culture, ethics and norms
TRANSCRIPT
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Presented by:
Parth R Shah 11MBA091Shweta Purohit 11MBA076
Abhishek Rathod 11MBA080
Nikita Shah 11MBA089
Culture, Ethics and Norms
Subject:
International Business(MB811)
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Flow of Presentation
Introduction
Case 1: Wal-Marts Failure in South Korea
Case 2: KFC in India
Case 3: Global challenges faced by Nike
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In concept, business ethics is the applied ethics discipline that
addresses the moral features of commercial activity.
International business ethics has taken on a new urgency with
the emergence of globalization. Low transaction and
communication costs, driven by advances in computer and
telecommunication technologies, have made the global market,
once a metaphor truly global.
Introduction
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The first school is relativism that supports the maxim when in
Rome, do as the Romans do
The second school with a moral imperialist perspective that argues
that people should apply their own cultural ethical values when
operating anywhere around the world.
Moral imperialists argue for the maxim when in Rome, do as you
would at home
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The third school of thought is universalism, which of
course refers to normative ethical standards, or universal
guidelines that transcend national boundaries and cultural
differences . when in Rome or anywhere else, do as we
and the Roman agree to do
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Wal-Marts Failure in South Korea
CASE ON CULTURE
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Background of Wal-Mart
Wal-Mart is the worlds largest retailer, operating in 15
countries with 6500 stores
Wal-Mart is North Americas largest retailer
It has a market share of an estimated 20 percent of the entire
U.S. retail market
Wal-Marts global expansion has been achieved through a
combination of investments, acquisitions of existing stores etc
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Wal-Mart in South Korea
Wal-Mart in South Korea was established in
August 1998
Wal-Mart had acquired four stores and sixundeveloped sites in South Korea
Wal-Mart had high hopes for the long-term
potential from South Koreas operations
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Reasons for failure
South Koreans believe that Wal-Mart failed in South
Korea primarily due to Wal-Marts inability to
understand the shopping preferences of local
consumers
South Korean consumers were used to shopping more
frequently than most Americans
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They may not purchase things at once, but they will
usually buy at least one item
Some other strategies like the distribution, product mix,
and pricing strategies were also some other reasons for its
failure
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Distribution
Wal-Mart outlets in South Korea were placed outside
instead of in the cities
South Koreans, however, were used to easily accessible
shopping facilities without the need to travel
Many South Koreans would not shop at a Wal-Mart
because they did not like how the store was set up.
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Product Mix South Koreans have different consumer preferences
than North Americans
South Koreans like fresh vegetables and fresh food rather
than dry products
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Pricing
Wal-Marts EDLP strategy led to Korean consumers
perceived Wal-Mart stores as a cheap marketplace with
poor quality products
Wal-Mart's stores in Korea lost about $10 million in 2005
on sales of $720 million
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On May 22, 2006 Wal-Mart became another
multinational that failed to adjust with the taste of
South-Korean consumers
Wal-Mart sold its 16 stores to Shinsegae for $882
million
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Lessons from Wal-Mart
Wal-Marts exit from the South Korean market showed
that the American way of marketing did not translate
well in every market
More knowledge of the environment and competition
could have provided Wal-Mart with a greater
understanding of the culture and their different needs
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KFC in India
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Background
KFC was founded by Harland Sanders (Sanders) in the
early 1930s, in Corbin, Kentucky, US.
KFC now stretches worldwide with more than 13,000
restaurants in more than 80 countries and territories
UK, Australia, South Africa, China,USA, Malaysia and
many more
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KFC's Entry in India Foreign fast food companies were allowed to enter India during
the early 1990s due to the economic liberalization policy of the
Indian Government. KFC was among the first fast food
multinationals to enter India
KFC opened its first fast-food outlet in Bangalore in June 1995
Upper middle class population, with a trend of families eating
out. It was considered India's fastest growing metropolis in the
1990s.
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P bl f KFC
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Problems for KFC KFC's chickens did not adhere to the Prevention of
Food Adulteration Act, 1954.
Chickens contained nearly three times more
monosodium glutamate (popularly known as MSG, a
flavor enhancing ingredient) as allowed by the Act
Severe protests by People for Ethical Treatment of
Animals (PETA)
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KFC was targeting higher class income group in
India
Protest of Indian farmers and government
pressure
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"The chicken they serve is full of chemicals, and the birds
are given hormones, antibiotics and arsenic chemicals to
fatten them quickly."- Nanjundaswamy.
It was unethical to promote highly processed 'junk food' in
a poor country like India with severe malnutrition
problems
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The growing number of foreign fast food chains would
deplete India's livestock, which would adversely affect its
agriculture and the environment
Non-vegetarian fast-food restaurants like KFC would
encourage Indian farmers to shift from production of basic
crops to more lucrative varieties like animal feed and meat,
leaving poorer sections of society with no affordable food
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Re- entry of KFC in India In 2003 it made a quiet re-entry into the Indian market.
The strategies like targeting higher income group level. But at
the same time providing menu which can be afforded by the
middle income group level
Came up with menu like hot crispy chicken which contains
Indian spices which Indian people like, and veg-snackes and
veg zinger, rizo rice
They are adhering the rules of food corporation of India and
PETA and expanding business successfully
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Learning
Understand the significance of cultural, economic,
regulatory and ecological issues while establishing
business in a foreign country
Understand the importance of ethics in doing business
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Nike - Successful Global Business
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Introduction
Nikea global brand created in 1972
Products offered, like the customized options available in
the Nike store online, Nike Sportswear, Nike Women, Nike
Basketball, and Nike Football
company outsourced its manufacturing plants to several
countries in order to lessen costs and become more efficient
in productivity
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Cultural, legal and ethical issues
Factory workers were forced to work exceptionally
long hours to fulfill quotas and had to follow strict
rules during work for below minimal pay
A mere $1.60 a day to Vietnam factory workers when
the living wage is at least $3 a day
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Failed to provide a safe working environment
Workers with skin or breathing problems had not beentransferred to departments free of chemicals and that
more than half the workers who dealt with dangerous
chemicals did not wear protective masks or gloves
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Failure to follow child labor laws by hiring children
who were not allowed to work and forcing them to
work overtime for below minimal pay
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Efforts by Nike
Numerous governmental organizations haveworked with Nike to ensure safe and ethical
business practices and to monitor the
sweatshops Nike established overseas
Nike was forced to change its operational and
strategic plans drastically in order to remain
successful and appease labor and civil rights
unions
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Learning
The case of the Nike demonstrated how difficult it can
be for a business to become global because of the
different rules and regulations established by that
country
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