IB7002-5, INTERNATIONAL BUSINESS
IB7002-5, INTERNATIONAL BUSINESS IB7002
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Popular in International Business
This 8 page Class Notes was uploaded by JC11 on Saturday April 9, 2016. The Class Notes belongs to IB7002 at Northcentral University taught by in Spring 2016. Since its upload, it has received 16 views. For similar materials see International Business in International Business at Northcentral University.
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Date Created: 04/09/16
NORTHCENTRAL UNIVERSITY ASSIGNMENT COVER SHEET Student: THIS FORM MUST BE COMPLETELY FILLED IN Follow these procedures: If requested by your instructor, please include an assignment cover sheet. This will become the first page of your assignment. In addition, your assignment header should include your last name, first initial, course code, dash, and assignment number. This should be left justified, with the page number right justified. For example: Save a copy of your assignments: You may need to resubmit an assignment at your instructor’s request. Make sure you save your files in accessible location. Academic integrity: All work submitted in each course must be your own original work. This includes all assignments, exams, term papers, and other projects required by your instructor. Knowingly submitting another person’s work as your own, without properly citing the source of the work, is considered plagiarism. This will result in an unsatisfactory grade for the work submitted or for the entire course. It may also result in academic dismissal from the University. IB70025 Isabel Wan, PhD International Business Assignment 5 Faculty Use Only <Faculty comments here> <Faculty Name> 2 Introduction The purpose of this week’s assignment is to critically evaluate the impact that cultural influences on conflict, clashing civilizations, clashes among nations, ethnic conflicts, and resolution of cultural conflicts and their effects on the international business environment. While globalization under most circumstances is considered to be a positive force, it is also seen as a threat to small, local businesses. As the the global environment becomes more accessible to individuals, order and security are tested. Violent outbreaks are becoming more frequent and are instilling a greater sense of insecurity in various regions. Throughout this assignment the following will be discussed: 1) an evaluation of the economic, social and political changes, 2) economic growth and governmental policy trends, and 3) the cultural international business environment. Economic, Social, and Political Changes Economic, social, and political changes have taken place since the recent global financial crisis. The companies that were successful during this time were identified as the BRICs countries. The overall global climate is moving towards the creation of democratic nations that provide more freedoms to residents. In addition, the welfare of the residents is now more than ever being taken into account in more countries throughout the world. Countries that infringe on human rights begin to face sanctions and embargos placed by the U.S. and similar minded countries. The countries also face potential involvement by the UN if treatment is bad enough, ex. Genocide, starvation. No longer can one region of the world enslave, starve, or murder residents without having global involvement. In addition, multinational companies must make decisions to enter a particular market based on the country’s economic, social, and political 3 environment. To take a look at how each concept affects multinational corporations and the overall business environment, economic, social, and political changes will be further analyzed. Economic change Economic conditions are changing globally, especially within the countries identified as BRICs. The financial crisis from 20082009 negatively affected countries throughout the world, with the exception of the BRICs countries. By setting aside a substantial savings, Brazil, Russia, India, and China were identified as positively performing emerging countries. Brazil consistently increased its GDP of 3.4%, and even in 2008 during the financial crisis, Brazil increased it’s GDP by 5.2%. Russia’s GDP growth exceeded 8% prior to the crisis, and in 2008 it increased by 5.6%. China on the other hand has consistently increased its GDP on average of 9.8% per year while India increased its GDP from approximately 3.5% per year prior to 2003 to 9% after 2003 (Ogrean & Herciu, 2010). Overall, one can see that as economic change take place, it is important to analyze the strategies of successful economies. While most countries were significantly impacted by the financial crisis of 2008 and 2009, there were countries that not only survived, but thrived during this time. An MNC will need to review economic conditions to adjust its financial strategy in times of economic uncertainty. In addition, an MNC should look to build businesses in countries that are identified as successful emerging countries to maximize profitability. Social Change Another area for multinational corporations to consider while conducting business in the international environment is social change. Social change allows for a larger percentage of multinational companies to cross borders. Governments and people in other nations are starting 4 to open their minds to change. An example of social change in action would be Walmart as it continues to expand into foreign countries. While Walmart has corporate policies in place that have worked well in the U.S., they must become more flexible as they move into new environments. Currently Walmart’s customer service involves bagging a customer’s goods as well as asking a customer for help if they are at a 10foot distance. While these are corporate strategies that are standard and accepted in the U.S., these are not strategies that are accepted around the world. As Walmart attempted to apply the same strategy in Germany, the actions were perceived as irritating and offensive. Multinational companies need to be aware of the different viewpoints held by various countries and must also to become successful in an alternate environment (Luthans & Doh, 2012). Overall, social change is taking place everyday, but the change is slow. Modifying behaviors in places such as Saudi Arabia and Afghanistan will take place at an exceptionally slower pace. If a MNC is looking to influence customers, a more forward thinking country that is more accepting of foreign opinions may be the route to take. Political Change Political change is another area to take into consideration. After a review of the literature, political change appears to be pushing the international environment towards democracy. Most countries are in the process of allowing residents additional freedoms. China also is moving towards this trend, at least in a placating way towards the rest of the world. Communist China made vows to make political changes and honor human rights, but the th country’s actions showed the opposite was true. On the 25 of December, 2009, literary critic Mr. Liu Xiaobo was sentenced to eleven years in prison and an additional two years denied of political rights. His crime was coauthoring a manifesto that demanded democratic reform. His 5 peaceful expression of his political views was not acceptable in the eyes of China’s government. The U.S. attempted to place pressure on the Chinese government to release Mr. Liu without success. One could see that even with the appeal that was conducted by Mr. Liu, the officials already had their minds made up and upheld Mr. Liu’s sentence (Landreth, 2009). Not only did the Chinese government place Mr. Liu in prison, the government then directed its attention on Mr. Liu’s family. As a political activist and a freedom fighter, Mr. Liu’s family became the government’s next target. The government began to place pressure on Mr. Liu and his decision to publish the manifesto by arresting Mr. Liu’s family members to include his brotherinlaw and nephew in hopes to silence any further political uprisings (Ford, 2013). Economic Growth and Governmental Policy Trends 5.0 Analyze the economic growth and governmental policy trends of emerging countries in the last decade and critically discuss the influence of this on international trade interactions. Government policy trends are moving towards more democratic nations which allow more freedoms to for people. Government policy trends in emerging countries are moving towards helping the population of the country. India, for example, is implementing governmental policy to ensure more welfare recipients are able to receive OAD medicines. The policies allow a tiered, differential pricing system based upon wages earned in order to help more people (Chatterjee, Kubo, & Pingali, 2015). As countries are growing in the level of responsibility to its residents, policies are changed to reflect the updating strategies. The trends show that Governments are setting saving more, becoming more concerned for its people, and pushing towards democracy. Multinational corporations must be aware of government policies and what changes are being made. MNCs need to stay abreast of changes to ensure laws are not 6 broken and tare able to effectively operate in a given environment. Cultural International Business Environment The cultural international business environment is one that also continues to evolve. Cultural influence significantly impact the way business is conducted. Some nations have lived with cultural and ethnic conflicts, clashing civilizations, for thousands of years. Culture involves a long history, and many times that history leads to conflict. This level of conflict remains year after year until some form of resolution can be made or generations evolve. Conflict resolution is a key part of globalization. In many instances, cultural conflicts have been resolved by globalization. If business owners wanted to conduct business in a particular area and they didn’t agree with the other country’s politics, they had to place their own beliefs and expectations to the side in order to conduct business. Under many circumstances, the need to promote wealth results in compromise of personal values and beliefs to work past existing cultural issues. A specific example of a difference in cultural beliefs takes place involves the U.S. One of the most well known clashes among civilizations and nations involves the U.S. Payne (2013) discussed how America’s longest running war is not with a nation but a group. The Taliban. The U.S. has been fighting the Taliban for so many years, it is hard to count. The U.S. and Taliban both believe in a particular way of life that represents a particular culture. Cultures are made up of groups of people that share beliefs, values, customs, and ways of life. When the ideals cultures are made up of are challenged, the people can become very offended which sets off a clash of civilizations. If the persons making up a particular culture believe strongly enough, war may ensue. A prime example of this is the ongoing war between Israel and its surrounding Arabic countries. Ethnic conflict is another area that ends in war. Ethnic conflicts are most prevalent in 7 African and Arabic nations. Ethnic conflicts are perceived to be a product of ancient hatred, but in current day, the conflicts are due to poor countries with poor governing institutions. Globalism while increasing awareness and knowledge to additional cultures and ethnicities also contributes to the cultural clash. The positive discussion suggests that over time, the number of conflicts have decreased as societies are becoming more integrated (Payne, 2013). As globalization continues and technology advances, one of the concerns is the increased number of violent outbreaks taking place worldwide. An example of this was discussed as recent as the 16 of November 2015. ISIS, a terrorist organization is using globalization and advanced technology to instill terror in a global population. One of the primary ways they are doing this is through the use of the PS4 gaming system. The terrorists have found a way to incorporate plans into the software as well as transmit messages that are discarded seconds after the other individual receives them (Tassi, 2015). MNCs must be aware of this and take additional precautions to screen personnel prior to hiring and evaluate the area of operation thoroughly prior to starting up a business. Conclusion The world’s economic, political, and social climate is constantly changing. Some countries are moving rapidly towards a nation of rapid growth and individual freedom, and others are moving very slowly. Multinational corporations that are looking to move into a particular area to conduct business need to be aware of cultural belief systems and how they impact business. Technology moves the world towards globalization and exposes cultures to one another. While this may cause some conflict, the overall combining of cultures is effectively decreasing the number of conflicts overall. MNCs must be aware of the area they are looking to 8 conduct business within. To analyze concept further, the following was discussed: 1) an evaluation of the economic, social and political changes, 2) economic growth and governmental policy trends, and 3) the cultural international business environment. References Chatterjee, C., Kubo, K., & Pingali, V. (2015). The consumer welfare implications of governmental policies and firm strategy in markets for medicines. Journal of Health Economics, 44255273. doi:10.1016/j.jhealeco.2015.09.001 Ford, P. (2013). China harasses family of Nobel Peace laureate Liu Xiaobo. Retrieved from http://www.csmonitor.com/World/AsiaPacific/2013/0423/Chinaharassesfamilyof NobelPeacelaureateLiuXiaobo Landreth, J. (2009). Will the West's criticism of China for jailing top dissident backfire? http://www.csmonitor.com/World/AsiaPacific/2009/1227/WilltheWestscriticismof Chinaforjailingtopdissidentbackfire Luthans, F., & Doh, J. (2012). International Management: Culture, Strategy, and Behavior 8th New York, NY McGrawHill Irwin Ogrean, C., & Herciu, M. (2010). Changing the patterns of the global economy – the emergence and evolution of the BRIC countries. Studies in Business & Economics, 5(2), 100110 Payne, R. J. (2013). Global issues. New Jersey: Pearson Education, Inc. Tassi, P. (2015) How Paris ISIS terrorists may have used PlayStation 4 to discuss and plan attacks [Updated]. Retrieved from http://www.forbes.com/sites/insertcoin/2015/11/14/ whytheparisisisterroristsusedps4toplanattacks/
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