Mike PerezCole UnderwoodSarah TorpChapters 2 & 3
Chapter 2-The Political Legal and Technological Environment Summary Individualism-People should be free to pursue economic and political endeavors without constraints- Synonym with capitalism and is connected to a free market society-Encourage diversity or competition, combined with private ownership will stimulateproductivity -Following the status quo will stunt progress but competing with increase creativity andprogress-David Hume, Adam Smith and Aristotle are supporters of this philosophy-Research shows that team performance is negatively influenced by those who considerthemselves individualistic but competition stimulates motivation and encourages efforts toachieve goals Collectivism- Views the needs or goals of society at large as more important than individual desires.-Plato believed that individual rights should be sacrificed and property should be communityowned.- Emerged in Germany and Italy as “national socialism” or fascism-Authoritarian ideology that considers the individual inferior to the needs of the state andseeks to forge a type of national unity based on religion, cultural, race or ethnicity
Socialism-There is government ownership but profit is not the ultimate goal-Based on the philosophies of Karl Marx, Friedrich Engles, and Vladimir IIyichLenin-Classless society when everything was essentially communal-Broken down into two extremes: Communist & Social Democracy-Communist: Limited individual freedom, everything is government regulated.Former countries under communist control include Soviet Union, Nicaragua,Cambodia, Laos and Vietnam.-Although many countries are no longer under communist rule, China is stillcommunist to this day-Social Democracy: Achieved its goal through a non violent movement-Australia, France, Germany, Great Britain, Norway, Spain and Sweden areexamples- Problems: businesses that were nationalized were inefficient due to the guaranteeof funding and the monopolistic structure. Citizens noticed an increase in taxes andprices
>The political system or system of government in a country greatlyinfluences how it manages and conducts business. - Legal and regulatory environments can be extremely confusing. - In result, slower time to market and greater costs occur. - MNCs must take time to evaluate legal framework of every differentmarket.> There are four foundations on which laws are based - Islamic Law - Socialist Law - Common Law - Civil or Code Law> MNCs must understand that there are certain rules that one mustfollow when interacting with another MCN. These are calledInternational Law.
> International Law can mostly be summed up by a few basicbroad principles.> The International law examples demonstrate theframework of operation for MNCs, but there are also manyspecific laws that impact businesses as well. - Foreign Corrupt Practices Act is a major example that iseasily seen from American history. - Other examples include; Bureaucratization andprivatization
• Advancements in technology: o increase the quality of products o aid in information gathering o improve research and development• International connections and interdependence due to technological advancements is referred to as "flattening the world"• Internet and cell phones are the most significant technological advances that provide people with instant communication and information
• Technology is constantly evolving and shaping international business o Satellites will enable people in very remote areas to communicate and receive information with their phones o Automatic translation telephones o Artificial intelligence and embedded learning technology will allow machines to "think" like humans• Advances in biotechnology, e-business, and telecommunications create a shift toward high-tech, knowledge-based economies o MNCs may take advantage of these and prosper• Advances in technology have already eliminated middle management and white- and blue-collar jobs o outsourcing and offshoring to lower costs• What are the costs and benefits of technological advancements that impact international management?
Advancements in Technology Benefits Costs• allows for more • employees jobs are opportunities to conduct eliminated business internationally • salaries are reduced• cost of doing business because workers skills are globally declines not in demand & have• productivity will increase been replaced by machines• prices will eventually • job loss is especially decrease devastating in developing countries
Question #1The government system greatly impacts how a country doesbusiness. As political polocies continue to change, MNCs mustadapt their strategies and practices to accommodate theirpartners. For example, Chinese government would experiencegreater challenges when working with EU countries becausethey are communist. MNCs would need to understand how thecommunist system of government works and be able to meetthe requirements in order to work together successfully with anEU country."Effective management occurs when the philosophies arerecognized."- Agree or disagree? Discussion.
Question #2• Most positive effects of technological advancements and telecommunications should be seen in developing countries where inefficiencies in labor and production impede growth• Digitization, higher-speed telecommunication, and advancements in biotechnology give developing countries the opportunity to jump into the 21st century• Are there any negative effects?
Question #2• Examples: o People in South America and Eastern Europe used to wait years to get a telephone installed, and now it is relatively inexpensive and fast with cell phones will improve quality of life big market for telecommunications in developing economies o In India, the recent high-tech boom has created jobs for a growing number of people and will continue to do so the future
Chapter 3-Ethics & Social Responsibility-Ethics: the study of morality and standards of conduct Working conditions, work hours, and labor regulations createchallenges for employers and employees.-Human Rights- There is no universally adopted standard Women in the workforce--in Japan they are only offeredsecretarial or dead end jobs even with college degrees. Itsbelieved they will marry early and leave the job. There are alsono sexual harassment laws and managers see women asassistants, therefore not understanding the problem with it.Discussion- Is it even worth going to college if you are onlygoing to get a low paying job and risk sexual harassment?Despite equal opportunity initiatives in the U.S., France, Germany, andGreat Britain, women do not receive the same treatment or pay as men inthe workforce. Will women ever be able to break through the glass ceiling?
Summary Continued-The Foreign Corrupt Practices Act (FCPA) makes itillegal for US companies & their managers to attempt toinfluence foreign officials through personal payments. IRS continually audits books of MNCs. Those involved are subject to high penalties and jail time.-Passing of this act has paid off because many US multinationalcompanies have increased amount of business in countries theyuse to pay bribes and made it clear they will not buy stock incompanies that use unethical practices.- Look at page 66 at the corruption graph and discuss.-Discussion: Do you think ethnics typically comes into playduring a business deal?
• Corporate social responsibility - the actions of a firm to benefit society beyond the requirements of the law and the direct interests of the firm• Nongovernmental organizations (NGOs) - private, not-for-profit organizations that seek to serve societys interests by focusing on social, political, and economic issues o poverty, social justice, education, health, and environment o examples: Save the Children and World Wildlife Fund sharp criticism of Nike, Levis, Chiquita NGOs recognize that MNCs can have positive impacts on countries where they do business adhering to higher social and environmental standards• Sustainability - development that meets humanitys needs without harming future generations• Corporate governance - the system by which business corporations are directed and controlled o provides structure of how company objectives are set, how to obtain the objectives, and monitors performance o U.S. and U.K. are "outsider" systems due to dispersed ownership of corporate equity among many outside investors
• Governments, MNCs, and NGOs are now working together to contribute to international development assistance and ensure that corporate governance practices are sound and effective o while keeping corporate social responsibility and sustainability in mind• New corporate ethics guidelines passed in the United States have forced MNCs to examine their own ethical practices and make changes to comply o This continuing trend toward globalization and free trade appears to encourage the development of a set of global ethical, social responsibility, and anti-corruption standards o Shifting from traditional business conduct to new ethical standards o What motivates MNCs to implement ethical and socially responsible business practices? page 59
Japans Ethical Issues-Japan cabinet members have accepted questionable paymentsand favors.-The bank system has failed to take action when distributingloans and continued to operate despite being technicallybankrupt.-Japanese firms have concealed consumer complaints for over20 years-Women paid dramatically less for the same job as men and asmentioned before, big problem with sexual harassment
Chapter #3 Questions1. What lessons can US MNCs learn from the political andbribery scandals in Japan that can be value to them in doingbusiness in this country? Discuss 2.2. How do ethical practices differ in the US and the Europeancountries such as France and Germany? What implicationsdoes your answer have for the US multinationals operating inEurope?
Colgates Distasteful Toothpaste ...-Please read pages 78 - 80 and answer the review questions.You may work with a partner.
Colgates Distasteful Toothpaste ...1) - First strategic error, gave H&H complete control of theproduct. - Second, waited too long to address the issue - Ethics - The study of morality and standards of conduct - Ethics demands us to do what is deemed right by society,Colgate should have known that the racial slur of "Darkie" wassomething that needed to be addressed. Colgate needed to takecontrol of H&H sooner rather than later.
Colgates Distasteful Toothpaste ...2) - In our opinion Colgate needed to address the issue soonerand with more force. Colgate thought that by not responding tothe issue it would eventually go away, but in fact, by trying tosuppress the issue for so long, it actually did more harm thangood. A complete name and label change, though possiblydropping total sales, was necessary. Both could have beenslowly brought into the market and made public over time sothat consumers would find the new H&H product just as goodas before.
Colgates Distasteful Toothpaste ...3) - After a name change, there is almost no way to keep allconsumer loyalty, this is why Colgate did not want to changethe name. It is definitely a big issue when deciding on asomething such as a change in name or image.- Almost fully the reason why Colgate did not respond veryquickly to name change.
Colgates Distasteful Toothpaste ...4) - No, the "no management rights" clause was not a goodthing for the company. - In the negotiation process Colgate could have set up anequal rights clause and therefore had more say in the decisionmaking process. If Colgate had more say, they could havecaught the problem long before if became such a national issue.