The document discusses issues faced by Yahoo China and challenges of operating internationally, including political and management missteps that hurt Yahoo's performance in China. It also covers different political philosophies like individualism, collectivism, and socialism that influence business environments, as well as ethics, human rights, technology, and other topics international companies must navigate.

1. International Management
Ch. 2 & 3
Alyssa Munk, Hailey Hinshaw, Alex Kenworthy

2.  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.

3. 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?

4.  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

5. 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.

6.  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.

7. Examples of
Totalitarianism:
Nazi Germany
Fascist Italy Soviet Union

8. 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.”

9.  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?

10. 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

11. Successes in Privatization: Privatization Yields enduring
Banks benefits & is good for the country as
Cities a whole.
Fire-Fighting
Historic Landmarks •More than 8,500 state-owned
Judiciary enterprises in over 80 countries have
Land been privatized in the past 12 years
Libraries
National Defense •41 firms privatized by public offerings in
Parking Meters 15 countries. among them
Parks •--increased returns on…
Police sales, assets, and equity, raised internal
Postal Services efficiency, improved their capital
Radio Spectrum structure, and increased capital
Railroads expenditures.
Rivers and Oceans (Fish and
Whales) • The Chilean telephone company
Roads doubled its capacity in the four years
Social Security after sale. The privatized telephone
Telecommunications company in Mexico reduced its per-unit
Wilderness and Wildlife labor costs sharply.
Zoos

12. 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 and
regulations 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 China
unfairly blocking foreign-made auto parts and U.S. imports.
•Case against Chenming Paper Holdings and Gold East Paper of China over
glossy paper exports. NewPage claimed the Government subsidies not only
boosted exports but also made the goods inexpensive. China’s “non-market”
economy gave them loop holes.

13. 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 in
areas 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.

14.  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

15.  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.

16. Articles on Biotechnology
Genetically modified organism:
A genetically modified organism (GMO) is an organism whose genetic
material has been altered using techniques in genetics generally known as
recombinant DNA technology.
http://www.youtube.com/watch?v=WrBH5I
WwmGM
New cancer vaccines:
University of Georgia researchers created a vaccine that dramatically reduces the
size 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 the
technologies used to create it.”
“Companies like these have the potential to create stable, high-paying jobs that
have a significant social and economic impact,”

17.  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?

18.  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?

19. Beyond the Green Corporation
•Embracing sustainability can avert costly setbacks
from environmental disasters, political protests, and
human rights or workplace abuses.
•Wal-Mart has made a series of high profile promises
to slash energy use overall, from its stores to its
trucking fleets, and purchasing more renewable
sources.
•Innovest studies 120 different factors, such as energy
use, health and safety records, litigation, employee
practices, regulatory history ect…
The purpose of this article is to show how current day
corporations have much more to consider when selling a product.
Taking care of the environment, people, and energy is a large
important task.

20. 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 back
and recycles it for free

21. 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?

22. 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

23. 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?

24. Who is abusing Human Rights??
http://www.youtube.com/watch?v=WtzYe1
S9AAc

25. 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.

26. 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

27. “We believe our first responsibility is to the doctors, nurses
and patients, to mothers and fathers and all others who use
our products and services. In meeting their needs everything
we do must be of high quality.”
http://www.youtube.com/watch
?v=GZRfPAvNClI

28. 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

29. 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

30. 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

31. 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.

32. Sovereignty and Sovereign Immunity:
The principle of Sovereignty holds that
governments have the right to rule
themselves as they see fit.
Amanda Knox
http://www.youtube.com/watch?v=cEXzvaF
nTA4

33. Colgate’s Distasteful Toothpaste
In 1985 Colgate bought 50% of
Hawley and Hazel group who
produced “Darkie” Toothpaste.
It had been sold in
Taiwan, Hong Kong, Singapore
Malaysia, China and Thailand.
US civil rights groups were up
in arms about the name
claiming the toothpaste to be
racist. Congress got involved
and urged Colgate to change
the name. Colgate placed a
plan to change the logo within 3
years. Now the Colgate name
cannot be found on what is
today known as Darlie
Toothpaste.

34. Colgate Questions
1. 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?