Global Business Environment

Global Business Environment

 Course code: T 2781

 Credits: 4
 Classroom sessions: 48
 Experiential Learning sessions: 12
 Total marks: 100 (40 internal assessment component; 60 end term examination)
 Number of assessments: 4
 Type of assessments: Mid term test, surprise test, presentation, case study
 Group
15 10.1.2023 10.2.2023 20.2.2023
presentation
Mid term 10
Case Study 10 20.1.2023 30.1.2023 10.2.2023
Surprise test 5
 Important Instructions

 Please follow the timelines for the submission of assignments/assessments.

No extensions in submission date will be allowed (except with prior
approval in exceptional circumstances with valid proof)
 Please read the instructions accompanying the assignments/assessments
carefully while preparing the assignments. Some assignments may require
submission of pre-information (in such cases assignments of only those
students will be evaluated who submit the solicited information)
 Please prepare the assignment on your own. Avoid copying it from online
sources. A student will be awarded zero in case plagiarism is detected.
Course Outcome To enable students to understand the basic concepts of global
(CO) 1 business enviornment
Course Outcome To enable students to analyze the concept of political
(CO) 2 environment
Course Outcome To enable students to analyze and evaluate the concept of
(CO) 3 international legal environment and cultural environment
Course Outcome To enable the students to evaluate the technology and
(CO) 4 knowledge environment
Course Outcome To enable the students to analyze the global macroeconomic
(CO) 5 environment
 Components of Business Environment:

A. Internal environment:
 Internal environment includes all those factors which influence business and which are
present within the business itself. These factors are:

1) Objectives and policies of Business

2) Production Capacity
3) Production Methods
4) Management Information System
5) Participation in Management
6) Composition of Board of Directors
7) Managerial Attitude
8) Organizational Structure
9) Features of Human Resource
 Contd..

B. External Environment:
 External environment includes all those factors which influence business
and exist outside the business. Business has no control over these factors.
The information about these factors is important for the study of the external
environment.
 Micro-environment
1) Customers
2) Suppliers
3) Competitors
4) Public
5) Business Intermediaries
 Macro-environment - PESTLE
Stages of Environment Analysis:
Stages of Environment Analysis:

Scanning: (Analysis)
It is the process of analyzing the environment. Identification of emerging/ensuing trends is
a critical purpose of environmental scanning. The main aim of environmental scanning is
alerting the organization to potentially significant external impingement before it has fully
formed or crystallized.

Monitoring: (Follow-up)
It entails perspective follow up and a more in-depth analysis of the relevant environmental
trends identified at the scanning stage.
 a specific description of environmental patterns to be forecast;
 identification of trends for further monitoring;
 identification of patterns requiring further scanning.
 Contd..

Forecasting: (Future)
Forecasting is concerned with the development of plausible directions, scope, speed, and
intensity of environmental change to layout the evolutionary path of anticipatory change
in the environment.

Assessment: (Impact)
Assessment involves drawing up implications/ possible impacts. In an assessment, the
frame of reference moves from understanding the environment of the focus of Scanning,
Monitoring and Forecasting-to identifying what that understanding of environment means
for the organization.
Importance of Environmental Analysis:

1. Identification of strength:
 Strength of the business firm means capacity of the firm to gain advantage over its competitors.
Analysis of internal business environment helps to identify strength of the firm.

2. Identification of weakness:
 Weakness of the firm means limitations of the firm. Monitoring internal environment helps to
identify not only the strength but also the weakness of the firm. A firm may be strong in certain
areas but may be weak in some other areas.

3. Identification of opportunities:
 Environmental analyses helps to identify the opportunities in the market. The firm should make
every possible effort to grab the opportunities as and when they come.

4. Identification of threat:
 Business is subject to threat from competitors and various factors. Environmental analyses help
them to identify threat from the external environment. Early identification of threat is always
beneficial as it helps to diffuse off some threat.
Contd..
5. Optimum use of resources:
 Proper environmental assessment helps to make optimum utilization of scare human, natural and
capital resources. Systematic analyses of business environment helps the firm to reduce wastage and
make optimum use of available resources.

6. Survival and growth:

 Systematic analyses of business environment help the firm to maximize their strength, minimize the
weakness, grab the opportunities and diffuse threats.

7. To plan long-term business strategy:

 A business organization has short term and long-term objectives. Proper analyses of environmental
factors help the business firm to frame plans and policies that could help in easy accomplishment of
those organizational objectives.

8. Environmental scanning aids decision-making:

 Decision-making is a process of selecting the best alternative from among various available
alternatives. An environmental analysis is an extremely important tool in understanding and decision­
making in all situation of the business.
• India has a big youth population with about 64.4%
of its total population between the ages of 15 and
59 years in 2015, according to data from the
sample registration survey of India (SRS).
• Children between the ages of 0 and 14 years made
up 27.3% of the population--the future
demographic dividend of the country, while 8.3%
of the population were above the age of 60 years.
• Urban and rural areas had very similar
population composition. But youth made up a
greater share of the urban population (67.7%)
than the rural areas (62.9%).
Our population will stabilize by 2050, which is what
both the Indian government projects and
international data show. In that case, we will begin
to have an adverse [dependency] ratio between
older generations and young people. This means we
will have fewer young people and more older
people, thus we will not have enough young people
to look after older people. Plus, we don't have social
security in India at all, in any form, especially for the
aged. That is going to be a problem. Also, in about 20
years, if we don't skill our young people and create
jobs, there's going to be a demographic disaster.
Techniques of Environmental Analysis:

1. PESTLE Analysis
2. SWOT Analysis
3. Porters 5 Forces
PESTLE Analysis:

POLITICAL:
1) Legislation such as the minimum wage or anti discrimination laws.
2) Market regulations
3) Trade agreements, tariffs or restrictions
4) Tax levies and tax breaks
5) Type of government regime e.g. communist, democratic, dictatorship
Contd..

ECONOMIC:
1) Home economy situation and trends
2) Overseas economies and trends
3) Market routes and distribution trends
4) Interest and exchange rates
5) International trade/monetary issues (anti dumping laws)
Contd..

SOCIAL:
1) Lifestyle trends
2) Demographics
3) Consumer attitudes and opinions
4) Brand, company image
5) Consumer buying patterns
6) Fashion and role models
7) Ethnic/religious factors
8) Advertising and publicity
9) Ethical issues
Contd..

TECHNOLOGICAL:
1) Competing technology development
2) Associated/dependent technologies
3) Replacement technology/solutions
4) Technology access, licencing, patents
5) Consumer buying mechanisms/technology
Contd..

LEGAL:
Legal factors have to do with all the legislative and procedural components in an
economy. Also, this takes into account certain standards that your business might have
to meet in order to start production/promotion.

1) Employment law
2) Consumer protection
3) Industry-specific regulations
4) Competitive regulations
5) Future legislation
6) Environmental regulations
Contd..

ENVIRONMENTAL:
Environmental factors have to do with geographical locations and other related
environmental factors that may influence upon the nature of the trade you’re in. For
example, agri-businesses hugely depend on this form of analysis.

1) Ecological
2) Environmental issues
3) Staff attitudes
4) Management style
5) Environmental regulations
6) Consumer values
SWOT Analysis:
STRENGTH:

 A STRENGTH is something a company is good at doing or an attribute that

enhances its competitiveness in the market and depends on the quality of its
resources and capabilities.
 One way to appraise the degree of a company’s strengths has to do with the
company’s competence level in performing key pieces of its business.
■ Which activities does it perform really well?
■ And are there activities that perform better than rivals.
 WEAKNESS:

 A WEAKNESS is something a company lacks or does poorly or a condition that

puts it at a competitive disadvantage in the marketplace.
 The internal weaknesses can relate to inferior or unproven skills, expertise, or
intellectual capital in competitively important areas of the business
 Deficiencies in competitively important physical, organizational, or intangible
assets.
 Or missing capabilities in key areas
 So weaknesses and shortcomings that constitute competitive liabilities
 OPPORTUNITY:

 Market OPPORTUNITY is a big factor in shaping a company’s strategy. Managers

must first identify market opportunities before they can tailor a strategy.
 A company is well advised to pass on a particular market opportunity unless it has or
can acquire the competencies need to capture it.
 So managers must not see every industry opportunity as a company opportunity.
 Opportunities most relevant to a company are those offering:
■ Good match with its financial and organizational resource capabilities
■ Best prospects for growth and profitability
■ Most potential for competitive advantage
 THREAT:

 A THREAT is a forecast environmental condition that is out of your control and

has the potential to harm your business profitability.
1) Potential threats include entry of lower-cost foreign competitors
2) Burdensome regulations
3) Rise in interest rates
4) Potential of a hostile takeover
5) Unfavourable demographic shifts
6) Adverse shifts in foreign exchange rates
Porters 5 Forces:
Five Competitive Forces:

 Threat of new entrants

 Bargaining power of suppliers
 Bargaining power of buyers
 Threat of substitute products
 Intensity of rivalry among competitors
New Entrants:

 Threat to current competitors

 Market share
 Production capacity
 Earnings
 Likelihood of entry
 Barriers
 Expected retaliation
Market Entry Barriers

 Economies of scale
 Product differentiation
 Capital requirements
 Switching costs
 Access to distribution channels
 Cost advantages independent of scale
 Government policy
 Expected retaliation
Bargaining Power of Suppliers:

 Supplier concentration
 No substitutes
 Small customers
 Critical product
 High switching cost
 Threat of forward integration
Bargaining Power of Buyers:

 Large buyers in industry

 Large portion of firm’s sales

 Low switching costs

 Standardized product

 Threat of backward integration

Threat of Substitutes:

 Few switching costs

 Lower price

 Equal or higher quality and performance capabilities

Industry Rivalry:

Intensifies when a firm is challenged or recognizes an opportunity to

improve its market position

Visible dimensions:
- Price
- Quality
- Innovation
Unit 2 - The Political Environment
The Global Political system

 Democracy
 Totalitarianism
Democracy

 Pure
 Republican
Totalitarianism

 Theocratic – guided by religious leaders

 Secular – guided by military establishments
 Right-wing – Private ownership of property is endorsed, market forces are also allowed a
free play, but political freedom is rarely granted
 Tribal – when a political party that represents a particular tribe monopolises power.
Macro-level Political System

 Political system under democracy comprises of three

institutions:
 Legislature
 Executive/Government
 Judiciary
Legislature

 Law making – Laws made by the legislature, also called the parliament, govern the citizens
 Ensure accountability of the executive/government on policies and actions to the people.
 Engage in discourse and debate on the issues that concern the nation and the citizens
Executive/Government

 The term Government refers to “….the centre of political authority, having the power to
govern to those it serves.”
 India has a federal structure, with powers divided between state and central governments.
 TAXES LAW AND ORDER

INSPECTION AND LICENSES

VOLUNTARY PROGRAMS MONEY AND CREDIT

COMPETITION
PROVIDING INFORMATION GOV ORDERLY GROWTH
BUS BUS
ERN
INE TARIFFS AND QUOTAS INE
ME
SS CONTRACTS SS
NT INFRASTRUCTURE
INFORMATION
GOVERNMENT SERVICE
SMALL INDUSTRIES

POLITICAL ACTIVITY TRANSFER OF TECHNOLOGY

JUDICIARY

 Systems of law
 Islamic
 Common
 Civil
 Socialist
Islamic Law

 Derived from the interpretations of the holy ‘Quran’ and teachings of Prophet Muhammad
(P.B.U.H.)
 The word Islam translates into English as ‘submission’ or ‘surrender’. Followers of Islam
submit to the will of God, who decrees what is proper and what is improper.
 Among the unique aspect of Islamic law is the prohibition of paying or receiving interest.
The Islamic law of contracts states that any given transaction should be devoid of ‘riba’
which is understood as unlawful gain by way of interest.
Common Law/Case Law

 A legal system based on the decisions previously made by the courts (stare decisis).
 Common law thrives on precedential weight, on the basis that it is unfair to treat similar
facts differently on different occasions.
 Stare decisis principle of common law is of great significance for business. As the law
gives fairly precise guidance on every issue.
Civil Law

 It has all the laws written into a collection and codified and not co-created by judges.
 Common law differs from civil law in protection of intellectual rights. Under common law
ownership is established by usage; under civil law ownership is established by registration.
 In the common law judges serve as neutral reference, defining points of law and ruling on
various motions put forth by the opposing party’s lawyers. These lawyers are responsible
for developing their client’s cases and choosing which evidence to submit on their client’s
behalf. In the civil law system, the judge takes on many tasks of the lawyers, for example,
determining the scope of evidence to be collected.
Socialist Law

 This law evolves from the Marxist socialist system.

 Extensive codes are the primary sources of the socialist law, but the ideology thrust on the
codes makes socialist law different from others.
 Communist ideology permeates the socialist law. The legal environment provides for state
ownership of the means of production and distribution. It also calls for state ownership of
land and collective use of land. There is little tolerance for private property rights.
 The codes support centralised planning, allowing the government to set national and
uniform standards for business practices.
Comparative law

 Not a system law but an emerging discipline that examines differences between legal
systems prevailing in different countries.
Judicial Powers

 The powers of the judiciary are of two types:

 The authority of the courts to settle legal disputes, and
 Judicial review – the authority of the courts to rule on
the constitutionality of a legislation
Political risk

 Political risk is any Government action or politically motivated

event that would adversely affect the long-term profitability or the
value of a firm.
 Macro-level: Affects all international business in the same way
 Micro-level: Affects specific foreign businesses.
 Macro-level
 Expropriation of corporate assets without prompt and adequate compensation
 Barriers to repatriation of profits
 Loss of technology or other intellectual properties
 Campaigns against and boycott of foreign goods.
 Mandatory labor laws
 Protectionist measures
 Civil wars and wars between countries
 Inflation recession, currency devaluation
 Politically motivated debt-default or renegotiations or rescheduling
 Natural calamities
 Strikes and labor disputes
Micro-level

 Increased taxation
 Cap on FDI
Intellectual property

 Intellectual property is a category of property that includes intangible creations of the

human intellect.
 Intellectual property (IP) refers to creations of the mind, such as inventions; literary
and artistic works; designs; and symbols, names and images used in commerce.
 IP is protected in law: Example - patents, copyright and trademarks, which enable
people to earn recognition or financial benefit from what they invent or create. By
striking the right balance between the interests of innovators and the wider public
interest, the IP system aims to foster an environment in which creativity and
innovation can flourish.
 Types of intellectual property:

Copyright:
 Copyright is a legal term used to describe the rights that creators have over their literary and
artistic works. Works covered by copyright range from books, music, paintings, sculpture
and films, to computer programs, databases, advertisements, maps and technical drawings.

Patent:
 A patent is an exclusive right granted for an invention. Generally speaking, a patent provides
the patent owner with the right to decide how - or whether - the invention can be used by
others. In exchange for this right, the patent owner makes technical information about the
invention publicly available in the published patent document. E.g. Corona Vaccine

Trademark:
 A trademark is a sign capable of distinguishing the goods or services of one enterprise from
those of other enterprises. Trademarks date back to ancient times when artisans used to put
their signature or "mark" on their products.
Contd..
Industrial Design:
 An industrial design constitutes the ornamental or aesthetic aspect of an article. A design
may consist of three-dimensional features, such as the shape or surface of an article, or
of two-dimensional features, such as patterns, lines or color. E.g. Tetra Pack

Geographical indications:
 Geographical indications and appellations of origin are signs used on goods that have a
specific geographical origin and possess qualities, a reputation or characteristics that are
essentially attributable to that place of origin. Most commonly, a geographical indication
includes the name of the place of origin of the goods.

Trade secrets:
 Trade secrets are IP rights on confidential information which may be sold or licensed.
The unauthorized acquisition, use or disclosure of such secret information in a manner
contrary to honest commercial practices by others is regarded as an unfair practice and a
violation of the trade secret protection. E.g. Coke / Pepsi Formula, Haldiram Masala
Intellectual Property Theft:
Patent infringement:
 In general, patent infringement ensues when a patent that has been approved by a
government agency and is used or applied in the industry by another person without the
permission of the patent owner.

Trademark infringement:
 Trademark infringement occurs when a third party makes unauthorized use, in the course
of trade, usually concerning similar or competing goods, of a mark that is identical to the
registered trademark (or so similar to the registered trademark that consumers are likely
to be confused or deceived as to the origin of the goods).

Copyright infringement:
 Generally, copyright infringement happens when a novel, film or musical work (but also
potentially something like a technical manual) is reproduced (in whole or in part) relating
to the original work or has numerous major elements copied in a derivative work.
Contd..

Trade secret violation:

 Although not often protected directly by legislation, trade secrets are typically covered
by non-disclosure agreements (NDAs) when shared between two parties. Therefore, if
one party that has seen another party's trade secrets decides to publicize them contrary
to an agreement or apply the secrets commercially without the information holder's
permission, they have violated their NDA.

Counterfeit:
 In some jurisdictions, such as in the EU, there is no distinction between "infringement
of goods" and "counterfeit goods," while other regions have a precise legal delineation
between the two.
How to minimize the risk of IP theft?
Gain visibility into sensitive data:
 Knowing exactly what sensitive data you have and who has access to is the initial step
in building strong security posture. Using an automated data classification solution
will help you dealing with the loads of data being created or modified daily.

Establish a data security policy:

 A security policy defines how security threats are addressed, specifies which controls
are needed to mitigate IT security vulnerabilities, and defines a recovery plan should a
network intrusion occur. Your security policy must be verified by your legal
department and signed by your CEO.

Monitor employee activity:

 Even if you trust those who have access to your sensitive data, they are still are the
biggest threat, because even people without bad intentions can make critical mistakes.
That’s why it is important to establish user behavior monitoring.
Contd..

Involve HR:
 It’s a good idea to coordinate with HR and be notified whenever an employee is leaving
so you can watch for suspicious activity, such as bulk file copying, before they leave and
disable their accounts promptly when they are gone.

Provide training to employees:

 Poor cybersecurity awareness of employees increases the risk of IP loss. We recommend
establishing training programs for employees based on their roles and the level of access
they have in your network.
Ethics:

 At its simplest, ethics is a system of moral principles.

 Ethics is defined as a moral philosophy or code of morals practiced by a person or group
of people.
 Ethics is concerned with what is good for individuals and society and is also described
as moral philosophy.
 The term is derived from the Greek word ethos which can mean custom, habit, character or
disposition.
Ethical Issues:

 As political, legal, economic, and cultural norms vary from nation to nation, various
ethical issues rise with them. A normal practice may be ethical in one country but unethical
in another. Multinational managers need to be sensitive to these varying differences and
able to choose an ethical action accordingly.
 In an international business, the most important ethical issues involve employment
practices, human rights, environmental norms, corruption, and the moral obligation of
international corporations.
Ethical Issues
Employment Practices and Ethics:
 Ethical issues may be related to employment practices in many nations. The conditions in a host country may be much
inferior to those in a multinational’s home nation. Many may suggest that pay and work conditions need to be similar
across nations, but no one actually cares about the quantum of this divergence.

Human Rights:
 Basic human rights are still denied in many nations. Freedom of speech, association, assembly, movement, freedom from
political repression, etc. are not universally accepted.

Environmental Pollution:
 When environmental regulation in the host nation is much inferior to those in the home nation, ethical issues may arise.
Many nations have firm regulations regarding the emission of pollutants, the dumping and use of toxic materials, and so
on.

Corruption:
 Corruption is an issue in every society in history, and it continues to be so even today. Corrupt government officials are
everywhere. International businesses often seem to gain and have gained financial and business advantages by bribing
those officials, which is clearly unethical.

Moral Obligations:
 Some of the modern philosophers argue that the power of MNCs brings with it the social responsibility to give resources
back to the societies. The idea of Social Responsibility arises due to the philosophy that business people should consider
the social consequences of their actions.
Corporate Social Responsibility (CSR):

 Corporate Social Responsibility is a management concept whereby companies integrate

social and environmental concerns in their business operations and interactions with their
stakeholders.
 Corporate social responsibility is a type of international private business self-regulation
that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by
engaging in or supporting volunteering or ethically-oriented practices.
 CSR and Ethics in International Firms:

 Every organization must take their codes of ethics and policies on corporate social
responsibility with them. As a citizen of several countries, a multinational corporation
has several responsibilities. These include:
1) Respecting local practices and customs, ensuring that there is harmony between the
organization’s staff and the host population, providing management leadership, and
developing a solid group of local managers who will be a credit to their community.
2) When a multinational firm makes an investment in a foreign country, it should commit
to a long-term relationship. That means involving all stakeholders in the host country in
decision-making.
3) A responsible multinational must implement ethical guidelines within the organization
in the host country. By fulfilling these responsibilities, the company will foster respect
for both local and international laws.
Factors to be considered for Incorporating ethics
in decision making:

Criteria that can help ensure appropriate ethical considerations are part of the decisions
being made in the organization:
 Compliance:
Does it conform to the company's values and code of ethics? Does it meet (should exceed)
legal requirements?

 Promote good and reduce harm:

What solution will be good to the most people while minimizing any possible harm?

 Responsibility:
What alternative provides the most responsible response? Does the solution ensure
meeting our duties as a good corporate citizen?
Contd..

 Respects and preserves rights:

Does the option negatively impact an individual's or organization's rights?

 Promotes trust:
Does the solution lead to honest and open communication? Is it truthful? Is there full
disclosure?

 Builds reputation:
Would a headline of your decision generate pride or shame? Does your solution add to or
detract with the identity you want for the organization?
International Ethical Codes of Conduct

1. Company Code
2. Business Code

COMPANY CONDUCT
1) Respecting Human Rights
2) Promoting Health, Safety and Well-being
3) Creating Equality and Non-discrimination
4) Enabling Personnel Participation
5) Avoiding Conflicts of Interest / Related Party Transactions
6) Complying with Environmental Legislation
7) Committing to Quality
8) Protecting Company’s Property, Assets and Intellectual Property
9) Respecting Information Security and Privacy
Contd..

BUSINESS CONDUCT
1) Engaging with Society, Sponsorship, Lobbying and Donations
2) Adhering to Laws on Arms Export Practices
3) Committing to Fair Competition and Antitrust
4) Responsibility Regarding Gifts, Benefits and Hospitality
5) Acting Against Corruption, Illegal Payments and Facilitation Payments
6) Compliance with Accurate Financial Reporting and a Transparent Tax Strategy
7) Prevention of Money Laundering
8) Integrity towards Customers
9) Reliability towards Suppliers
10) High Ethical Standards of Third Parties, such as Intermediaries and Market
Representatives
11) Communication
Integration of Ethics and Business Conduct:
i. Ethics in Finance:
It deals with various ethical dilemmas and violations in day-to-day financial transactions. An example of ethical violations is
data fudging in which enterprises present a fabricated statement of accounts and other records, which are open to
investigation.

The following are the ethics in finance:

a) Following truthfulness and authenticity in business transactions
b) Seeking the fulfillment of mutual interests
c) Getting the economies and financial units freed from greed-based methodologies.

ii. Ethics in Human Resource Management:

It deals with the enforcement of the rights of employees in an enterprise.

Such rights are as follows:

d) Having a right to work and be compensated for the same
e) Possessing a right for free association and participation
f) Enjoying a right for fair treatment in an enterprise
g) Holding a right to work in a hazard-free environment
h) Blowing whistle (an activity where an employee can raise voice against any wrong practice of anyone in an
enterprise)
Contd..
iii. Ethics in Marketing:
Deals with a number of issues, which are as follows:
a) Misinforming the customers about the products or services
b) Deciding high prices for the products and services
c) Creating false impression on the customers/consumers about the features of products
d) Promoting sexual attitudes through advertising; thus, affecting the young generation and
children.

iv. Ethics in Production:

It deals with the responsibility of an organization to make sure that products and processes of
production is not causing harm to the environment.
It throws light on the following issues:
e) Avoiding rendering services or producing products that are hazardous to health. For
example, tobacco and alcohol
f) Maintaining ethical relations with the environment and avoiding environmental
pollution.
 HOFSTEDE’S FRAMEWORK

• POWER DISTANCE
• INDIVIDUALISM VERSUS COLLECTIVISM
• MASCULINITY VERSUS FEMININITY
• UNCERTAINTY AVOIDANCE
• LONG TERM VERSUS SHORT TERM ORIENTATION
• INDULGENCE VERSUS RESTRAINT
POWER DISTANCE INDEX (PDI)

This dimension expresses the degree to which the less powerful members of
a society accept and expect that power is distributed unequally. The
fundamental issue here is how a society handles inequalities among people.
People in societies exhibiting a large degree of Power Distance accept a
hierarchical order in which everybody has a place and which needs no further
justification. In societies with low Power Distance, people strive to equalise
the distribution of power and demand justification for inequalities of power.
INDIVIDUALISM VERSUS COLLECTIVISM (IDV)

The high side of this dimension, called Individualism, can be defined as a

preference for a loosely-knit social framework in which individuals are
expected to take care of only themselves and their immediate families.
Its opposite, Collectivism, represents a preference for a tightly-knit
framework in society in which individuals can expect their relatives or
members of a particular ingroup to look after them in exchange for
unquestioning loyalty. A society’s position on this dimension is reflected
in whether people’s self-image is defined in terms of “I” or “we.”
MASCULINITY VERSUS FEMININITY (MAS)

The Masculinity side of this dimension represents a preference in society

for achievement, heroism, assertiveness, and material rewards for
success. Society at large is more competitive. Its opposite, Femininity,
stands for a preference for cooperation, modesty, caring for the weak and
quality of life. Society at large is more consensus-oriented.
In the business context Masculinity versus Femininity is sometimes also
related to as “tough versus tender” cultures.
UNCERTAINTY AVOIDANCE INDEX (UAI)

The Uncertainty Avoidance dimension expresses the degree to which the

members of a society feel uncomfortable with uncertainty and ambiguity.
The fundamental issue here is how a society deals with the fact that the
future can never be known: should we try to control the future or just let it
happen?
Countries exhibiting strong UAI maintain rigid codes of belief and
behaviour, and are intolerant of unorthodox behaviour and ideas. Weak UAI
societies maintain a more relaxed attitude in which practice counts more
than principles.
LONG TERM ORIENTATION VERSUS SHORT TERM NORMATIVE
ORIENTATION (LTO)

Every society has to maintain some links with its own past while dealing
with the challenges of the present and the future. Societies prioritize these
two existential goals differently.
Societies who score low on this dimension, for example, prefer to
maintain time-honoured traditions and norms while viewing societal
change with suspicion.
Those with a culture which scores high, on the other hand, take a more
pragmatic approach: they encourage thrift and efforts in modern education
as a way to prepare for the future.
INDULGENCE VERSUS RESTRAINT (IVR)

Indulgence stands for a society that allows relatively free

gratification of basic and natural human drives related to
enjoying life and having fun. Restraint stands for a society
that suppresses gratification of needs and regulates it by
means of strict social norms.
CROSS-CULTURE COMMUNICATION:

UNDERSTANDING CULTURAL DIVERSITY:

• GIVEN DIFFERENT CULTURAL CONTEXTS, THIS BRINGS NEW COMMUNICATION
CHALLENGES TO THE WORKPLACE. EVEN WHEN EMPLOYEES LOCATED IN DIFFERENT
LOCATIONS OR OFFICES SPEAK THE SAME LANGUAGE (FOR INSTANCE,
CORRESPONDENCES BETWEEN ENGLISH-SPEAKERS IN THE U.S. AND ENGLISH-SPEAKERS
IN THE UK), THERE ARE SOME CULTURAL DIFFERENCES THAT SHOULD BE CONSIDERED
IN AN EFFORT TO OPTIMIZE COMMUNICATIONS BETWEEN THE TWO PARTIES.

DEVELOPING AWARENESS OF INDIVIDUAL CULTURES:

• HOWEVER, LEARNING THE BASICS ABOUT CULTURE AND AT LEAST SOMETHING ABOUT
THE LANGUAGE OF COMMUNICATION IN DIFFERENT COUNTRIES IS IMPORTANT. THIS IS
NECESSARY EVEN FOR THE BASIC LEVEL OF UNDERSTANDING REQUIRED TO ENGAGE IN
APPROPRIATE GREETINGS AND PHYSICAL CONTACT, WHICH CAN BE A TRICKY AREA
INTER-CULTURALLY. FOR INSTANCE, KISSING A BUSINESS ASSOCIATE IS NOT
CONSIDERED AN APPROPRIATE BUSINESS PRACTICE IN THE U.S., BUT IN PARIS, ONE PECK
ON EACH CHEEK IS AN ACCEPTABLE GREETING. AND, THE FIRM HANDSHAKE THAT IS
WIDELY ACCEPTED IN THE U.S. IS NOT RECOGNIZED IN ALL OTHER CULTURES.
 CONTD..
DEMAND MUTUAL ACCEPTANCE:
• NEXT, CULTIVATE AND DEMAND MUTUAL ACCEPTANCE AND UNDERSTANDING. IN
DOING THIS, A LITTLE EDUCATION WILL USUALLY DO THE TRICK. EXPLAIN TO TEAM
MEMBERS THAT THE PART OF THE TEAM THAT WORKS OUT OF THE AUSTRALIA
OFFICE, FOR EXAMPLE, WILL BE WORKING IN A DIFFERENT TIME ZONE, SO
ELECTRONIC COMMUNICATIONS AND/OR RETURN PHONE CALLS WILL EXPERIENCE
A DELAY. AND, MEMBERS OF THE INDIA OFFICE WILL ALSO OBSERVE DIFFERENT
HOLIDAYS (SUCH AS MAHATMA GANDHI'S BIRTHDAY, OBSERVED ON OCTOBER 2).

KEEP IT SIMPLE:
• WHEN YOU COMMUNICATE, KEEP IN MIND THAT EVEN THOUGH ENGLISH IS
CONSIDERED THE INTERNATIONAL LANGUAGE OF BUSINESS, IT IS A MISTAKE TO
ASSUME THAT EVERY BUSINESSPERSON SPEAKS GOOD ENGLISH. IN FACT, ONLY
ABOUT HALF OF THE 800 MILLION PEOPLE WHO SPEAK ENGLISH LEARNED IT AS A
FIRST LANGUAGE. AND, THOSE WHO SPEAK IT AS A SECOND LANGUAGE ARE OFTEN
MORE LIMITED THAN NATIVE SPEAKERS.
CROSS BORDER NEGOTIATION AND DECISION
MAKING:
NEGOTIATING:
• THE PROCESS OF VERBAL AND NON-VERBAL EXCHANGES BETWEEN TWO OR MORE
PARTIES WITH THE GOAL OF REACHING A MUTUALLY SATISFACTORY AGREEMENT

BARGAINING:
o THE PROCESS OF ARGUING AND HAGGLING OVER PRICES AND OTHER DETAILS
INVOLVED IN TRANSACTIONS OF GOODS AND SERVICES, COMMON IN FLEA
MARKETS, BAZAARS, AND FAIRS ALL OVER THE WORLD
 FUNDAMENTAL ELEMENTS OF THE
NEGOTIATION PROCESS
1) TWO OR MORE PARTIES INVOLVED IN REAL OR PERCEIVED CONFLICT OVER
IMPORTANT GOALS,

2) SHARED INTEREST IN REACHING AN AGREEABLE SOLUTION

3) BACKGROUND PREPARATIONS LEADING TO THE PROCESS OF NEGOTIATION

4) A GOAL, BUT NOT A CERTAINTY, OF REACHING MUTUAL AGREEMENT

IMPORTANCE OF FRAMING NEGOTIATION IN INTERNATIONAL BUSINESS:

5) GOOD NEGOTIATIONS CONTRIBUTE SIGNIFICANTLY TO BUSINESS SUCCESS, AS

THEY:

6) HELP TO BUILD BETTER RELATIONSHIPS

7) DELIVER LASTING, QUALITY SOLUTIONS - RATHER THAN POOR SHORT-TERM

SOLUTIONS THAT DO NOT SATISFY THE NEEDS OF EITHER PARTY

8) HELP TO AVOID FUTURE PROBLEMS AND CONFLICTS.

STAGES OF NEGOTIATION IN INTERNATIONAL
MANAGEMENT
Role of Communication in Employee Motivation
Across Culture:
INFORMATION DISTRIBUTION:
• THE COMPANY SHOULD DISTRIBUTE INFORMATION THAT EMPLOYEES CONSIDER VITAL, SUCH AS CHANGES IN
THE COMPANY'S BUSINESS FOCUS OR PLANNED CHANGES IN THE WORKFORCE, UNLESS THAT INFORMATION
IS COMPANY CONFIDENTIAL

RELATIONSHIPS:
• A WORKPLACE OPERATES ON THE EFFECTIVE RELATIONSHIPS BUILT BETWEEN EMPLOYEES, MANAGERS,
DEPARTMENTS AND ALL LEVELS OF THE COMPANY. CLEAR AND HONEST COMMUNICATION HELPS TO
ENCOURAGE AND STRENGTHEN THOSE RELATIONSHIPS, WHICH CAN ASSIST EMPLOYEES IN REACHING
MAXIMUM PRODUCTIVITY.

DECISION-MAKING:
• A COMPANY'S DECISION-MAKING PROCESS INCLUDES ACTIVE COMMUNICATION THROUGHOUT THE
ORGANIZATION. EMPLOYEES SHOULD BE ALLOWED AS MANY WAYS AS POSSIBLE TO OFFER THEIR IDEAS AND
OPINIONS, AND BE PART OF THE DECISION-MAKING PROCESS.

IMPROVEMENT:
• SKILL SET TRAINING PROGRAMS WITH MANAGERS IS THE WAY IN WHICH MOST EMPLOYEES RECEIVE THEIR
CAREER DEVELOPMENT ASSISTANCE. IF MANAGERS ARE NOT MONITORING EMPLOYEE PERFORMANCE AND
DEVELOPING TRAINING PROGRAMS TO IMPROVE PRODUCTIVITY, THEN THE SKILL SETS OF THE EMPLOYEES
BEGIN TO SUFFER.