International Business Management aims to enables individuals to acquire the necessary business and socio-economic knowledge and skills to specialise in international management. Growing globalisation and regionalisation at the beginning of the 21st century presents new challenges for the economy. To meet the challenges posed by the internationalisation of networks of value creation requires adequately qualified employees; employees who, in addition to a solid business background, also have sufficient know-how regarding the specific cultural aspects and socioeconomic conditions in the inter-regional business environment. International Business Management addresses this need.
Buddhism refers to the broad and multifaceted religious tradition that focuses primarily on the reality of worldly suffering and on the ways one can be freed from such suffering. Siddhartha Gautama or Buddha founded Buddhism. Buddhism is very popular in Europe and US. Buddhism as traditionally conceived is a path of salvation attained through insight into the ultimate nature of reality. Buddhism encompasses a variety of traditions, beliefs and practices, largely based on teachings attributed to Siddhartha Gautama, commonly known as the Buddha.
The foundation of all Buddhist practice is ethical conduct and altruism.
Buddhist ethics:Śīla (Sanskrit) or sīla (Pāli) is usually translated into English as "virtuous behavior", "morality", "ethics" or "precept". It is an action committed through the body, speech, or mind, and involves an intentional effort. It is one of the three practices (sila, samadhi, and panya) and the second pāramitā. It refers to moral purity of thought, word, and deed. The four conditions of śīla are chastity, calmness, quiet, and extinguishment.
Śīla is the foundation of Samadhi/Bhāvana (Meditative cultivation) or mind cultivation. Keeping the precepts promotes not only the peace of mind of the cultivator, which is internal, but also peace in the community, which is external. According to the Law of Karma, keeping the precepts are meritorious and it acts as causes which would bring about peaceful and happy effects. Keeping these precepts keeps the cultivator from rebirth in the four woeful realms of existence.
Śīla refers to overall principles of ethical behavior. There are several levels of sila, which correspond to "basic morality" (five precepts), "basic morality with asceticism" (eight precepts), "novice monkhood" (ten precepts) and "monkhood" (Vinaya or Patimokkha). Lay people generally undertake to live by the five precepts, which are common to all Buddhist schools. If they wish, they can choose to undertake the eight precepts, which add basic asceticism.
Some of the dominant teachings of Buddhism and some specific Buddhist principles that can be applied to help multinationals become more ethical:
Buddhism teaches a lot to humans in all aspects. The essence of Buddhism is that craving and desires inevitable produce suffering. Buddhism teaches us to reach a state where there is no suffering. To remove suffering one has to follow the Eightfold path of Right understanding, Right intention, Right speech, Right action, Right livelihood, Right effort, Right mindfulness, and right concentration. Buddhism also believes that the way to end suffering is to meditate to train and soothe the mind to ultimately reach enlightenment or Nirvana.
Buddhism teachings can also be applied to multinationals to proper and become ethical. Ethics of Material Progress: Interprets Buddha’s teachings, suggesting that Buddha saw poverty as the major reason for decline of ethical behavior in society. Buddhism can therefore be prescribed to produce a work ethic that encouraged workers to engage in their best efforts and promoted qualities such as taking initiative, persistence, and hard work. Laziness is seen as a very negative quality and heavily discouraged. Hence multinational companies should expect works that have a positive attitude to work.
Buddhist work ethics also emphasizes Teamwork and Ethical means to achieve success at work. Multinational companies can design an environment that can take advantage of such values.
Buddhism is also based on the notion that there is no separate self and that all beings are interconnected and interdependent. Such beliefs affect how people treat each other. Buddhism promotes Compassion and Love as sublime states and provides actual practical guidance to live according to high ethical standards. Multinational Managers should thus be aware of their actions and ensure that decisions are made within such Ethical boundaries. Buddhists believe that a company exists for the betterment of the society and other being. Multinationals should encourage employees to engage in a number of exercises that can enhance an Ethical Orientation to Business. One should be more careful about one’s actions on others. The compassion and love inherent in considering others as close relatives may be helpful to deal with the Employee Diversity of multinational companies.
Another Buddhist principle is that the positive action of others makes life possible. Hence, multinational managers should recognize the efforts of their workers.
Finally, it is important to understand that although work is a key component of life, other areas need to be balanced. Multinational managers can respect a balanced work design for their workers.
Applying these Buddhist principles are likely to result in long term gains.
Some parameters to be considered by multinationals when choosing an ALLAINCE PARTNER:
Alliances are fast and flexible ways of gaining complementary resources, they are increasingly among the most popular strategies that companies use to develop new products and to expand into new geographical areas or markets.
HRM deals in managing successful strategic alliances, the importance of building trust and commitment, how to assess the performance of strategic alliances, how to handle a failed alliance, and the use of dedicated alliance management units. Although strategic alliances are attractive for variety of reasons, they are inherently unstable and provide significant management challenges.
Implementing a strategic alliance:
· Decide where to link in value chain.
· Select a potential partner: If partner is not acceptable, search again….
· If partner is acceptable: Choose the alliance type, negotiate an agreement, Build the organization, and build trust and commitment.
· Assess Performance.
· If the alliance meets strategic objectives: Continue or increase involvement.
· If the alliance does not meet strategic objectives: Terminate the alliance or check or revise Implementation.
Choosing a partner is the most important step: Several key criteria are applied for picking an appropriate alliance partner.
1. Seek Strategic complementary: Potential Partners must have a good understanding of each other’s strategic objectives for the venture.
2. Pick a partner with complementary skills: Partners must contribute more than money to the venture.
3. Seek out companies with compatible management styles: If companies have different management style, it can never get along. “You have to suppress the ego – its absolute poison in a joint venture.” 2 companies with different specializations can never get along together. E.G. An engineering company can rarely get along with a finance company, since both share difference at management and operational level.
Hence getting the overall preview of alliance company’s management styles and operational design is very important before preceding the venture.
Company can either redirect the search or can make amendments for being compatible with the other company.
E.G: In this case, the finance department of the engineering company can be outsourced to the said finance company. So as the alliance company will be solely responsible for the finance section. By making this clause the Head Company can never interfere with other divisions of the Alliance Company and vice-versa except for the finance division.
If this question is answered appropriately the venture can be successful.
4. Seek a partner that will provide the “right” level of mutual dependency.
5. Avoid the anchor partner: Anchor partners hold back the development of a successful strategic alliance because they cannot or will not provide their share of funding. Potential partners should study carefully each other’s financial position and investment plans. A potential partner with a weak division or expansion in other areas may drain financial support from the alliance. If the potential partner is financially weak but still attractive for other reasons, precautions are advised. E.G. A contract might specify that the division of alliance profits among the partners may vary in proportion to each partner’s financial contribution to the venture.
6. Be cautious of the “elephant and ant” complex: This occurs when 2 companies are greatly unequal in size.
7. Assess operating policy differences with potential partners.
8. Assess the difficulty of cross cultural communication with a likely partner.
Considerable evidences indicate that people from different cultural backgrounds prefer certain traits and behaviors in their leaders. Different cultures have different images of their leaders. However, some also believe that some leader behaviors and traits are culture universals. Leadership has different evaluation connotations in different societies. The US places a very important premium on leadership which is seen as having a positive connotation and is thus a desirable quality. Whereas some societies place less emphasis on leadership. E.G: In Japan CEO typically attribute organizational success to their subordinates rather than to their own leadership. In Mexico, where people are mostly preoccupied with consensus and equality, the concept of leadership is also thought to be over emphasized.
Also attributes and characteristics of leaders do not necessarily translate well into other national contexts. For e.g.: in Germany, the engineer rather than the manager is the cultural hero. In Chinese family business, the leader is the patriarch, the oldest male head of the family.
The latest research in cross-national leadership is a project called GLOBE (Global Leadership and organizational Behavior Effectiveness). The GLOBE study contains insights regarding leadership that can help the multinational manager develop a leadership style to navigate successfully through a maze of cultural settings. The GLOBE research team did an extensive study in different countries. The first task of the team was to see which leadership traits/behaviors are culturally endorsed. Culturally endorsed means which traits are considered best for a leader in a particular national context. The GLOBE team found that numerous leader behaviors and traits are culturally endorsed in some societies but not others. These are the culturally contingent aspects of leadership and vary by the national context.
Some examples of large range of cultural differences are: Cunning, Subdued, Sensitive, Evasive, and Ambitious.
Some examples of moderate range of cultural differences are: Ruler, Domineering, Habitual, Willful, and Elitist.
Some examples of small range of cultural differences are: Self-sacrificing, Compassionate, Intuitive, and worldly.
Larger variations among countries mean it is more likely that successful multinational managers must moderate their leadership styles to succeed in different national context. Some leadership traits like trustworthy, just, honest, positive, dynamic, dependable etc are accepted in all countries. Some traits like loner, asocial, not cooperative, ruthless, egocentric are not accepted by all nations.
The GLOBE leadership study also compared by grouping the countries into clusters. Clusters are convenient for summarizing information regarding how countries are similar as well as how they differ. E.g.: Arabic cluster, Germanic Europe cluster, Latin European cluster etc. Leaders from different countries have different characteristics and use different behaviors to achieve the same organizational ends, these differences occur because the national context produces differences in the repertoire of behaviors and traits available to managers to express their leadership styles. Each national context has its own acceptable ways to communicate a leaders concern for tasks or people.
Negotiation includes several steps which include preparation, building the relationship, exchanging information, and the first offer, persuasion, concessions, the agreement and post agreement. Most important in international negotiation is preparation.
A winning negotiation strategy requires preparation. Experts on negotiation identify several essential questions and issues to consider before the negotiation. It includes the following:
· Determine if the negotiation is possible: A company must at least have some areas of agreement with your negotiating counterparts.
· Know exactly what your company wants from the negotiation: What the company hopes to achieve? Minimal acceptable conditions of the agreement.
· Know the other side: Can the other organization deliver what your company wants?
· Send the proper team: The negotiators have appropriate knowledge of the minute details.
· Agenda: Is there an agreed upon agenda?
· Prepare for a long negotiation: Avoid being rushed to accept disadvantages.
· Environment: All details regarding the negotiation place should be known.
· Strategy: Plan the strategy but remain flexible.
· The successful negotiator not only prepares for the substance of negotiation but also does an extensive research about the nature ad styles of the foreign culture.
· Negotiation goal – Signing the contract or forming a relationship.
· Formal or informal personal communication style: business cultures differ widely on the acceptability of informal styles.
· Direct or Indirect communication style: The extent to which communication is direct and verbal rather than indirect or non-verbal depends on different cultures.
· Sensitivity to time – low or high: the pace of negotiation and the time given to each phase of negotiation intertwine with the objective of the negotiation.
· Forms of Agreement – Specific or General: An agreement may contain general principles or very detailed documents that attempt to anticipate all possible outcomes of relationship.
· Team organization – a team or a leader.
Neglecting all these pints can lead to problems in negotiation.
Step2: Building the relationship:
After initial planning, the first step of actual negotiation begins with Building a relationship between the negotiating parties. Negotiators do not focus on the business issues. Rather they concentrate on social and interpersonal matters. They develop opinions regarding the personality characteristics of the negotiators. This phase of the negotiation process takes place at a place different from the formal location. The duration and importance of relation – building stage vary widely by national culture.
Step3: Exchanging information and the first offer.
Both parties exchange information n the needs for the agreement. Parties exchange information that is task related. It pertains to the actual details of the proposed agreement. Both sides make a formal presentation of what they desire from the agreement.
Both sides present their first offer. At this stage national and business cultures influence what information is given and requested, how the information is presented, and how close the initial offer is to the actually expected specifications.
After the first offer, Core negotiation begins.
In this stage each side in the negotiation attempts to get the other side to agree to its position. This is the heart of the negotiation process. Several tactics are undertaken b the negotiators, some of which are standard verbal and non verbal negotiation tactics and some are the dirty tricks of negotiation.
Verbal and non verbal negotiation tactics:
Verbal negotiation tactics:
· Promise: if you do something for me, I will do something for you.
· Threat: if you do something I don’t like, I will do something you don’t like.
· Normative appeal: This is the way we do or we do not do business.
Cultural differences in nonverbal communication styles also influence negotiations. Non verbal communications through such things as body posture, facial expression, hand gestures and the use of personal space as a natural part of negotiation.
Dirty tricks: Dirty tricks are negotiation tactics that pressure opponents to accept unfair or undesirable agreements or concessions. Some E.G:
· Deliberately deception or bluffing: negotiators present flagrant untruths either in the facts they offer or their intentions for the negotiation.
· Stalling: Negotiators wait until the last minute.
· Escalating authority: Negotiators make an agreement then reveal that it must be approved by senior management.
· Good guy, bad guy routine:
· You are wealthy and we are poor.
· Old friends
One can avoid these tricks by:
1. Avoid using the tricks yourself
2. Point out the dirty tricks when they are used.
3. Be ready to walk out of negotiation if the other side fails or play fairly.
4. Realize the ethical systems.
Step5 and Step6: Concessions and agreements:
Successful negotiations result in final agreement. The final agreement is a signed contract, agreeable to all sides. It must be consistent with the chosen legal system or system. The safest contracts are legally binding in the legal systems of all the signers.
For most negotiations to reach final agreements, each side must make some concessions. Concession making requires that each side relax certain demands to meet other party’s needs. Concession making has 2 types of approach: Sequential approach and holistic approach.
Companies choose an export strategy, some functions of e-commerce companies are outsourced to e-fulfillment specialist called as e-commerce enablers. The enablers provide services and software that translate web sites and calculate shipping, value added tax, duties, and over charges unique to each country.
The enablers of multinational e-commerce companies exist because many companies – do not have the internal resources or capabilities to conduct all e-commerce functions. In such a rapidly changing competitive envt, very few companies have the time to develop such strategic capabilities. Enablers take on functions such as receiving the customers purchased goods, storage, packaging, and eventually shipment to the customer. Successful order fulfillment enablers understand local business culture and know how to comply with taxation and regulatory issues. Many enablers now specialize in helping companies to globalize their e-commerce. Some companies have automated translation process for multilingual websites.
Services offered by e-commerce enablers are receiving the customers purchased goods, storage, packaging, and eventually shipment to the customer, comply with taxation and regulatory issues. Some companies also provide transaction services and web translations.
Help make companies’ website linguistic and globalized. Hence these websites can be used globally which in turn increases revenue.
The services can be categorized as:
· Export and import regulations and duties.
· Complex border crossings
· Multiregional / Country expertise needed.
· Extensive documentation required
· Coordination of multiple transportation legs.
· Total landed cost often unknown until the shipment is delivered.
· Web translation services are divided into 3 phases:
1. Pre-click phase: Transportation options and costs, get import duties, VAT, taxation, excise, and governmental charges, and determine total landed cost.
2. Click phase: The buyer orders and determines door – to –door shipping.
3. Post click phase: documentation and tracking of shipment.
POINTS TO BE CONSIDERED BEFORE ENTERING THE INTERNATIONAL MARKET:
The small business must respond to many of the same questions as the larger business does when considering multinational options. However, the limited number of products or services and the limited resources – of most small business make certain drivers of internationalization more important for them.
There are several questions that need to be answered affirmatively before going international.
1. Do we have a global product or service? A global product or service can be sold worldwide with minimal changes for each country. Small businesses seldom have the resources to adapt each product to local needs, so producing a standard worldwide product make globalization easier.
2. Do we have managerial, organizational, and financial resources to internationalize? Internationalization, even with the more simple participation strategies, requires significant availability of financial and personnel resources.
· What is the reason for going international?
· How committed is top management to the internationalization decision?
· How quickly does management expect the internationalization effort to pay off?
Management experience and Resources:
· What in-house international expertise does the firm have (international sales experience, language capabilities, etc)?
· Who will be responsible for the international organization component of the company (e.g., export department)?
· How much senior management time should be allocated?
· What organizational structure is required?
· How is the present capacity being used?
· Will international sales hurt domestic sales?
· What will be the cost of additional production at home or in a foreign location?
· What modifications of the product or service are required?
· What amount of capital can be committed to international business?
· What level of operating costs for international operations can be supported?
· What other financial requirements may compete with the internationalization efforts?
· By what date must the internationalization effort have positive returns?
3. Even if we do have the resources are we willing to commit those resources and face the risk of internationalization? Small business must view internationalization as similar to other start-up ventures. For the right company the right products, the eventual returns from new international venture may exceed the investment and make the exposure to risk worthwhile.
4. Is there a country in which we feel comfortable doing business? Without resources to understand the cultural and business practices in many countries, small business managers often first seek international opportunities in national cultures similar to their own.
5. Is there a profitable market for our product or service? Even with good product or services, a key question focuses on which country to enter.
6. Which country should we enter? A thorough strategic analysis is required. Firms need to identify potential threats and opportunities by country.
7. Do we have a unique product or service that is not easily copied by larger multinational companies or local entrepreneurs?
8. Do location advantages exist upstream in the value chain? Internationalization of a small firm need not be just a downstream activity in the value chain, such as marketing. When there are advantages of lower cost or higher quality in supply or manufacturing, small multinational companies can seek the same location advantages available to larger companies by sourcing raw materials or manufacturing in other countries.
9. Can we afford not to be a multinational? A shrinking home market may require a firm to internationalize to maintain sales revenue. Finding international sources of lower costs of raw material or production facilities may be necessary to match competitor’s prices and maintain profit margins.
Prior to going international all these questions need to be answered affectively for a stable and profitable business venture.
Teleological and Deontological theories of ethics:
Teleological and deontological theories are categorized as ethical philosophy. The first is traditional ethical philosophy. The second is a contemporary philosophical view of how we can think about ethics.
Two basic systems of ethical reasoning dominate ethical philosophy. These are the teleological and the deontological. In teleological ethical theories, and the morality of an act or practice comes from its consequences. The most popular teleological theory is utilitarianism. Utilitarianism argues that what is good and moral comes from acts that produce the greatest good for the greatest number of people. Many multinational economic decisions are made using utilitarianism.
In contrast to teleological ethical theories, deontological ethics theories do not focus on consequences. Rather, actions by themselves have a good or bad morality regardless of the outcomes they produce. The moral principle forbidding stealing, common in many religious doctrines, takes precedence over a bad outcome. Similarly, deontology would argue that closing a planting is unethical as workers are not being treated with dignity.
Some ethical philosophers who believe in deontological ethical theories argue that morality is intuitive and self – evident--- that is, moral people just know what is right because it is obvious how an ethical person should behave. Other ethical philosophers argue that we cannot rely on intuition. Instead we should follow an essential moral principle or value such as the golden rule or a concern for justice. Still other deontologists argue for a more comprehensive set of moral principles or rules that can guide our behavior, such as the Ten Commandments, the Quran, or the Bible.