International Management Ch. 2 & 3 Alyssa Munk, Hailey Hinshaw, Alex Kenworthy
Yahoo China has suffered many management missteps which has brought the company to a downward spiral in China. FLAWS: ~President XieWen stepped down “for personal reasons” after 42 days on the job. ~ A dissident was recently arrested, he had a China Yahoo account. US politicians were up in arms over this. ~Major errors in programming. Spyware Zaps it from your downloads.
Chapter 2 The Political, Legal and Technical Environment “Effective management occurs when philosophies are recognized.” What does this mean? How can it be applied to International Management?
Individualism – Political philosophy that people should be free to pursue economic and political endeavors without constraint. Capitalism and Free-market economies Believe individualism increase competition, innovation, and innovation Example – Margaret Thatcher She privatized much of the UK, more than had been ever been before Collectivism – Political Philosophy that the goal of society as a whole is more important than individual desires. Instead of competing, people become more unified Originated in Germany and Italy with national socialism or fascism. Socialism – A moderate form of collectivism in which there is government ownership of institutions, and profit is not the ultimate goal. Two extremes: Communism and Social Democracy
Extremes of Socialism Communism – in China, Russia and much of Europe during 1970’s China is still communist in social rules but NOT in business rules Russia is in transition, but it’s CORRUPT In Russia, businesses require bribes before a deal can be made. Is this ethical? It’s just Russia’s normal way of doing things. Would you open a business in Russia of required to bribe? Would you support a business in Russia if you knew it required bribes to operate profitably? How does this corruption change the way MNCs will look to Russia as a potential candidate? Social Democracy – non-violent socialist movement This system has not been well received anywhere Since it offers less privatization, the government has to increase taxes and raise prices.
Democracy – A political system in which the government is controlled by the citizens either directly or through elections. America was built on a democracy, but do you think it’s the best form of government? What are it’s advantages? Does it have any disadvantages? http://www.youtube.com/watch?v=woBC5b3Ti0M Totalitarianism – A political system in which there is only one representative party which exhibits control over every facet of political and human life. Any opposition leads to imprisonment or worse.
Examples of Totalitarianism:Nazi Germany Fascist Italy Soviet Union
China Celebrates 60 Years of Communist Rule “Today, a socialist China geared to modernization, the world and the future has stood rock-firm in the east of the world,” Mr. Hu said in a brief speech speckled with boilerplate references to Chinese-style socialism. The Chinese people, he said, “cannot be prouder of the development and progress of our great motherland.”
In what ways do different ideologies and political systems influence the environment in which MNCs operate? Would these challenges be greater for Russia and China over those operating in the EU? Why or Why not?
International Regulatory Practices Foreign Corrupt Practices Act – an act that makes it illegal to influence foreign officials through personal payment or political contributions; made into U.S. law in 1977 because of concerns over bribes in international business areas. Critics were afraid FCPA regulations would decrease business and cause bad relations between the countries BUT… MNCs operated successfully under FCPA laws AND foreign governments applauded FCPA investigations (helped reduce all corruption in their countries) One example of international regulations includes: The Principle of Sovereign Immunity – an international principle of law which holds that governments have the right to rule themselves as they see fit. Amanda Knox
Successes in Privatization: Privatization Yields enduringBanks benefits & is good for the country asCities a whole.Fire-FightingHistoric Landmarks •More than 8,500 state-ownedJudiciary enterprises in over 80 countries haveLand been privatized in the past 12 yearsLibrariesNational Defense •41 firms privatized by public offerings inParking Meters 15 countries. among themParks •--increased returns on…Police sales, assets, and equity, raised internalPostal Services efficiency, improved their capitalRadio Spectrum structure, and increased capitalRailroads expenditures.Rivers and Oceans (Fish andWhales) • The Chilean telephone companyRoads doubled its capacity in the four yearsSocial Security after sale. The privatized telephoneTelecommunications company in Mexico reduced its per-unitWilderness and Wildlife labor costs sharply.Zoos
The United States Goes to the Mat (pg.47)The United States accumulated a $233 billion deficit with China.This is due to an extremely undervalued Yuan, and government subsidies andregulations that favor Chinese Multinational Corporations.US Tactics:•Threats to impose tariffs on Chinese imports.•In 2006 the US partnered with the European Union to file a complaint on Chinaunfairly blocking foreign-made auto parts and U.S. imports.•Case against Chenming Paper Holdings and Gold East Paper of China overglossy paper exports. NewPage claimed the Government subsidies not onlyboosted exports but also made the goods inexpensive. China’s “non-market”economy gave them loop holes.
China’s Response: •China will rewrite their tax Code and eventually eliminate tax breaks to Chinese businesses. •Draft a plan to buy 12.5 billion of U.S. goods, from mechanical to agricultural.Worst Scenario could result in china abandoning the U.S. market…However,In 2007 The U.S. and China reached agreement to cooperate more closely inareas of financial services, aviation, energy and environment. The United States recognizes that China is an economic powerhouse and that an excess of tariffs could result in a trade war. The U.S. government believes full success in this area will require it to “Go to the mat” with China.
Technology Advantages and Disadvantages of technology in global business? How it’s affecting international management: Biotechnology is revolutionizing agriculture, medicine, and industry Nanomachines will eventually be able to remake the whole physical universe. Satellites connect even the most remote parts of the world… can collect data, receive images Automatically translating phones, allowing people to communicate in their own language (but tone of voice cannot be understood, which can be important) Artificial intelligence that can think on its own like a human
Biotechnology – The integration of science and technology to create agriculture or medical products through industrial use and manipulation of living organisms. Is this Ethical? Consider: Laser eye surgery vs. Animal cloning DID YOU KNOW: The US is the only country that allows cloned animal products to be incorporated into the food supply.
Articles on BiotechnologyGenetically modified organism:A genetically modified organism (GMO) is an organism whose geneticmaterial has been altered using techniques in genetics generally known asrecombinant DNA technology. http://www.youtube.com/watch?v=WrBH5I WwmGMNew cancer vaccines:University of Georgia researchers created a vaccine that dramatically reduces thesize of 90% of tumors caused by breast cancer.“Biotechnology is a key industry in Georgia, and this year Boons founded Athens-based company Viamune to help develop and commercialize the vaccine and thetechnologies used to create it.”“Companies like these have the potential to create stable, high-paying jobs thathave a significant social and economic impact,”
E-Business – Businesses that run totally online. Mostly good for B-2-B (Business to Business), not to customers Do you think E-Business will be profitable? How will it affect the globalization process if companies are only online? E-Cash – country-less, boarder-less, paperless money that can easily be transferred online. How would this work (where does the money come from)? Do we have a dual system? Would it be profitable? Who would run it in the system?
Telecommunication – phones are going everywhere. Easy to use and easy to set up Phones connect everyone in the world, even in the most remote places. What does this mean for international business? Technology, Outsourcing, and Offshoring Technology decreases the amount of jobs available for people Do you think Technology benefits or hinders the job market? With outsourcing, we lose jobs in the homeland With technology, we lose jobs to computers and machines Will machines be as smart and productive as people? Example: automated responders over the phone How will advances in technology and telecommunications affect developing countries?
Beyond the Green Corporation•Embracing sustainability can avert costly setbacksfrom environmental disasters, political protests, andhuman rights or workplace abuses.•Wal-Mart has made a series of high profile promisesto slash energy use overall, from its stores to itstrucking fleets, and purchasing more renewablesources.•Innovest studies 120 different factors, such as energyuse, health and safety records, litigation, employeepractices, regulatory history ect…The purpose of this article is to show how current daycorporations have much more to consider when selling a product.Taking care of the environment, people, and energy is a largeimportant task.
Going Green to Get the Green Toyota – Prius hybrid Makes phones for handicapped and low-income consumers. They are phasing out toxic materials.Takes hardware backand recycles it for free
Ch. 3 Ethics and Social Responsibility Ethics- study of morality and codes of conduct Varies from country to country “When in Rome, do as the Romans do” Dilemmas arise from conflicts between ethical standards Ethical Business Practices Chinese counterfeiting no clear laws against it Japanese banks bankruptcy What lessons can U.S. multinationals learn from the political and bribery scandals in Japan that can be of value to them in doing business in this country?
Human Rights No universally adopted standard of acceptable behavior Human Rights Issues Japanese sexual harassment problems with equal employment opportunities only offered lower level jobs don’t understand moral issues
Human Rights Women’s rights “glass ceiling” How do ethical practices differ in the U.S. and in European countries such as France and Germany? What implications does this have for U.S. multinationals operating in Europe?
Who is abusing Human Rights?? http://www.youtube.com/watch?v=WtzYe1 S9AAc
Corruption OECD – Organization for Cooperation and Development Treaty that outlaws foreign bribery among 29 nations Although the treaty has narrow provisions, it did create a more ethical and level playing field in global business.
Corporate Social Responsibility and Sustainability Corporate Social Responsibility- actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm increasing pressure NGOs- private, not-for-profit organizations that serve society’s interests Sustainability- development that meets humanity’s needs without harming future generations
“We believe our first responsibility is to the doctors, nursesand patients, to mothers and fathers and all others who useour products and services. In meeting their needs everythingwe do must be of high quality.”http://www.youtube.com/watch?v=GZRfPAvNClI
NGOs, MNCs, and Ethical Balance Dramatically altered business environment globally NGOs have grown in number, power, and influence MNCs may have positive impacts in countries they do business MNC and NGO collaboration social and environmental projects
Response to Social Obligations MNCs maintain social and environmental standards in workplaces and communities Individual companies incorporate social responsibility and ethics with help of NGOs Companies actively responding to pressures
Corporate Governance Corporate governance- system by which business corporations are directed and controlled specifies delegation of rights within the corporation provides structure related to governance rules and regulations which differ between countries
International Assistance Increasing global assistance Focus on countries that have not benefited from globalization and economic integration Cost benefit analysis Global agenda goals Reducing poverty, hunger, illiteracy, etc.
Sovereignty and Sovereign Immunity:The principle of Sovereignty holds thatgovernments have the right to rulethemselves as they see fit.Amanda Knoxhttp://www.youtube.com/watch?v=cEXzvaFnTA4
Colgate’s Distasteful ToothpasteIn 1985 Colgate bought 50% ofHawley and Hazel group whoproduced “Darkie” Toothpaste.It had been sold inTaiwan, Hong Kong, SingaporeMalaysia, China and Thailand.US civil rights groups were upin arms about the nameclaiming the toothpaste to beracist. Congress got involvedand urged Colgate to changethe name. Colgate placed aplan to change the logo within 3years. Now the Colgate namecannot be found on what istoday known as DarlieToothpaste.
Colgate Questions1. Identify the major strategic and ethical issues faced by Colgate in its partnership with Hawley and Hazel.2. What do you think Colgate should have done to handle the situation?3. Is it possible for Colgate and Hawley and Hazel to change the toothpaste’s advertising without sacrificing consumer brand loyalty? Is that a possible reason for Colgate’s not responding quickly to domestic complaints?4. In the end, was a “no management rights” clause good for Colgate? What could have happened during the negotiations process to get around this problem?