INTERNATIONAL BUSINESS

Year : II Semester : IV
1
MANAGEMENT
UNIT 5: CONFLICT
MANAGEMENT AND ETHICS IN
INTERNATIONAL BUSINESS
MANAGEMENT
References: Prepared and presented by,
N. Ganesha Pandian,
1. INTERNATIONAL
Assistant Professor,
BUSINESS – TEXT
Madurai School of Management
AND CASES
Madurai.
BY “ P.SUBBA RAO”
2

 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
 Problems of international
3
business
 The important problem in international business include:
1. Political factors
2. Huge foreign indebtedness
3. Exchange instability
4. Entry requirements
5. Tariffs, quotas and Trade barriers
6. Corruption
7. Bureaucratic practices of government
8. Technological pirating
9. Quality maintenance
10. High cost
 Conflict in Organizations
4

 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
 Conflicts in International
5
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.
6

 Conflicts arises mostly due to the conflicts in

interests of global companies with those of:
1. Host country’s companies
2. Host country’s government
3. Host country’s customers
4. Host country’s society
5. Host country’s government
 Factors causing conflicts
7

 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
 Conflicts and negotiations in
8
International Business
 Marketing areas
 Finance areas
 Human resource areas
 Social and Ethical areas
 Environmental issues and
 Competing Areas
 Other factors
9

 Macro economic areas include:

1. Structural factors

2. Exploitation of natural resources

 Production areas of conflict

 Company level conflicts

 Negotiations
10

 Conflict resolution and negotiations as given

below:
1. Negotiation strengths: Government and
company
- Technology; Marketing expertise; product
diversity; Joint companies
1. Bargaining process
2. Behavioral aspects in negotiations
3. Bilateral and multilateral agreements
4. Corporate citizenship
 Role of international agencies in
11
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
12

 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
 The ILO declaration for MNCs and
13
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.,
 Dispute settlement system in WTO
14

 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
 Ethics in international business
15

 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
 Ethical issues in International
16
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.
17

 In the international business setting, the most

common ethical issues involve:
1. Employment practices
2. Human rights
3. Environmental pollution
4. Corruption
5. Moral obligations
6. Ethical dilemmas
 Determinants of Ethical
18
behavior

Decision
Personal making
Ethics process

Ethical
behavior
Organizatio
n Culture Leadership

Unrealistic
performance
Goals
 Ethical decision making
19

 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
 Part-A
20

 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.
 Part-B
21

 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.
22

 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.