elements of Culture
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Language & Culture
The Influence of Language on Culture.
The Influence of Culture on Language.
High & Low-context Languages.
Language
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LanguageLanguage includes speech, written characters,numerals,
symbols & gestures of non-verbal communication.
The Influence of Language on Culture
Language establishes the categories on which our perceptions
of the world are organised.
Many anthropologists argue that the language fails to capture
nuances of human thoughts & behaviours.
The Influence of Culture on Language
The impact of culture seems to be more significant than viceversa.
The vocabularies of all languages reflect cultural nuances of
the societies.
High & Low context Languages
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High & Low-context LanguagesLanguages in which people state things directly & explicitly
are called low context.
There is no need to interpret the situation to under-stand theimportance of the words.
Languages in which people state things indirectly & implicitly
are called high context.In the high context language, communications have multiple
meanings that can be interpreted only by situation.
So important the ideas of high & low context that many people
refer to the whole cultures as being high & low context.Ex. of low context are northern European languages, including
German, English etc.
Ex. Of high context are, Asian & Arabiclanguages.
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Education & Culture
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Education & CultureIn its broad sense, education is the lifelong process of learning through
which members of a society acquire knowledge & develop skills, ideas,
values, norms, & attitudes which they share with other members of thesociety.
Economic progress of a country depends on the education of its citizens.
Aesthetics & CultureAesthetics relates to the artistic tastes of a culture.
International managers should understand aesthetic local values if he or
she has to appreciate another culture & the way in which business must
address these values in the international arena.Music is deeply embedded in culture & should be considered while
promoting goods & services.
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i i f i
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Implications for Inter-national
BusinessGlobal businesses are the repositories of multi-cultures.
Multi-culturalism means that people from many cultures (&frequently many countries) interact regularly.
Managing multi-culturalism is essential for every inter-nationalfirm.
Four tasks are crucial :-
a) spreading cross-cultural literacy,
b) culture & competitive advantage,
c) managing diversity &
d) strategy culture fit
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Name of Company Strategy - Culture Fit
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P&G During 1980s, modified its bulky
diapers in Japan to trim-fitwhich helped regain 30 per cent
market share. Trim-fit became
best sellers in the US.
Coca-Cola Labels on bottles supplied to gulf contain no-alcohol.
Nokia Introduced Hindi SMS for Indian
users of cell phones
McDonalds Meat prepared after halal isprinted on the label before
exporting meat to Saudi Arabia
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Worldwide Integration Strategy
Firms use either a world-wide integration strategy or
local (national) responsive strategy.
Standardized products are developed & are sold
throughout the world with few alternations.
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RELIGION
Religion one of the oldest sources of ethical inspiration.
More than 100,000 different religions exist across the
globe. But despite differences, the major religions
coverage on the belief that ethics in an expression ofdivine will that reveals the nature of right and wrong in
business and other areas of life.
The worlds great religions are also in agreement on
fundamental principles, which are similar to the buildingblocks of secular ethical doctrine.
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Cultural experience
Culture, as was stated earlier, refresh to a set of values,
rules and standards transmitted among generations and
acted upon to produce behaviors that fall within
acceptable limits.
Theses rules and standards always play in important part
in determining values, because individuals anchor their
conduct in culture of the group.
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The legal system
Laws are rules of conduct, approved by legislatures, that
guide human behavior in any society. They codify
ethical expectations and keep changing as new evils
emerge. 3 types of legal system:-
Common law
Civil law.
Theocratic law
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MANAGING ETHICS
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Ethics training programs:-Nearly all companies that take ethics seriously provide
training in ethics for their managers and employees.
Such training programs acquaint company personal with
the official company policy of ethical issues, and they
show how those policies can be translated into the
specifics of everyday decision-makingEthics and law :-Law and ethics aim at one thing-defining proper and improper
behavior but the two are not quite the same, laws are asocieties
attempt to formalize- that is to reduce to written rules-ideasabout
what is right and what is wrong in various walk of life.
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PART 5
CORPORATE CULTURE AND ETHICALCORPORATE CULTURE AND ETHICAL
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CORPORATE CULTURE AND ETHICALCORPORATE CULTURE AND ETHICAL
CLIMATECLIMATE
Corporate culture is blend of ideas, customs,
traditional practices, company values and shared
meanings
Every organisation has a culture and it exercisesconsiderable influence on employee behaviour
Example: Hewlett-Packards stress on culture is
called HP WAY
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In some companies one can feel the ethical wind.
Unarticulated understanding among employees is
called ETHICAL CLIMATE
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Three different types of yardsticks to view ethical
climate:
1. EGOISM- self centeredness
2. BENEVOLENCE- concern for others
3. PRINCIPLE- respect for owns integrity, group norms
and society laws
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ETHICALCRITERIA
INDIVIDUALPERSON
COMPANY SOCIETY
EGOISM(selfcenteredapproach)
Self-interest Companyinterest
Economicefficiency
BENEVOLENCE
(concern forothers approach)
Friendship Team interest Social
responsibility
PRINCIPLE(integrity
approach)
Personalmorality
Company rulesand procedures
Laws andprofessional
codes
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Example:
If a manager approaches ethics issues with
benevolence mind; he/she would stress friendly
relations, emphasize the importance of team play,
recommend socially responsible courses of action.
If a manager uses egoism to think about ethical
problems, he/she would be more likely to think of self-
interest, promoting companys profit.
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IMPROVING ETHICAL DECISION-MAKINGIMPROVING ETHICAL DECISION-MAKING
DIFFICULTIES
FIRSTLY: managers faces dilemma in deciding on a
course of action
SECONDLY: managers confront a distinction
between facts and values when making ethical
decisions
THIRDLY: good and evil exist simultaneously
FOURTHLY: knowledge about the consequences s
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g q
limited. One of the principles of decision making is
UTILITARIAN, that is if an act results in the greatest
good of greatest numbers it is taken as morallyaccepted.
FIFTHLY: ethical standard also vary
SIXTLY: unethical practices abound every where
PRACTICAL SUGGESTIONSPRACTICAL SUGGESTIONS
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PRACTICAL SUGGESTIONSPRACTICAL SUGGESTIONS
There are 3 well known principles. They are:
1. MORAL IDEALISM: pursue those which are good and
avoid badones
2. INTUITION: it leaves individual to sense the moral
gravity of situation
3. UTILITARIANISM: seeks to establish moral focus onconsequences
Some other options are
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Some other options are
engage in imaginary conversations with
hypothetical opponent
have a conversation or debate with intelligent
person
Write an essay in favour and against
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THANK YOU
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QUERIES