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BADM 633 – Wk 13 International Business Culture. Hershey Plots Cadbury Bid Chocolate Maker Could Link With Italy's Ferrero to Counter Kraft's $16 Billion Offer. WSJ – 17 Nov 2009

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BADM 633 – Wk 13

International Business Culture

Hershey Plots Cadbury Bid Chocolate Maker Could Link With Italy's Ferrero to Counter Kraft's $16 Billion Offer

WSJ – 17 Nov 2009

Chocolate giant Hershey Co. is in talks with banks to line up billions of dollars to launch a rival bid to Kraft Foods Inc.'s $16 billion offer for British candy maker Cadbury PLC, said people familiar with the matter.

Hershey, emboldened by improving financial markets, looks much more willing than it did just weeks ago to make a run at Cadbury, these people said. The Pennsylvania maker of Hershey bars and Reese's Peanut Butter Cups is considering a bid of its own or with a partner such as Ferrero SpA, the Italian maker of Tic-Tacs, Nutella hazelnut spread and Ferrero Rocher chocolates.

Hershey Chief Executive David West in the last two weeks has spoken with Ferrero bankers at least twice about teaming up to buy Cadbury, one person familiar with the matter said. Those discussions are in preliminary stages and financial specifics haven't been discussed

Heinz Seeks to Tap Mexico's Taste for KetchupFood Giant Pours It On to Promote Flagship Product in Fast-Growing Emerging Market

WSJ – 24 Nov 2009

Mexicans eat more ketchup by sales value than consumers in all but eight other countries. Many of them slather the thick red sauce on chicken, pasta and eggs—even pizza. At the start of 2007, U.S. ketchup giant H.J. Heinz Co. held less than 1% of the Mexican ketchup market. In fact, Mexico was such a low priority that Heinz had fewer than 10 salespeople in the country, which is nearly three times as large as Texas.

Tuesday, when Heinz releases quarterly earnings, its executives plan to boast that Heinz now accounts for 12% of the ketchup poured in Mexico, where a spokesman says the company now has 150 ketchup sales and marketing employees.

The shift illustrates Heinz is positioning itself for growth in emerging markets.

Heinz's management, which CEO Wm. Johnson said overlooked Mexico while chasing sales in China, Russia, Indonesia and other emerging markets, didn't begin focusing on the country until the mid-2000s. Few restaurants in Mexico carried Heinz ketchup and, at retail, it was mostly sold in the imported-goods sections of grocery stores. Even so, Mexico's overall retail sales of ketchup had climbed more than 70% since 2000.

Heinz Seeks to Tap Mexico's Taste for KetchupFood Giant Pours It On to Promote Flagship Product in Fast-Growing Emerging Market

WSJ – 24 Nov 2009

changing demographics in a global economy
Changing Demographics in a Global Economy
  • United States dominance in world trade
  • United States dominance in Foreign Direct Investment
  • Dominance of United States multinational firms
  • Centrally planned economies off-limits
changing demographics cont d
Changing Demographics -cont’d
  • Anti-globalization debate
    • Jobs
    • Income
    • Environment
  • Spread of democracy
  • Global terrorism
  • Economic transformation
    • Deregulation
    • Privatization
    • Legal systems


  • Laws are society’s values and standards that are enforceable in the courts.

Slide 4-47



  • Ethics are the moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justly when faced with moral dilemmas.

Slide 4-7



  • Ethical principles vary from religion to religion. True or false?
  • FALSE - The five fundamental ethical
  • principles are:
    • Do no harm
    • Make things better
    • Respect others
    • Be fair
    • Be loving

Slide 4-10



  • What is right in one part of the world might not be right in another part. True or false?
  • FALSE - What people believe to be right may
  • differ from one country to another, but this
  • does not mean that what actually IS right
  • differs.

Ethics attempts to discover what IS right

and wrong, regardless of accepted practice.

Slide 4-10



  • Ethical principles change over time. True or false?
  • FALSE - The aforementioned five ethical
  • principles have existed since the beginning of
  • civilization and will remain so until its end.

Slide 4-10



  • Being honest is the most important ethical rule of all. True or false?
  • FALSE - In some situations, rare as they
  • may be, other ethical considerations may
  • take precedence.

For example, during WWII, courageous

men and women in Europe who hid Jews

from the Nazis had to lie to the Gestapo.

Slide 4-10



  • Sometimes, one not only has a right to keep private things private, but has a duty not to do so. True or false?
  • TRUE - As with the example of lying above,
  • the duty to maintain confidentiality is not an
  • absolute moral obligation. When a patient
  • tells his psychiatrist that he intends to
  • commit murder, the psychiatrist has the
  • right to not keep this information to herself,
  • but has a duty not to do so.

Slide 4-10



  • Avoiding harm is a moral imperative, but being loving is not ethically required. True or false?
  • TRUE - Whatever a person’s relationship is
  • to you, you have a duty to not harm him or
  • her. Being loving, kind or compassionate
  • might be better viewed as ideals to which we
  • should aspire, rather than as principles of

duty. If you fail to act charitably toward the

driver who chops you off, you are not acting

unethically (although you may be expressing

the deepest aspects of your humanity).

Slide 4-10



  • People often disagree about what is important in life. True or false?
  • TRUE - This is a sociological fact and says
  • nothing about what should constitute the good
  • life. Even if most people that you encounter
  • believe acquiring wealth is their main objective,
  • it does not follow that becoming rich and
  • famous is a worthwhile goal. What they

might be saying is that “being famous will

make me happy.”

Slide 4-10

business ethics
Business Ethics
  • Ethical issues in international business

Foreign Corrupt Practices Act (FCPA)

  • Moral obligations
  • Ethical perceptions across cultures
global competition
Global Competition

Ethics – is it good business?

Going Green


Increasing $tockholder Equity


Rockefeller Rebellion Turns Up Heat on Exxon

John D.'s Heirs Seek Change -- and Respect

WSJ - May 24, 2008; Page A1

Two decades ago, Neva Goodwin Rockefeller grew so tired of all the baggage that came with her fabled family name that she changed it and became plain Neva Goodwin. But now, Ms. Goodwin, 63 years old, is embracing the powerful Rockefeller name as she publicly challenges the management of Exxon Mobil Corp., successor to the oil company founded by her great-grandfather, John D. Rockefeller. As Neva Rockefeller Goodwin, she has marshaled four generations of Rockefellers to join her in a campaign to force major changes at one of the most profitable companies in the world. The battle will come to a head at Exxon's annual meeting Wednesday in Dallas. (Scheduled for 28 May.)

Some members of the family joined the fight out of a passionate belief in the threat of global warming; others were concerned that Exxon is overlooking business opportunities or risks. Many seem offended that the company appears impervious to the wishes of its shareholders, including those named Rockefeller.

Slide 4-7


Exxon Withstands Activist Proposals

Chairman, CEO Jobs To Remain Joined; Environment Still Issue

WSJ - May 29, 2008; Page B3

DALLAS -- Exxon Mobil Corp. shareholders rejected a proposal to create an independent chairman in a heated proxy fight over the future of the giant oil company . . . The proposal to create an independent chairman, which would have stripped Chairman and Chief Executive Rex Tillerson of one of his titles, drew 39.5% of the votes cast at Wednesday's annual shareholder meeting. Support for the measure edged down from last year, when it received 40% of the votes cast.

The shareholder unrest also reflected some concerns that Exxon isn't doing enough to prepare for climate change or develop a more robust renewable-fuels strategy. (The chairman) acknowledged activists' environmental concerns without offering any concrete promises. He said Exxon must continue to generate needed energy while taking steps to "lower our environmental footprint." But he also said he didn't think non-fossil fuels would make a significant dent in global energy demand until 2050 or so.

Slide 4-7

global competition1
Global Competition

Ethics – is it good business?

 The Question:

Companies spend billions of dollars doing good works -- such as developing eco-friendly technology -- and then trumpeting them to the public. But does it pay off?

global competition2
Global Competition

Ethics – is it good business?

 The Test:

In a series of experiments, consumers were shown the same products -- coffee and T-shirts -- but one group was told the items had been made using high ethical standards and another group that low standards had been used.

global competition3
Global Competition


What consumers were willing to pay for a pound of coffee based on what they were told about the company's production standards:

  • Ethical standards . . . . . . . . . $9.71
  • Unethical standards . . . . . . . . 5.89
  • Control (no information) . . . . 8.31

Source: Remi Trudel and June Cotte

global competition4
Global Competition


How much consumers were willing to pay for all-cotton T-shirts based on what they were told about the proportion of ethical production:

  • 100% organic cotton . . . . . . $21.21
  • 50% organic cotton . . . . . . . . 20.44
  • 25% organic cotton . . . . . . . . 20.72
  • Unethical behavior* . . . . . . . .17.33
  • Control (no information) . . . . 20.04

*Production harms environment

global competition5
Global Competition


Consumers with high ethical expectations of companies doled out bigger rewards and punishments than consumers with low expectations. What each group was willing to pay for a pound of coffee based on production standards:

  • Consumers with high expectations:
    • Ethical standards . . . . . . . $11.59
    • Unethical standards . . . . . . . 6.92
  • Consumers with low expectations:
    • Ethical standards . . . . . . . $9.90
    • Unethical standards . . . . . . 8.44
global competition6
Global Competition

The Results:

Consumers are willing to pay a small premium for ethically produced goods. But they'll punish an unethically made product even more harshly, by buying it only at a steep discount.

global competition7
Global Competition

Six Products, Six Carbon Footprints

Everybody's talking about it. But what exactly is a carbon footprint? And how is it calculated?

By JEFFREY BALLWSJ – 06 Oct 2008

A new concept is entering the consumer lexicon: the carbon footprint.

First came organic. Then came fair trade. Now makers of everything from milk to jackets to cars are starting to tally up the carbon footprints of their products. That's the amount of carbon dioxide and other greenhouse gases that get coughed into the air when the goods are made, shipped and stored, and then used by consumers.

So far, these efforts raise as many questions as they answer. Different companies are counting their products' carbon footprints differently, making it all but impossible for shoppers to compare goods. And even if consumers come to understand the numbers, they might not like what they find out.

For instance, many products' global-warming impact depends less on how they're made than on how they're used. That means the easiest way to cut carbon emissions may be to buy less of a product or use it in a way that's less convenient.

carbon footprints
Carbon Footprints
  • CARS -The simplest statistic in the carbon-footprinting game may be this: For every mile it travels, the average car in the U.S. emits about one pound of carbon dioxide. Given typical driving distances and fuel-economy numbers, that translates into about five tons of carbon dioxide per car per year.
    • The vast majority of those emissions -- 86% -- came from the car's fuel use, the study found. Just 4% of emissions came from making and assembling the car. That means consumers can lower their footprint by buying a car with better fuel economy.
    • The Prius, the hybrid gasoline-and-electric car that averages 42 miles per gallon, has a lifetime carbon footprint of 44 metric The Corolla, a small sedan with 29 MPG, has a footprint of 64 tons. The Camry (23 MPG) has a footprint of 95 tons. And the 4Runner, an SUV rated at 16 MPG, has a footprint of 118 tons.
  • SHOES -You may think you're at one with nature going for a walk in the woods in your sturdy hiking boots. But those boots pack a lot of carbon. The big reason: the leather.
    • Timberland Co., a shoe company with an outdoorsy image, has assessed the carbon footprint of about 40 of the shoe models it currently sells. The results range from about 22 pounds to 220 pounds per pair. Each of the shoes that has been carbon-footprinted comes with a label assessing its greenhouse-gas score on a scale of zero, which is best, to 10, which is worst.
carbon footprints1
Carbon Footprints
  • LAUNDRY DETERGENT - The recipe for a low-carbon load of laundry: Use liquid detergent instead of powder, wash your clothes in cool water and hang them out to dry.
    • But consumers who care about their carbon emissions should do more than switch detergent forms, the labels advise. Doing the wash in cooler water -- 86 degrees Fahrenheit instead of 104 degrees -- will shave the carbon footprint of each load by 0.3 pounds. That's as much of a reduction as you get from switching to liquid from powder.
    • The biggest way to cut the environmental impact of cleaning clothes, however, is to stop using a clothes dryer. Drying laundry outside on a line, Tesco says, will cut the carbon footprint of every load by a whopping 4.4 pounds.
  • JACKETS – Patagonia Inc.'s Talus jacket looks like a naturalist's dream. In fact, its carbon footprint is 66 pounds. That is 48 times the weight of the jacket itself.
    • Over the past year the outdoor-equipment maker has computed and posted on its Web site the carbon footprints of 15 of its products. Because most of Patagonia's products are made overseas and sold in the U.S., the company that a big chunk of the carbon footprints came from –
    • The fabric for the Talus is made in China, the zippers come from Japan, and the jacket is sewn in Vietnam. Yet all that transportation adds up to less than 1% of the product's total carbon footprint, Patagonia says. The majority of the footprint -- 71%, or about 47 pounds -- comes in producing the polyester, which originates with oil.
carbon footprints2
Carbon Footprints
  • MILK - Several studies of milk's carbon footprint are under way in the U.S. Each has come up with a different number, largely because each is counting things differently.
    • A recent study by National Dairy Holdings, a Dallas-based dairy, found that the carbon footprint of a gallon of its milk in a plastic jug is either 6.19 pounds or 7.59 pounds. The difference rests in what kind of cases the jugs are placed in during transport from the milk-processing plant to the distribution center. Plastic cases, because they take more energy to produce, yield more carbon-dioxide emissions than do cardboard ones.
  • BEER - When New Belgium Brewing Co. set out last year to compute the carbon footprint of a six-pack of its Fat Tire Amber Ale, it figured it would find transportation was the biggest problem. That's the emission source New Belgium thinks about most often. The microbrewer has been expanding into more states, necessitating more trucking of its beer.
    • When the numbers came in this summer, they showed that a six-pack's carbon footprint was about seven pounds. The real surprise was where the bulk of that number came from: the refrigeration of the beer at stores. Transportation came in fourth, behind manufacturing the glass bottles and producing the barley and malt. Refrigeration poses a tougher problem. Stores selling Fat Tire aren't owned by New Belgium, so even if the brewer wanted them to stop refrigerating the beer, they might not do so. Many stores could switch from less-efficient, open-front beer chillers to more-efficient models enclosed by clear doors. But that presents its own hurdle, Ms. Orgolini notes: "People don't want to have to open the door."
carbon footprints3
Carbon Footprints
  • S-o-o-o, as you can see, measuring carbon footprints is a very complex issue. It goes well beyond SUV’s vs. sub-compacts, McMansions vs. apartments/condominiums or coal vs. solar-power for electricity generation.
  • Regarding your personal choices, based on what we’ve have just seen, do you choose . . .

MILK or BEER ???




Slide 4-42


Johnson & Johnson


Slide 4-42

implications for global managers
Implications for Global Managers
  • The most common ethical issues that one may encounter in an international business setting are:
    • employment practices,
    • human rights,
    • environmental regulations,
    • corruption and
    • the moral obligation of multinational corporations.
  • Ethics & Trust – do the hard right thing