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INTERNATIONAL BUSINESS MANAGEMENTUNIT 5: CONFLICT MANAGEMENT AND ETHICS IN INTERNATIONAL BUSINESS MANAGEMENT

Prepared and presented by,N. Ganesha Pandian,Assistant Professor,Madurai School of Management,Madurai.

Year : II Semester : IV

References: 1. INTERNATIONAL BUSINESS – TEXT AND CASES BY “ P.SUBBA RAO”

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Disadvantages of International Business

Conflict in International Business Sources and Types of Conflict Conflict Resolutions Negotiation The Role of International Agencies Ethical Issues in International Business Ethical Decision-Making

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Problems of international business

The important problem in international business include: 1. Political factors2. Huge foreign indebtedness3. Exchange instability4. Entry requirements5. Tariffs, quotas and Trade barriers6. Corruption7. Bureaucratic practices of government 8. Technological pirating9. Quality maintenance 10. High cost

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Conflict in Organizations

Organizational conflict, or workplace conflict, is a state of discord caused by the actual or perceived opposition of needs, values and interests between people working together.

Opposition Incompatible behavior Antagonistic inter action Block another party from reaching her or his

goals

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Conflicts in International Business Conflicts arise between the foreign companies

and host country and foreign companies and

domestic companies

Global companies also have the conflicts with

the home country companies and governments.

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Conflicts arises mostly due to the conflicts in interests of global companies with those of:

1. Host country’s companies2. Host country’s government3. Host country’s customers4. Host country’s society 5. Host country’s government

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Factors causing conflicts The objective of most of the global companies is

to maximize the profits world wide along with the earnings as much profits as possible in each country

The purpose of most of countries in allowing and inviting foreign companies is to get the long term benefit from their operation.

These varying goals result in conflicts

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Conflicts and negotiations in International Business

Marketing areas Finance areas Human resource areas Social and Ethical areas Environmental issues and Competing Areas

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Other factors

Macro economic areas include: 1. Structural factors2. Exploitation of natural resources Production areas of conflict Company level conflicts

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Negotiations Conflict resolution and negotiations as

given below:1. Negotiation strengths: Government and

company- Technology; Marketing expertise;

product diversity; Joint companies1. Bargaining process2. Behavioral aspects in negotiations3. Bilateral and multilateral agreements4. Corporate citizenship

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Role of international agencies in conflict resolution

International agencies perform conflict preventive functions

Below here are role of some international agencies in resolving the conflicts in international business

1. The united Nations code of conduct for Transnational corporations, 1983:

This code is a comprehensive set of recommendations regarding the behavior of MNCs and host countries in preventing conflicts

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UNCTAD codes: United Nations Conference on Trade and Development code

The OECD code of practice on MNC operations: The 1976 declaration sought to encourage MNCs to contribute positively to the economic and social development of host nations

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The ILO declaration for MNCs and Social Policy

This code is adopted in 1977. This code deals with the issues related to employment, Vocational training, working conditions, and industrial relations and etc.,

These codes help the MNCs and host countries to prevent conflicts and disputes among MNCs, host country business firms, host country governments, etc.,

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Dispute settlement system in WTO

WTO provides a more powerful mechanism to solve disputes arise due to trade among member countries.

The rules are set out in the WTO Dispute Settlement Understanding (DSU)

Disputes between or among the member countries arise as one country adopts the trade policy that is viewed by other members breaking the WTO agreements

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Ethics in international business The term ‘Ethics’ refers to accepted

principles of right or wrong that govern the conduct of a person , the members of a profession, or the actions of an organizations

Business ethics are the accepted principle of right or wrong governing the conduct of business people

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Ethical issues in International Business

Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development and culture vary significantly from nation to nation.

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In the international business setting, the most common ethical issues involve:

1. Employment practices2. Human rights3. Environmental pollution4. Corruption5. Moral obligations6. Ethical dilemmas

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Determinants of Ethical behavior

Ethical behavio

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Personal Ethics

Decision making process

LeadershipOrganization Culture

Unrealistic performance

Goals

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Ethical decision making Focus on five things that an international business and

its managers can do to make sure ethical issues are considered in business decisions

1. Favor hiring and promoting people with a well grounded sense of personal ethics

2. Build an organizational culture that places high value on ethical behavior

3. Make sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in a manner that is consistent with that rhetoric

4. Implement decision making process that require people to consider the ethical dimensions

5. Develop moral courage

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Part-A Difference between conflict and dispute. Win – win strategy Ethical Decision making Differentiate between ‘Functional Vs.

‘Dysfunctional conflicts’ How ‘salami tactics’ as a negotiation

technique helps to resolve conflicts.

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Part-B I, Explain the factors causing conflicts in international

business. II, briefly explain the different types of conflict in

international business I, Explain the roles of international agencies in

conflict resolution II, Discuss the ethical issues in international business. Describe the sources and types of conflicts. Explain

the steps in conflict resolutions. Discuss the steps involved in ethical decision making

process.

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I, Discuss the causes of organization conflict that MNEs may face during negotiation.

II, Discuss the negotiation process in international business and the stages involved therein.

I, Examine the role of WTO in dispute resolution among countries.

II, Name and describe the role of various international conflict resolution agencies to which MNC’s resort to in maintaining smooth conduct of business worldwide.