This document discusses international business environments and operations. It covers evaluating the impact of foreign direct investment, the economic effects of multinational enterprises on home and host countries, and key issues around the social activities and consequences of globalized business. Some of the topics covered include balancing payments effects, growth and employment impacts, ethics and bribery, labor conditions, and developing corporate codes of ethics. The overall objectives are to understand how to evaluate multinational enterprises and their effects as well as discuss responsible corporate behavior internationally.

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Lesson # 6
International Business
Environments and Operations
5-1

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Globalization
and Society

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Chapter Objectives
• To identify problems in evaluating the activities
of multinational enterprises (MNEs)
• To evaluate the major economic effects of MNEs
on home and host countries
• To understand the foundations of responsible
corporate behavior in the international sphere
• To discuss some key issues in the social
activities and consequences of globalized
business
• To examine corporate responses to globalization

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Evaluating the Impact of FDI
• FDI is Foreign Direct Investment
• The large size of some MNEs causes
concern for some countries
• MNEs and countries need to understand
the impact of FDI in home and host
countries

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What MNEs Have To Offer

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Considering the Logic of FDI
• Need to consider relationship between
those who make foreign investments
(MNEs) and possible effects on receiving
countries
• Areas to consider:
 Stakeholder trade-offs
 Cause-and-effect relationships
 Individual and aggregate effects

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The Economic Impact of the MNE
• Balance-of-Payments effects:
 Net import effect
 Net capital flow
• Growth and Employment effects:
 Home-country losses
 Host-country gains
 Host-country losses

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Why Companies Care About Ethical
Behavior
• Instrumental in achieving two objectives:
 To develop competitive advantage
 To avoid being perceived as irresponsible

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Ethics and Bribery
• Bribes are payments or promises to pay cash or
anything of value
• Bribes are used to get government contracts or
to get officials to do what they should be doing
anyway
• Problems with bribery:
 Affects performance of company & country
 Erodes government authority
 Damages reputations when disclosed
 Increases cost of doing business

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Ethical Dimensions of Labor
Conditions
• Ethical Trading Initiative
• The Problem of Child Labor
• What MNEs Can and Can’t Do

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Corporate Codes of Ethics
• Motivations for Corporate Responsibility
• Developing a Good Code of Conduct

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