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The Challenge of International Strategy

The Challenge of International Strategy

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The Challenge of International Strategy

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  1. The Challenge of International Strategy • Massive growth in the number of firms employing international strategies especially multinational corporations (MNCs) • Underlying challenges of operating internationally • Legitimacy • Cultural differences • Business and government differences • Management and control of global operations • Exploration of global markets

  2. Export/Import Strategy Multi-Domestic Strategy Trans/Multi-national Strategy Global Strategy A Typology of International Strategies

  3. Arguments about Internationalization

  4. The Multinational Corporation Home CountryStakeholder Pressures Host CountryStakeholder Pressures The Dilemma of the Multinational Corporation

  5. Home CountryStakeholder Pressures Host CountryStakeholder Pressures Standards Practices Ethics Laws Culture Customs System ofGovernment Socioeconomic System Standards Practices Ethics Laws Culture Customs System ofGovernment SocioeconomicSystem The Multinational Corporation The Dilemma of the Multinational Corporation

  6. Product safety Plant safety Advertising practices Human resource management Environmental problems http://www.studentsagainstsweatshops.org http://www.sweatshopwatch.org @ Key Ethical Issues in Global Business

  7. Ethical Choices in Home versus Host Country Situations Questions to be Resolved by Managers: Which ethical standards will be used? Which ethical standards will transcend national boundaries? Worker and product safety? Fair treatment? Health? Discrimination? Freedom? Minimum pay? Consumer rights? Environmental Protection? What constitutes moral minimums in each category?

  8. International LawGlobal Codes of Conduct ETHICAL IMPERIALISM CULTURAL RELATIVISM BROAD MIDDLE GROUND HomeCountry HostCountry • Cultural standards • Ethical/moral standards of home country • Cultural standards • Ethical/moral standards of host country Mix of Home and Host Country Standards Application of Ethical Principles Ethical Choices in Home versus Host Country Situations

  9. A DECISION TREE FOR INTERNATIONAL ETHICAL DECISION MAKING1 Would the action be permissible in the home country if it were at the same level of economic development as the host country? NO YES Don’t do the action. Can the firm do business in the host country without doing the action? NO YES Don’t do the action. Is the action a violation of a fundamental human right? YES NO Don’t do the action. Do the action. 1. Adapted from Donaldson, T, 1985, Multinational Decision making: Reconciling International Norms, Journal of Business Ethics, 4, 357-366

  10. The right to physical movement The right to ownership of property The right to freedom from torture The right to a fair trial The right to nondiscriminatory treatment The right to physical security The right to freedom of speech and association The right to minimal education The right to political participation The right to subsistence Fundamental Human Rights

  11. A DECISION TREE FOR INTERNATIONAL ETHICAL DECISION MAKING1 Would the action be permissible in the home country if it were at the same level of economic development as the host country? NO YES Don’t do the action. Can the firm do business in the host country without doing the action? NO YES Don’t do the action. Is the action a violation of a fundamental human right? YES NO Don’t do the action. Do the action. 1. Adapted from Donaldson, T, 1985, Multinational Decision making: Reconciling International Norms, Journal of Business Ethics, 4, 357-366

  12. Necessary to do business Common practice Accepted practice Form of commission, tax, or compensation Wrong Illegal Compromise personal beliefs Promotes government corruption Once started, never stops Prohibits taking a stand for honesty, morality, ethics Benefits recipient only Creates dependence on corruption Deceives stockholders Arguments For and Against Bribery For Bribery Against Bribery Chapter 9-14

  13. Foreign Corrupt Practices Act Transparency International OCED Antibribery Initiatives Individual Country Initiatives Trends Against Bribery

  14. Grease Payments Relatively small sums of money given for the purpose of getting minor officials to: • Do what they are supposed to be doing • Do what they are supposed to be doing faster • Do what they are supposed to be doing better Bribes Relatively large amounts of money given far the purpose of influencing officials to make decisions or take actions that they otherwise might nottake. If the officials considered the merits of the situation only, they might take same other action. Bribes versus Grease Payments

  15. Actions for Improving International Business Ethics • Create global codes of conduct • Corporate global codes and standards • International organization global codes and standards • Integrate ethics into a global strategy • Suspend activities in host country • Create ethical impact statements

  16. Social Accountability 8000 SA8000 Standard and verification system is a credible, comprehensive and efficient tool for assuring humane workplaces. The certification process examines firms along the following dimensions: • Child labor • Forced labor • Health and safety • Freedom of association and Right to Collective Bargaining • Discrimination • Discipline • Working Hours • Compensation • Management Systems