This document provides an overview of conflict management and ethics in international business management. It discusses sources of conflict in international business, including political, economic, and cultural differences between countries. It also addresses conflict resolution strategies like negotiation and the roles of international organizations in mediating disputes. Finally, it examines key ethical issues that multinational companies may face regarding practices like employment, human rights, and corruption. Managers must consider ethics in decision-making and cultivate an ethical culture and leadership to guide responsible business conduct globally.

1. INTERNATIONAL BUSINESS
MANAGEMENT
UNIT 5: CONFLICT
MANAGEMENT AND ETHICS IN
INTERNATIONAL BUSINESS
MANAGEMENT
Prepared and presented by,
N. Ganesha Pandian,
Assistant Professor,
Madurai School of Management
Madurai.
Year : II Semester : IV
1
References:
1. INTERNATIONAL
BUSINESS – TEXT
AND CASES
BY “ P.SUBBA RAO”

2.  Disadvantages of International Business
 Conflict in International Business
 Sources and Types of Conflict
 Conflict Resolutions
 Negotiation
 The Role of International Agencies
 Ethical Issues in International Business
 Ethical Decision-Making
2

3. Problems of international
business3
 The important problem in international business include:
1. Political factors
2. Huge foreign indebtedness
3. Exchange instability
4. Entry requirements
5. Tariffs, quotas and Trade barriers
6. Corruption
7. Bureaucratic practices of government
8. Technological pirating
9. Quality maintenance
10. High cost

4. Conflict in Organizations
 Organizational conflict, or workplace
conflict, is a state of discord caused by the
actual or perceived opposition of
needs, values and interests between people
working together.
 Opposition
 Incompatible behavior Antagonistic inter action
 Block another party from reaching her or his
4

5. Conflicts in International
Business5
 Conflicts arise between the foreign companies
and host country and foreign companies and
domestic companies
 Global companies also have the conflicts with
the home country companies and
governments.

6. 6
 Conflicts arises mostly due to the conflicts in
interests of global companies with those of:
1. Host country’s companies
2. Host country’s government
3. Host country’s customers
4. Host country’s society
5. Host country’s government

7. Factors causing conflicts
7
 The objective of most of the global companies
is to maximize the profits world wide along with
the earnings as much profits as possible in
each country
 The purpose of most of countries in allowing
and inviting foreign companies is to get the
long term benefit from their operation.
 These varying goals result in conflicts

8. Conflicts and negotiations in
International Business8
 Marketing areas
 Finance areas
 Human resource areas
 Social and Ethical areas
 Environmental issues and
 Competing Areas

9. Other factors
9
 Macro economic areas include:
1. Structural factors
2. Exploitation of natural resources
 Production areas of conflict
 Company level conflicts

10. Negotiations
10
 Conflict resolution and negotiations as given
below:
1. Negotiation strengths: Government and
company
- Technology; Marketing expertise; product
diversity; Joint companies
1. Bargaining process
2. Behavioral aspects in negotiations
3. Bilateral and multilateral agreements
4. Corporate citizenship

11. Role of international agencies in
conflict resolution11
 International agencies perform conflict
preventive functions
 Below here are role of some international
agencies in resolving the conflicts in
international business
1. The united Nations code of conduct for
Transnational corporations, 1983:
This code is a comprehensive set of
recommendations regarding the behavior of
MNCs and host countries in preventing
conflicts

12. 12
 UNCTAD codes: United Nations Conference on
Trade and Development code
 The OECD code of practice on MNC
operations: The 1976 declaration sought to
encourage MNCs to contribute positively to the
economic and social development of host
nations

13. The ILO declaration for MNCs and
Social Policy13
 This code is adopted in 1977. This code deals
with the issues related to employment, Vocational
training, working conditions, and industrial
relations and etc.,
 These codes help the MNCs and host countries to
prevent conflicts and disputes among MNCs, host
country business firms, host country governments,
etc.,

14. Dispute settlement system in WTO
14
 WTO provides a more powerful mechanism to
solve disputes arise due to trade among member
countries.
 The rules are set out in the WTO Dispute
Settlement Understanding (DSU)
 Disputes between or among the member
countries arise as one country adopts the trade
policy that is viewed by other members breaking

15. Ethics in international business
15
 The term ‘Ethics’ refers to accepted principles
of right or wrong that govern the conduct of a
person , the members of a profession, or the
actions of an organizations
 Business ethics are the accepted principle of
right or wrong governing the conduct of
business people

16. Ethical issues in International
Business16
 Many of the ethical issues and dilemmas
in international business are rooted in the
fact that political systems, law, economic
development and culture vary significantly
from nation to nation.

17. 17
 In the international business setting, the most
common ethical issues involve:
1. Employment practices
2. Human rights
3. Environmental pollution
4. Corruption
5. Moral obligations
6. Ethical dilemmas

18. Determinants of Ethical
behavior18
Ethical
behavior
Personal
Ethics
Decision
making
process
Leadership
Organizatio
n Culture
Unrealistic
performance
Goals

19. Ethical decision making
19
 Focus on five things that an international business and
its managers can do to make sure ethical issues are
considered in business decisions
1. Favor hiring and promoting people with a well
grounded sense of personal ethics
2. Build an organizational culture that places high value
on ethical behavior
3. Make sure that leaders within the business not only
articulate the rhetoric of ethical behavior, but also act
in a manner that is consistent with that rhetoric
4. Implement decision making process that require
people to consider the ethical dimensions
5. Develop moral courage

20. Part-A
20
 Difference between conflict and dispute.
 Win – win strategy
 Ethical Decision making
 Differentiate between ‘Functional Vs.
‘Dysfunctional conflicts’
 How ‘salami tactics’ as a negotiation technique
helps to resolve conflicts.

21. Part-B
21
 I, Explain the factors causing conflicts in
international business.
 II, briefly explain the different types of conflict in
international business
 I, Explain the roles of international agencies in
conflict resolution
 II, Discuss the ethical issues in international
business.
 Describe the sources and types of conflicts.
Explain the steps in conflict resolutions.
 Discuss the steps involved in ethical decision
making process.

22. 22
 I, Discuss the causes of organization conflict
that MNEs may face during negotiation.
 II, Discuss the negotiation process in
international business and the stages involved
therein.
 I, Examine the role of WTO in dispute
resolution among countries.
 II, Name and describe the role of various
international conflict resolution agencies to
which MNC’s resort to in maintaining smooth
conduct of business worldwide.