IB Daniel chapter ppt

Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

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International Business Environments & Operations

Chapter 2

The Cultural Environments

Facing Business


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Learning Objectives p To understand methods for learning about

cultural environments p To analyze the major causes of cultural

difference and change p To discuss behavioral factors influencing

countries business practices p To understand guidelines for cultural

adjustment


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Introduction p Culture refers to the learned norms based

on values, attitudes, and beliefs of a group of people

p Culture is an integral part of a nations operating environment n every business function is subject to potential

cultural differences


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Introduction Cultural Factors Affecting International Business Operations


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Introduction p Companies need to decide when to make

cultural adjustments p Fostering cultural diversity can allow a

company to gain a global competitive advantage by bringing together people of diverse backgrounds and experience


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Culture and the Nation-State p The nation is a useful definition of society

because similarity among people is a cause and an effect of national boundaries n laws apply primarily along national lines n language and values are shared within borders n rites and symbols are shared along national

lines


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How Cultures Form and Change Learning Objective 2: To analyze the major causes of cultural difference and change


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How Cultures Form and Change p Cultural value systems are established

early in life but may change through n choice or imposition

pcultural imperialism n contact with other cultures

pcultural diffusion pcreolization


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Language: Cultural Diffuser and Stabilizer p A common language within a country is a

unifying force p A shared language between nations

facilitates international business n Native English speaking countries account for a

third of the worlds production n English is the international language of

business


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Language: Cultural Diffuser and Stabilizer

Distribution Of The Worlds Major Languages


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Language: Cultural Diffuser and Stabilizer

Major Language Groups: Population and Output


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Religion: Cultural Stabilizer p Religion impacts almost every business

function p Centuries of profound religious influence

continue to play a major role in shaping cultural values and behavior n many strong values are the result of a

dominant religion


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Religion: Cultural Stabilizer Distribution Of The Worlds Major Religions


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Behavioral Practices Affecting Business

Learning Objective 3: To discuss behavioral factors influencing countries business practices


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Social Stratification p Social ranking is determined by

n an individuals achievements and qualifications

n an individuals affiliation with, or membership in, certain groups


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Work Motivation p The motivation to work differs across

cultures p Studies show

n the desire for material wealth is a prime motivation to work ppromotes economic development

n people are more eager to work when the rewards for success are high

n masculinity-femininity index phigh masculinity score prefers to live to

work than to work to live


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Work Motivation p Hierarchy of needs theory

n fill lower-level needs before moving to higher level needs

p The ranking of needs differs among cultures


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Relationship Preferences p Relationship preferences differ by culture p Power distance

n high power distance implies little superior-subordinate interaction pautocratic or paternalistic management style

n low power distance implies consultative style p Individualism versus collectivism

n high individualism welcome challenges n high collectivism prefer safe work

environment


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Risk Taking Behavior p Risk taking behavior differs across cultures

n Uncertainty avoidance phandling uncertainty

n Trust pdegree of trust among people

n Future orientation pdelaying gratification

n Fatalism pattitudes of self-determination


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Communications p Cross border communications do not

always translate as intended p Spoken and written language p Silent language

n Color n Distance n Time and punctuality n Body language n Prestige


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Communications Body Language Is Not A Universal Language


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Dealing with Cultural Differences

Learning Objective 4: To understand guidelines for cultural adjustment


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p Do managers have to alter their customary practices to succeed in countries with different cultures?

p Must consider n Host society acceptance n Degree of cultural differences

pcultural distance n Ability to adjust

pculture shock and reverse culture shock n Company and management orientation


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p Three company and management orientations n Polycentrism

pbusiness units abroad should act like local companies

n Ethnocentism phome culture is superior to local culture poverlook national differences

n Geocentrism pintegrate home and host practices


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Strategies for Instituting Change p Value Systems p Cost-Benefit Analysis of change p Resistance to too much change p Participation p Reward Sharing p Opinion Leadership p Timing p Learning Abroad


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The Future of National Cultures p Scenario 1:

n New hybrid cultures will develop and personal horizons will broaden

p Scenario 2: n Outward expressions of national culture will continue to

become homogeneous while distinct values will remain stable

p Scenario 3: n Nationalism will continue to reinforce cultural identity

p Scenario 4: n Existing national borders will shift to accommodate

ethnic differences


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Chapter 3

The Political and Legal Environments

Facing Business


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Learning Objectives p To discuss the philosophy and practices of the

political environment p To profile trends in contemporary political

systems p To explain the idea of political risk and

approaches to managing it p To discuss the philosophy and practices of the

legal system p To describe trends in contemporary legal systems p To explain legal issues facing international

companies


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Introduction Learning Objective 1: To discuss the philosophy and practices of the political environment


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Introduction p Every country has its own political and

legal environment p Companies must determine where, when,

and how to adjust their business practices without undermining the basis for success


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Introduction Political and Legal Factors Influencing International Business Operations


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The Political Environment p Managers evaluate, monitor, and forecast

political environments p A countrys political system refers to the

structural dimensions and power dynamics of its government that specify institutions, organizations, and interest groups, and define the norms that govern political activities


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Individualism vs. Collectivism p Individualism

n primacy of the rights and role of the individual

p Collectivism n primacy of the rights and role of the

community


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Political Ideology p A political ideology stipulates how

society ought to function and outlines the methods by which it will do so

p Most modern societies are pluralistic n different groups champion competing political

ideologies pDemocrats vs. Republicans in the United

States pDemocratic Party vs. Liberal Party in Japan


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Spectrum Analysis p A political spectrum outlines the various

forms of political ideology p Political freedom measures

n the degree to which fair and competitive elections occur

n the extent to which individual and group freedoms are guaranteed

n the legitimacy ascribed to the general rule of law

n the freedom of the press


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Spectrum Analysis The Political Spectrum


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The Standard of Freedom p Freedom House assesses political and civil

freedom around the world p Freedom House recognizes three types of

political systems n Free n Partly free n Not free


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The Standard of Freedom Map of Political Freedom, 2010


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Trends in Political Ideologies Learning Objective 2: To profile trends in contemporary political systems


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Third Wave of Democratization p Third Wave of Democratization

n number of democracies doubled in two decades

p Engines of Democracy 1. The failure of totalitarian regimes to deliver

economic progress!2. Improved communications technology!3. Economic dividends of increasing political freedom


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Democracy: Recession and Retreat

p Democracys retreat n just 26 of the worlds democracies are full

democracies p Engines of totalitarianism

n Economic development n Inconsistencies n Economics problems n Standards of democracy


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Democracy: Recession and Retreat

Freedom in the World: Gains and Declines


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Political Ideology and the MNE p What will the political map look like in the

future? n The Washington Consensus n The Beijing Consensus n The Clash of Civilizations


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Political Risk Learning Objective 3: To explain the idea of political risk and approaches to managing it


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The Legal Environment Learning Objective 4: To discuss the philosophy and practices of the legal system


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The Legal Environment p The legal system is the mechanism for

creating, interpreting, and enforcing the laws in a specified jurisdiction

p Types: n Common law n Civil law n Theocratic law n Customary law n Mixed systems


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The Legal Environment The Wide World of Legal Systems


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Trends in Legal Systems Learning Objective 5: To describe trends in contemporary legal systems


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Trends in Legal Systems p What is the basis of rule in a country?

n The rule of man plegal rights derive from the individual who

commands the power to impose them passociated with a totalitarian system

n The rule of law psystematic and objective laws applied by

public officials who are held accountable for their administration

passociated with a democratic system


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Trends in Legal Systems The Worldwide Distribution of the Rule of Law


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Legal Issues in IB Learning Objective 6: To explain legal issues facing international companies


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Strategic Concerns p Strategic issues p Country of origin and local content p Marketplace behavior p Product safety and liability p Legal jurisdiction p Intellectual property


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Intellectual Property: Rights and Protection

p Intellectual property refers to creative ideas, expertise, or intangible insights that grant its owner a competitive advantage

p Intellectual property rights refer to the right to control and derive the benefits from writing, inventions, processes, and identifiers n no global patent, trademark or copyright

exists


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Intellectual Property: Rights and Protection

p Attitudes towards intellectual property n Legal legacies

prule of man versus rule of law n Wealth, poverty, and protection

plevels of economic development n Cultural orientation

pindividualism versus collectivism


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Chapter 4

The Economic Environments Facing

Business


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Learning Objectives p To communicate the importance of

economic analysis p To discuss the idea of economic freedom p To profile the characteristics of the types

of economic systems p To introduce the notion of state capitalism p To profile indicators of economic

development, performance, and potential


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Introduction Learning Objective 1: To communicate the importance of economic analysis


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Introduction p Managers assess a countrys economic

environment knowing n Countries differ in different ways n Economic and political changes alter market

circumstances n It is important to understand connections,

change, and consequences n The challenges of the comeback n Choices of citizens, policymakers, and

institutions


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International Economic Analysis

Economic Factors Affecting International Business Operations


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Economic Freedom Learning Objective 2: To discuss the idea of economic freedom


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Economic Freedom p Economic freedom people have the

right to work, produce, consume, save, and invest the way they prefer n measured across business freedom, monetary

freedom, fiscal freedom, investment freedom, freedom from corruption, property rights, trade freedom, government size, financial freedom, and labor freedom


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Economic Freedom Global Distribution of Economic Freedom


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Value of Economic Freedom p Economic freedom affects

n Growth rates n Productivity n Income levels n Inflation n Employment n Life expectancy n Literacy n Political openness n Environmental sustainability


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Types of Economic Systems Learning Objective 3: To profile the characteristics of the types of economic systems


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Types of Economic Systems p An economic system refers to the

mechanism that deals with the production, distribution, and consumption of goods and services

p Types n Market economy n Command economy n Mixed economy


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Types of Economic Systems Types of Economic Systems


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State Capitalism: Detour or Destination?

p State capitalism refers to a system in which the government explicitly manipulates market outcomes for political purposes n promote certain industries to encourage

economic development n develop national companies into global leaders n foreign companies restricted from strategic

industries


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Economic Development, Performance, and Potential

Learning Objective 5: To profile indicators of economic development, performance, and potential


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Economic Development, Performance, and Potential

p Broad classes of countries include n developing countries

plargest number of countries plow per capita income

n emerging economies pfast growing, relatively prosperous pBRICs Brazil, Russia, India, and China

n developed countries phigh per capita income and standard of

living plike the U.S., Japan, France, Australia


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Broader Conceptions of Performance and Potential

p Green economics n gauge economic performance in terms of the

effect of current choices on long-term sustainability

p Sustainable development n meet the needs of the present without

compromising the ability of future generations to meet their own needs

p Happynomics n importance of emotional prosperity in addition

to financial prosperity


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Features of an Economy p Managers should also consider

n Inflation n Unemployment n Debt n Income distribution n Poverty n Balance of payments


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Inflation p Inflation

n a measure of the increase in the cost of living p Deflation

n when prices for products go down not up p Reflation

n increase the money supply and reduce taxes to accelerate economic activity


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Unemployment p Unemployment rate

n share of unemployed workers seeking employment for pay relative to the total civilian labor force

p Misery index n the sum of a countrys inflation and

unemployment rates


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Debt p Debt

n the total of a governments financial obligations pinternal debt pexternal debt

p Growing public debt signals n tax increases n reduced growth n rising inflation n increasing austerity


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Income Distribution p Income distribution

n estimates the proportion of the population that earns various levels of income

p Gini coefficient n measures the extent to which the distribution

of resources deviates from a perfectly equal distribution


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Poverty p Poverty the state of having little or no

money and few or no material possessions n extreme poverty

pless than $1.25 per day n moderate poverty

pless than $2.00 per day p Today the world population is 80% poor,

10% middle income, and 10% rich p Base of the Pyramid

n Frugal engineering


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Chapter 5

Globalization and Society


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Learning Objectives p To examine the broad foundation of ethical

behavior p To demonstrate the cultural and legal foundations

of ethical behavior p To discuss the importance of social responsibility

when operating internationally, especially in the areas of sustainability

p To discuss some key issues in the social activities and consequences of globalized business

p To examine corporate responses to globalization in the form of codes of conduct, among other things


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Introduction p Companies must satisfy stakeholders

n Shareholders n Employees n Customers n Society


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Foundations of Ethical Behavior Learning Objective 1: To examine the broad foundation of ethical behavior.


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Foundations of Ethical Behavior p Three levels of moral development

1. Preconventional 2. Conventional 3. Postconventional, autonomous,

principled


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Foundations of Ethical Behavior p Teleological approach

n decisions are based on the consequences of the action

p Utilitarianism n an action is right if it produces the

greatest amount of good p Deontological approach

n moral judgments are made and moral reasoning occurs independently of consequences


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Why Do Companies Care? p Ethical behavior can help a company

n develop a competitive advantage n avoid being perceived as irresponsible


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The Cultural and Legal Foundations of Ethical Behavior Learning Objective 2: To demonstrate the cultural and legal foundations of ethical behavior


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Legal Justification: Pro and Con p The law is inadequate because

n Some things that are unethical are not illegal n Laws are slow to develop in emerging areas of

concern n Laws may be based on imprecisely defined

moral concepts n The law often needs to undergo scrutiny by the

courts n The law is not very efficient


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Legal Justification: Pro and Con p Legal justification is appropriate because

n The law embodies many of a countrys moral principles

n The law provides a clearly defined set of rules n The law contains enforceable rules that apply

to everyone n The law reflects careful and wide-ranging

discussions


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Ethics and Corporate Bribery p Regardless of the reasons for not using

the law as a starting point for ethical behavior, it remains a good starting point

p Countries looking for solutions to common problems take similar legal steps n Consider

pactivities that affect the well-being of people pactivities that affect the environment


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Corruption and Bribery p Corruption

n the misuse of entrusted power for private gain p Bribes

n payments or promises to pay cash or anything of value

n Occurs pto obtain government contracts pto get public officials to do what they should

be doing anyway


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Corruption and Bribery Where Bribes Are Business As Usual


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Corruption and Bribery p International accords to stop bribery

n OECD Anti-Bribery Convention n ICC code of rules n UN Convention against Corruption

p Regional initiatives include n EU efforts n U.S. Foreign Corrupt Practices Act and

Sarbanes-Oxley legislation p Industry initiatives include

n 2005 World Economic Forum zero tolerance pact


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Ethics and the Environment Learning Objective 3: To discuss the importance of social responsibility when operating internationally, especially in the areas of sustainability


5-92

Ethics and the Environment p Companies compromise the environment

n contamination of air, soil, or water during manufacturing

n producing products that emit fossil-fuel contaminants

p Effect of natural resource extraction n renewable versus non-renewable


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What is Sustainability? p Sustainability

n meeting the needs of the present without compromising the ability of future generations to meet their own needs

p Is sustainability good business practice? n yes


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Global Warming, Kyoto Protocol p Kyoto Protocol (1997)

n signed to require countries to cut greenhouse gas emissions to 5.2% below 1990 levels between 2008 and 2012

p Some countries have adopted stricter requirements n others have not ratified the agreement

including pthe U.S., China, India


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Ethical Dilemmas and Other Business Practices

Learning Objective 4: To discuss some key issues in the social activities and consequences of globalized business


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Ethical Dilemmas in the Pharmaceutical Industry

p Tiered pricing and other price-related issues n reverse engineering

p WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) n generic drugs

p R&D and the Bottom Line n India


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Ethical Dimensions of Labor Conditions

p Labor issues include n Wages n Child labor n Working conditions n Working hours n Freedom of association


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Sources of Worker-Related Pressures in the Global Supply Chain


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p Child labor ILO estimates 250 million children aged 517 years work

p Some companies avoid operating in countries where child labor is common n or establish responsible policies in those

countries - IKEA p Some companies refuse to hire individuals

who want to work long hours n concerned about exploitation


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Corporate Codes of Ethics Learning Objective 5: To examine corporate responses to globalization in the form of codes of conduct, among other things


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Corporate Codes of Ethics p How should companies behave? p The UN Global Compact establishes

guidelines for appropriate behavior in human rights n labor n the environment n anti-corruption


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Motivations for Corporate Responsibility

p Unethical and irresponsible behavior could n result in legal sanctions n result in consumer boycotts n lower employee morale n cost sales because of bad publicity

p A code of conduct n sets global policy that must be complied with n communicates the code to employees,

suppliers, and subcontractors n ensures that policies are carried out n reports results to external stakeholders


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Corporate Ethics in The Future p Two trends:

n There will be greater convergence of proper ethical conduct

n Individuals will develop skills to address ethical issues

p Impact of social media p Impact of future business and government

leaders

Activities p Comparative Environmental

Frameworks

p Chapter 2: The Cultural Environments Facing Business (ACTIVITIES: p. 24)


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Activities p Comparative Environmental

Frameworks p Chapter 3: The Political and Legal

Environments Facing Business p (ACTIVITIES: p. 33)


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IB Daniel chapter ppt