Intl Bus Imperative_Spring 2009

8/2/2019 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
http://shiksha-mba.blogspot.com/2010/05/stages-in-developing-new-product.htmlhttp://shiksha-mba.blogspot.com/2010/05/stages-in-developing-new-product.html


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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

Intl Bus Imperative_Spring 2009

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