International Business

International business has never been a simple matter. In point of fact, with the diversified number of countries which engage in global business, the challenge is anything but easily surpassed. There are many lessons to be learned in gaining an international view of economics. Education about the world’s economic structure, cultural differences and the interrelation between the two is as important as understanding the methods your business uses from start to finish.

In this context any miscalculation would lead to a fatal business blunder. (Stickland, 2003) In this context the indication by David A. Ricks in his text Blunders in International Business that the use of the self-reference criterion as “probably the biggest cause of international business blunders”. (Ricks, 1999) It could be mentioned that under the parameter of understanding the method and interpretation of facts the context of execution changes from time to time and place to place.

The primary factor to conceptualize would be the fact that every country pursues business differently. Laws affect the ways in which business is conducted from region to region and country to country. Negotiations are never conducted exactly as they would be where you have pursued such actions in any city, in any state in whichever country from which you originate. It is widely believed that to survive as a corporate sector in the long term it is extremely important to mould the organization into an international sector.

Therefore, it’s that much obvious to plan the strategies of the company in accordance to international trade sequences. It is important evaluate the marketing policies to survive in the international market and analyze the effectiveness of the prevailing marketing plan. It is quite true that the activation of the international strategy would collide with that of the plans implemented while operating in the local market. A very relevant example would be the case of Mexican company Fortune Track.

The company is Spanish speaking personnel oriented organizations who have little or no . As a result they had to translate their entire contents and advisements that predominantly focused towards Spanish speaking communities. Once the translation was completed there was no backup measures to double check the translations as a result all the translation appeared quite funny to the English specking population once the company ventured into the markets of the United States.

The result was a complete failure of the promotion with thousands of dollars wasted. This blunder happened only because the management was not aware of the language of the market they were to penetrate. (Stickland, 2003) In conclusion it should be mentioned that though there are many indications and examples of international business blunders there are hardly any reference point that can be regarded as a positive measure to avoid those blunders.

It is definitely a complex formula to develop a winning strategy that would be successful every time when implemented but there should be indication whereby the errors or blunders could be avoided by specified formulations. In other word, there should be certain measures to avoid these blunders. References: Ricks, David A; November 1, 1999; Blunders in International Business; Blackwell Publishing, Incorporated; 3rd edition Strickland, A & Thompson, A; 2003; Strategic Management Concepts and Cases; New Delhi, India: McGraw Hill.

Discuss the impact of the international business cycle on domestic economic performance and policy settings. All countries that participate in world trade impact on the international business cycle. The further an economy is ‘integrated’ into the world economy, the more the international business cycle will affect that economy. Globalisation is leading toward further and deeper economic integration and as this happens, the international business cycle will have even more of a dramatic effect on domestic economic growth, performance and policy settings. A rise in the international business cycle tends to increase demand and output in trading countries whereas a fall in the international business cycle tends to decrease demand and output in those countries. Fluctuations in the business cycle will have an affect on domestic economic performance and domestic economic policy should be aimed at moderating the effects of the international business cycle on the domestic economic cycle. The international business cycle is defined as being increases in world GDP over time.

The general trend is for world output to grow over time and since world war two, industrialised countries have averaged growth between 3-4% per year. Over 1990-1998 Australia was the only OECD country to sustain growth over 3%. The international business cycle can be drawn graphically as seen in the diagram below.The international business cycle is characterised by four phases in the cycle. These are:

• Expansion. (Primarily caused by an increase in demand).
• Peak. (Demand pull inflation setting in, demand falls off).
• Contraction. (Further falling demand and rising unemployment).
• Trough. (Fall in output and demand reach their minimum point).

Many factors can lead to alterations in the business cycle. No matter what factors affect the cycle however, it can usually be defined as being either a money shock or a real shock. Real shocks involve a change in real variables leading to varying consumer and industry confidence.

Examples of real shocks include the 1973 and 1979 oil crises and the events of September 11, 2001. These shocks tended to send advanced economies into mild/significant recessions which, when transmitted through the business cycle, affected all economies in varying degrees. Money shocks involve changes in financial variables and good indicators of this happening include the crash of Wall St. in 1987 and the Asian Crisis of 1997. The Asian Crisis caused world GDP to fall 2% in the following year and has left lasting effects on the countries involved in the crisis. The Asian Crisis was caused by a collapse of the Thai Baht which triggered increasing uncertainty toward the Asian newly industrialised economies from foreign investors. Capital flight resulted and money was pulled out of Asia and placed in Russia (who had extremely competitive hedge funds) and the USA. Investor’s transferring money into Russia knew that the interest rates were unsustainable, but invested anyway since it was assumed the World Bank would not let them fold.

The World Bank was predominantly occupied with Asia however and Russia collapsed, leaving many foreign investors reeling and those with any capital left sending it to the economically stable USA. Money lost in the Asian Financial Crisis had a dramatic effect on the international business cycle, but it wasn’t all bad news as the depreciation in trading economies currencies allowed them to trade themselves out of trouble. How does the International Business Cycle affect us? Economic Growth. Varying trends in the international business cycle tend to be mirrored or repeated in domestic economies. Australia’s economic growth (increases in real GDP over time) fell in 1983, the early 1990’s and in 2001, directly corresponding to global slowdowns in these periods of time. The Asian crisis also threatened to severely stunt our economic growth in 1997 but our depreciated dollar (a result of the crisis) made our exports extremely competitive and therefore growth was not poor as a result of our increased export revenue. Unemployment, Inflation.

Changes in the international business cycle have an effect on domestic demand levels, domestic inflation levels and the cost of imports. Therefore, changes in the international business cycle will affect our domestic unemployment levels since demand and inflation greatly influence unemployment. Generally, inflation tends to rise during the upswing and peak of the international business cycle whereas unemployment increases during the downswing or recession. A downswing in the business cycle will tend to cause cyclical unemployment (a type of Keynesian unemployment caused by deficient international demand). An upswing in the international business cycle would tend to increase the price of imports, causing imported inflation and therefore, this may cause unemployment in certain import reliant industries as producers choose between the higher costs of imported capital products and domestic labour. Generally however, an upswing in the international business cycle has a positive effect on domestic unemployment.

An upswing in the international business cycle usually causes domestic inflation to rise and this in turn could cause unemployment through the conflicting nature of unemployment and inflation. I.e, when the government tries to target inflation in the short run via monetary policy a tradeoff in rising unemployment may have to be endured. This is displayed in the “J-Curve” below. An upswing in the business cycle could also possibly cause structural unemployment. If the world economy is experiencing unusually high levels of growth and demand, domestic governments might cut subsidies/protection aimed at uncompetitive industries and channel funds into competitive export industries to take advantage of increased world demand. External Stability External stability refers to the situation when export income is sufficient to finance import expenditure.

Changes in the international business cycle can either have a positive or negative effect on our external stability. External stability can be analysed through the current account deficit, particularly the goods balance. Australia has inherently been an ‘importing’ nation with a consistent deficit in the goods balance. If the growth rates of our trading partners outstrips domestic growth, the demand for exports would increase and therefore our goods balance would improve, moving us toward external stability. Conversely, a decrease in the growth rates of our trading partners would decrease demand for exports, leading us into less export revenue and external instability. Policy Settings Macroeconomic policies in response to fluctuations in the international business cycle. The Australian government may be required to alter macroeconomic policy settings in response to the international business cycle. This is done through monetary policy (conducted through the Reserve Bank) and fiscal policy (the Federal Government). During recent years, fiscal policy has tended to play more of a background role in economic management which is left largely to monetary policy.

The Reserve Bank of Australia (RBA) will tend to conduct monetary policy in response to the international business cycle depending on our domestic economic conditions. Examples of how the RBA may react to changes in the international business cycle: If the world economy experiences strong growth compared to weak growth domestically, the RBA may wish to allow world consumer confidence to spread into our economy. If domestic economic growth is sustainable and world growth is strong to the point of being unsustainable, the RBA may wish to tighten interest rates to limit the effect of world growth on the domestic economy. The role of fiscal policy in response to the international business cycle. Fiscal policy involves the use of the government’s budget to influence the level of economic activity and the achievement of objectives such as internal and external balance and economic growth.

Fiscal policy can be used to counteract large variation in the international business cycle. When world growth is slowing or in recession, the government may use an expansionary fiscal policy stance by handing down a smaller surplus or larger deficit. If world and domestic growth is becoming unsustainable, a deficit may be used which has a contractionary effect. Conclusion As economies become more globalised, the international business cycle will continue to have a significant effect on domestic economic growth, performance and policy settings. As the cycle effects key economic indicators such as unemployment, inflation and external stability, the government seeks to maintain a degree of control that allows fluctuations in the cycle to be a benefit and not a hindrance.

Stakeholders Theory is valuable to international business, but people are confused about how to apply it in operation and management. The internal impulse to commercial profit makes company want to escape from the application of Stakeholders Theory. Even though it is too early to say that Stakeholders Theory must be the future of international business, it is valuable to explore how to use Stakeholders Theory.

Firstly, enterprises who engage in international business could neglect the definition of scholars about stakeholders. And then they could ascertain who should be included in stakeholders according to themselves conditions (Ektewan, M & Stephen, O., 2010). After all, so-called affecting or affected by activities of organizations is really hard to define. The easiest way is to define who is stakeholder of organizations. The stakeholders of multinationals are very many, it is better to define stakeholders of each subsidiary. Obviously this way is easy to practice.

Secondly, companies should take different strategies to different stakeholders. After all, different stakeholders have different affects to the activities of company, or they are affected differently by company. To some extent, even though stakeholders have interests to entity, the size of interest is different. For example, if competitors are viewed as stakeholders of company, competitors will be different in different terms. In addition, the importance of stakeholders is different for different companies.

Thirdly, company should pay more attention to corporate social responsibility. No matter who are defined as stakeholders of company, corporate social responsibility should be fulfilled. Even though commercial profit is the internal impulse of commercial organization, as a part of the society, social responsibility can not be neglected (Jeff, F., 2010). Company can not survive without the support of society, let alone profit. However, company also should realize corporate social responsibility is not the burden of company. Society does not ask company to undertake excessive responsibilities, or the interests of the whole society will be damaged finally.

Fourthly, customers should be played in a very important place. As the saying goes that customer is king, the management and operation. One purpose of Stakeholders Theory is to stakeholders could affects the decision of company or the company should take account into the interests of stakeholders. In addition, a company only can pursue profit after the services or products are purchased by customers. Therefore, company should explore the needs and wants of customers. If there is new service or product to be public, the suggestions of customers should be pay attention.

Fifthly, Stakeholder Theory is not contradictive with other theories or strategies. Enterprises could use Stakeholders Theory along with other theories. For example, supply chain management and customer service management are relative to Stakeholders Theory. As a matter of fact, some companies do not realize they are applying Stakeholder Theory. Stakeholders Theory does not ask to be written into the articles of incorporation. Enterprises could apply Stakeholders Theory in practice unconsciously. Therefore, it should not be rigid to view Stakeholders Theory.

Conclusion

The theory of stakeholder has been an important part of international business. As the development of globalization, Stakeholders Theory will play a more important role in international business. Stakeholders Theory is still in the developing phase. The correctness of theory needs to be checked in practice. As a matter of fact, the development and application of Stakeholders theory depends on the choice of enterprises. After all, theory is from practice, and it only can be developed in practice. Even though there are many companies realize the importance and value of Stakeholders Theory, it is another thing to apply it.

Moreover, companies have to consider the cost of Stakeholders Theory when they use it. For example, it is well known that corporate social responsibility is important, but if a company can not survive, how it can fulfill corporate social responsibility. The application of Stakeholders Theory should be placed into a right and suitable place, or the consequence will be not good. In addition, the range of stakeholders could be large and small.

It can not be denied that some companies are confused about how to apply it. Maybe the shortages of Stakeholders theory will limit the application of it, or the shortages could be overcome in the practices. Many problems need to be explored in practice not just in theory. No matter how the future of Stakeholders theory is, its value has been seen. Therefore, people also should not be negative to the development of it. Stakeholders Theory should be together with other theories in order to overcome its shortages.

Reference

Annika, Carlsson, K., Karl, Henrik, D., Moll, C. H & Dario, P., 2008, Participative backcasting: a tool for involving stakeholders in local sustainability planning. Science Direct, 40 (1), pp. 34-46.

Ezekiel, C & Paul, O.,2010. Introducing Stakeholder Management. Construction Stakeholder Management, 29 (10), pp.1-12.

Ektewan, M & Stephen, O.,2010. Strategies and Tactics for Managing Construction Stakeholders. Construction Stakeholder Management, 14 (8), pp.121-137.

Freeman, R, E & David, L., 1984. Stockholders and stakeholders: A new perspective on corporate governance. California management review, 25 (3), pp. 88-106.

The management team from the United States will be in charge of the staffing for said restaurants. There will be a meeting of Executives in the United States, to explain the project and provide everyone with the necessary information needed to complete the task at hand, also giving the chance for all the executives get acquainted. Communication is very important in the business world and is required when expanding business to other countries. To have a complete understanding of a different culture, there has to be respect of customs, manners, and ethnicities.

It is important to understand being able to communicate both verbally and non- verbally is the key to success. Because each of the groups may speak a different language, it needs to be priority number one to make sure everyone is on the same page and there is no confusion. Some cultures can feel uncomfortable and insult others, when there is a lack of cultural understanding. Differing cultural standards of these countries include but are not limited to, politics, social, and education.

The language hurdles are an issue because of the people not knowing the other language does not understand when people have questions or comments. This will disturb the demonstration because it can cause confusion with communication between the different people and can cause them to be confused of the meeting and the information that they need to operate the business as taught. Language barriers can also cause rational replies and destructive sensitive replies. There are many approaches to aid everyone to improve a relationship with each other to help in conveying, execution, and growth.

Other approaches consist of creating a bond, ask questions about their culture, opinion, and customs, and listen courteously to all persons to gain a complete understanding and knowledge of their views and their culture Conveying proficiently will let agreeing conditions between businesses partners become more easily. The win-win model would be the best form of a negotiating model for negotiating each set of partners. The win-win model entails agreeing on terms, both sides believing they have won.

Conditionally, there are different types of coming to terms more efficiently. The key to coming to an agreement, there needs to be an agreed upon set of terms both arties understanding what the other party wants, without taking away from the initial goal. A conflict can possibly arise, if there is a conflict of interest or if one feels one way and the other individual feels another way. When conflict arises, it is very important to know that there is a conflict and a resolution is required.

The outcome of a conflict can be either positive or negative. There are many techniques that can be developed to assist in handling conflict. It is important to know how important it is to satisfy your own needs and the needs of the other individual needs. To overcome conflicts, there are many strategies that you can use. Taking care of you and knowing yourself consist of understanding triggers and creating a better environment. The next strategy is to clarify the personal needs that are threatened by the conflict.

To clarify the personal needs, means to be substantive and identify what the desired outcome of the negotiation process is. Find a safe place to negotiate is another strategy that consists of appropriate space to negotiate, appropriate time, and agreeing on the ground rules. Taking the time to listen ill help when conflict arises; because it will help you know what is being said by listening actively and help you have a clear understanding of what the other individual is saying.

Specifically and clearly asserting your needs means to build from what you are hearing and using messages to clarify what is being said. Approaching flexibility and problem solving is a method for handling conflict and it means to find a solution or options identify the issues concisely and clearly, are open-minded, and to clarify what the criteria is for making the right decisions. Managing the issue calmly, patiently, and successfully will help to clarify any feelings, focus on the interests and needs, and to take a break.

Also, implement and evaluate the issue and know what the cause was for the conflict and it will show you how to handle it if the situation was to arise again. Errors that can happen when negotiating contracts are very likely. Making sure when asking questions you leave the question open so the other party feels like they are being included. The other parties needs and expectations are considered, this helps them feel what they are proposing is not being disregarded. Self-defeating compromise is another mistake to avoid.

This is cause from the fear of losing the deal or fear that the people you are negotiating with are taking advantage of you. Directing insensible messages is a no-no because it will show when a person is anxious or self-critical, the best thing to do is manage the problematic thoughts. Short term thinking will help to end the negotiating process fast and help gain immediate benefits. Talking too much is a mistake, because it can cause you to negotiate against yourself, rather than for yourself. When negotiating, you have to wait or pause and be informal able with being silent.

Requiring face to face meetings is a mistake because it is best to negotiate at a distance. Negotiating at a distance will help come to a better agreement and it help an individual concentrate more on the high priority items by looking at the issues in an abstract way. Being too pasty is a mistake that is made by most individuals when negotiating because it makes things look desperate when you are trying to push an individual to say yes. Rather than push the individual to say you, you need to provide the individual what the chance to say not.

Most critical concerns in a political environment deal with impact on every business operation and it does not matter what its size, or area of operation. Political environment will still have an impact and it matters little whether the company is international, national, or domestic. All political factors, whether domestic or international will have an impact on business activity. The crucial and unavoidable reality of the international business is that both the host and home governments are integral partners.

A government control’s and restricts activities of a company by offering and encouraging its support or by discouraging and banning or restricting the company’s activities. But as reflected in its policies and attitudes toward businesses are a government idea of how best to promote the national interest, considering its own resources and the political philosophy. The international law recognizes the rights of nations to withhold grant or permission to do any business within the political boundaries. It also strives to control its citizens when it comes to conducting businesses.

The political environments of countries are a critical concern for the international marketer and on thus, it is important to first examine the salient features of political features of global markets they plan to venture in. The international laws recognize the fact that a sovereign state is independent and free from external control, and thus enjoys full legal equality; selects its won political, social, economic systems; governs its own territory; and has the power to enter into agreements with other nations they might Have interest in.

The extension of national laws beyond a country’s borders ensues in making it possible for international business conflict to arise. The nations can and usually abridge specific aspects of their sovereign rights in order to coexist with other countries. Just like the North American, Free Trade Agreement (NAFTA), the European Union and the, nations voluntarily agree to give up some of their sovereign rights so as to be able to participate with member nations for common and mutually beneficial goals.

A good example is the so-called pajama game which was discussed in global perspective is not unusual for multinational corporations. This pajama caper was a controversy which arose over a US embargo forbidding US businesses to trade with Cuba. Wal-Mart Canada was selling Cuban made pajamas in the Canadian market. When Wal-Mart officials in the US came to know about this, they ordered all offending Cuban pajamas as it as against the US law. Canada was incensed with the obtrusion of US law on Canadian citizens.

The Canadian citizen’s felt that they should be able to buy Cuban-made pajamas if and when they felt like. But Wal-Mart Canada was breaking US law if it continued to sell pajamas, and was subject to a million-dollar fine and a possible imprisonment. But then the ideal political climate for any multinational firm is to have a stable, friendly environment, but unfortunately, that is never the case. The friendliness and stability of a government in each country must be assessed as an ongoing business practice, since foreign businesses are judged by standards as variable as there are nations.

The instability and stability of the prevailing government policies that concern the international business is very important political condition. The political parties may change in time or get reelected, but the main concern is the continuity of the set rules or code of behavior regardless of the party in power. This is so because the change in the government policies does not always mean change ion the level of political risks taken. The political climate is very dynamic, thus its impacts on business.

In Europe, for example, the political parties in Italy have changed 50 times since the end of World War II, but the business continues to thrive as usual in spite of the political turmoil. As compared with India, its government policies remain hostile to foreign investments. This is to say that radical changes in policies toward foreign businesses can occur in the most stable of the governments. Some African countries are among the most unstable with seemingly unending civil wars, boundary disputes and oppressive military regimes.

One of the regions with the greatest number of questions concerning the long-term stability is Hong Kong since China gained control. But the official message is that nothing will change and thus everything is seemingly going smoothly even though the political analysts say that it is too early to predict how the business climate will change, if it will. When there is a potential for profit and given permission to operate within a country, MNCs can function under any type of government as long as there is some long-term stability and predictability. Italy composers were a great influence.

The knowledge of all philosophies of all major political parties within a country is particularly important to the marketer, since anyone might be dominant and tend to alter the prevailing attitudes. Where in some countries they have two strong political parties, which usually succeed each other, it is important to know the direction each of ten parties is likely to take. The changes in direction a country may take toward trade and other related issues may be caused not only by political parties, but also by politically strong interest groups and factions within the political parties, which cooperate to affect the trade policies.

The economic nationalism that might exist to some degree in all countries is another factor that effects international environment. Nationalism is somehow intense as far as feelings of national pride and unity, an awakening of nation’s people to take pride in their own country’ interests but this pride can take an anti-foreign business bias. The preservation of national economic anatomy is one of the central aims of economic nationalism where national interests and security are more important than international considerations.

This paper discus the possible impacts of political forces on firms, both in the international and domestic arenas. It scrutinizes the available theories on this subject matter, recognizes the gaps in the literature, and posits recommendations on how firms can counteract the political environments, especially by developing a political strategy for their businesses. 2. 0 Literature Review 2. 1 Introduction The impact of political forces on organizational business on the international and domestic arena cannot be ignored in the face of globalization.

Political forecasters have gained increasing interest in the area of political risk and possible problems that could accrue to businesses. In regard to the political climate in business, there are very important things that will guide one to understanding this. These include the influence on the government to act in particular ways as influenced either by domestic or international political forces, the acts and regulations of government owing to political activities, as well as the impact or the possible impacts of these policies and initiatives in relation to business.

Literature discusses various aspects that are connected to business. There is need to understand these aspects in depth. While, for example the government could be acting in particular manner so as to check particular issues, some may perceive it as political. Therefore, there is need to differentiate the actions that are as a result of political activity with those that are not. The government may have intentions that it may not expose, and so, real analysis cannot be carried out in regard to the information they give sometimes, while acting in particular manner.

In this literature review, the paper will delve into issues relating to political forces associated with operations of business firms and how companies respond or how they may respond. In addition, it is important to analyze various actions of the government as they may influence the business environment. As will be seen, past research has focused on these areas too. 2. 2 Political Risks in Business Past research has explored the risks that business may be involved in while doing business with the position that there is a possibility for business suffering as a result of political influence.

In particular, literature has defined political risk as that associated with losses that could occur to investors or organizations with operations in an area under particular or given political organization (Howell, 1981; cited in Bauzon, 1997). There has also been an attempt to distinguish between micro and macro political risks. According to Bauzon (1997), historically, colonial administrators have employed tactics aimed at gaining military and economic advantages, maintaining and protecting political hegemony where they had colonies.

Independence resulted to gaining of freedom from direct political controls and manipulation as a means to reducing political risks (Bauzon, 1997). The difficulty with which understanding political risk can happen has been pointed out in past researches. It has been posited that it has become more difficult to control, manage and even access political risk from a Western point of view because of the manner in which “assertiveness of the newly emergent nations of the Third World” has increased and the “demise of old-style colonialism” (Bauzon, 1997).

Loss of interest among political scientists regarding the problems affecting private organizations as they conducted business made understanding of the political risk problem more difficult. There has been attempt to bring in to literature on political risks, the positive aspects of it. Definition by Allan Willet has therefore focused on this perspective (Bauzon, 1997). Allan wanted the definition to focus on the “degree of uncertainty” of occurrence of it and not on the “degree of probability” of occurrence of it.

Thus risk may be taken as the “objective correlative of the subjective uncertainty” (Willet, 1951; cited in Bauzon, 1997). Literature regarding the definition of political risk has revealed the implication and ambiguity of the whole issue (Bauzon, 1997). It touches on a variety of aspects including the restrictions of government on remittance of profits, tax discriminations or through establishment of requirements by companies, property damage, and property expropriation by governments, enacting acts that are against corporate personnel, and contract interference by governments (Bauzon, 1997), among others.

All these must be dealt with in the exploration of the problem regarding political risks and how firms respond to the situations. The gaps relating to the literature and study of political risk in the past have been identified ion research. Bauzon (1997) has noted a time where there was lack of concern for problems affecting the MNCs because of focus on developing solutions to promote nation-building in the parts considered as lesser developed in the world. These solutions included formation of constitutional order among others. Interest for political risks has increased amidst increase in consulting opportunities.

In addition, past research was limited somehow by lack of more resources or access to them by academia. The influence of research towards the area of political risk was due to the political science and social sciences undergoing a “resurgence of the behavioralist”. The study of politics was attempted through formalistic and quantitative approaches and particularly, the study on the war causes and processes dealing with decision-making. Many resources have come up in relation to this debate, including books, journals and monographs.

These contributed to the discussion which was particularly dominated by professors in the areas of business and economics, and this has arisen more issues regarding political impacts of business. The area of forecasting received a boost through the entry of journals in this area. Growing interest on the political risks to business emerged amidst increased complexity and difficulty in the management of economic relations and international political relations. Currently, the formerly colonized countries have entered competition with those countries that colonized them, rather than the latter remaining passive objects.

In addition, Bauzon (1997) brings out the fact that it is no longer the same because Western-dominated financial institutions and governments are no longer necessarily the subjects to the formerly colonized nations. There have been differences as far as the definition of what political risks are, and these have helped in the exploration of various and more issues that the subject touches on. A large amount of literature has focused on the impact Third World countries are also forming blocs and free trading zones to leverage on the way they deal with outsiders.

In addition, this has been done to protect their market from external forces. The importance of political risk to both the governments and corporations cannot be ignored. Bauzon (1997) theorizes that it has been applied in the making of certain types of decisions by the Western government. This is in relation with the tool to intervene under certain conditions and how to intervene. This knowledge, according to him, has aided the corporate world to make decisions relating to whether to invest, how much to, the advantages that could accrue from certain investments as well as what to invest.

Bauzon (1997) is of the opinion that companies could reduce the risks related to political risks by use of this particular knowledge. In addition, they can use this knowledge to control the environment. This was captured in the definitions that bring out issues of impact of political risks as environmental changes that affect all or certain organizations, as well as likelihood of it to cause business loss. Such issues as insurance have been dragged into the issue of political risks through the definition by Willet. Literature does seem to not differentiate between “political forecasting” and “political risk assessment (or analysis)”.

Severally, the two have been used interchangeably. Bauzon (1997) has sought to distinguish the two terms, with the position that political risk assessment means the process seeking an understanding of the factors that may need to be prepared for by the government or the private sector. It is assumed here that the victim will prepare and make necessary decisions as well as manage risks after knowing the factors in the political risk field. It is assumed that the victim will receive a warning or indications or that he or she will be exposed to a climate with rules defining what must be done to survive (Bauzon, 1997).

2. 3 Actions of the Government in Business The government as an influence force in determining the market factors and influencing business has been widely discussed in literature. Porter (1980; cited in Aidan, Daniel, & Bernhard, 2005) put forward his five force analysis that puts government in the line of forces that determine the profitability of business and general flow of business. In addition to the governmental forces, there were others discussed by Porter, and this knowledge can be applied in the analysis of how businesses can develop political business strategies.

However, Porters analysis was not exhaustive regarding how businesses can develop political strategies, because it covers literature only when the government is a buyer or supplier only (Besanko, et al. , 2000; cited in Aidan, Daniel, & Bernhard, 2005). Earlier attempts to exclude government as a potential force that influences business activity was the consideration of it as exogenous, because buyers, suppliers and competitors and their interactions are the ones to be analyzed as competitive forces. In fact, consideration of the competitive forces discussed by Porter certainly leaves out the government as a competitive force.

However, as seen above, there are aspects of the government in touching business, which are automatically impossible to neglect. In fact, opponents may argue that the standard toolkit for business will not respond to the case where a business has gained a competitive advantage in the market as a result of governmental actions. This can only be accepted as far as we are solving the competitive strategy problem. Aidan, Daniel, & Bernhard, 2005 have argued that this cannot apply as far as we are dealing with the development of political strategy.

The possibility of the impact of government on other forces such as those discussed by Porter, and those focused on in research, has been explored in literature. Many have argued that the government force could override other forces. In fact, the government has been introduced as a sixth force in the Porter’s theorization, e. g. by Oster (1994; cited in Aidan, Daniel, & Bernhard, 2005). Those including the government as the sixth force in addition to the Porter’s five, have expanded on the areas through which government actions and decisions could affect business.

They capture that it can influence business and the flow of it through affecting suppliers, buyers as well as substitutes. Literature has posited that the government can act to influence business and the profitability there in as an independent force, through various channels. One analysis on the way they can affect business in this manner is that they are policy farmers and not buyers, suppliers or competitors (Aidan, Daniel, & Bernhard, 2005). In order to understand and capture the impact of business by the government, literature has proposed the inclusion of regulation aspect in defining government policy.

In this respect, taxation policy, industrial and trade policy have been included-they are at times neglected in defining government regulations. There has been an attempt to distinguish the negative impact of profits (or threats) for incumbent firms by the government actions from those actions affecting negatively only some business firms (Aidan, Daniel, & Bernhard, 2005). The differences have been perceived to occur as a result of capabilities and resources of the firms being heterogeneous. For instance, the category affecting only some business firms include industry-specific tax.

These are implemented to achieve certain purposes, e. g increasing access to resources, e. t. c. They achieve certain output taxes as well as “competitive bidding for access to the resources” (cited in Aidan, Daniel, & Bernhard, 2005; e. g. McMillan, 1994). These threaten the profitability of industries. In the exploration of the ways in which the government can affect the business either in the international market or domestic one, there has been focus on how revenues and costs of firms can be affected by certain specific actions imposed by governments.

Direct increase of revenues to firms by the governments may occur when they are given direct money. The government may also alter the relative costs or revenues and as a result alter the degree of rivalry among the firms. Other forces include the altering of the size composition and the number of firms. It may be considered that some businesses will be prone to impact by the government regulations and actions because of the nature of industries they serve. Some industries have certain levels of dangers and safety risks associated with them, and therefore, the government keeps an eye on them.

Others are involved in the generation of products and services that directly affect the environment, and there regulation is important in making sure that the public is taken care of. Those regulations involving the environment are taken to be costing the company and therefore may lower profits (Hopkins, 1996; cited in Aidan, Daniel, & Bernhard, 2005). However, the possibility of such changes leading to firm’s profitability have been explored, with such researchers as Leone and Koch (1979; cited in Aidan, Daniel, & Bernhard, 2005) discussing the possibility of firms getting more profits with such regulations.

Some firms may comply more quickly and at a lower unit of cost than others. Another aspect of study regarding how the political system may affect business activities regards the effects of changes in the domain of international public accounting. In this respect, there has been a shift from developments in the comparative studies from a focus on descriptive studies. This has happened as far as various nations are concerned. Some of the studies are those by, or focused by such researchers as El-Batanoni and Jone (19961) and Vela and Fuertes (2000; cited in Perez, Antonio & David, 2009).

Perez, Antonio & David (2009) have discussed the effect of changes in the political systems in Argentina, Chile and Paraguay as affecting the accounting system and economic issues. They have noted that a negative economic impact was experienced in Argentina during the military, pre-democratic or dictatorship rule, and leaders were lesser concerned with solving of the economic crisis than in staying in power and resisting efforts to have democracy return. Some changes touching economic changes were adopted during the democratic periods and the financial administration was reformed.

Chile encountered problems in the economic domain, because it got into serious economic problems as a result of adoption of an economic policy brought forward by socialist Allende during the military, pre-democratic or dictatorship period. Further transformations took place in Chile after democratization (Perez, Antonio & David, 2009). The financial literature has explored how the public policies may influence the share prices for industries and companies in various contexts (e. g. Thompson, 1993; cited in Aidan, Daniel, & Bernhard, 2005).

There is no doubt to the fact that business organizations are affected by the political climate. Decisions that are taken by governments affect the competitive advantages of firms, whether in the domestic or international environment. This means that they can affect the profitability of firms. The actions and decisions of the government are never exogenous and therefore are important as far as firms’ generation of strategies is concerned (Boddewyn and Brewer, 1994; cited in Aidan, Daniel, & Bernhard, 2005).

A number of researchers have brought out the position that understanding of the political influence of the government on the firms political strategy will definitely be necessary to aid in the development of a good strategy (called the political strategy) to enhance firms’ profitability. Literature has also dealt with collective political strategies where firms decide to join hand and develop a common goal regarding political strategies. However, it must be considered that a firm will have to develop a specific political strategy for itself without consideration of the collective goals.

There is great proof that firms require developing political strategies to aid in the generation of more profits in this respect. It is not necessary that the government should be the initiator for actions that touches the business in the political scene; the firms can themselves start the debate. Godwin and Seldon, 2002; Baron (1995; cited in Aidan, Daniel, & Bernhard, 2005) have discussed the point that this would involve the convincing of decision-makers in the political scenario to take actions that touch the business individuals.

It must be remembered that the sole focus of firms is to have a business and profit advantage in regard to political scenarios. Academic interest in political strategy and related issues have discussed and dealt with the way a firm can develop a political strategy that is specific to them, including the related issues, as well as the nature of public policies. A lot of literature reveals that there has been a lot of focus on the general firm’s business strategy and this proves that there has been downplaying of the political strategy and the related literature.

In fact, according to Mahon, et al. , (1994; cited in Aidan, Daniel, & Bernhard, 2005), there has been downplaying of this fact, even in strategic management books. There has generally been no explicit presentation of the political strategy in literature. There is a call to research dealing with how firms can organize corporate political activity by Hillman et al. , (2004; cited in Aidan, Daniel, & Bernhard, 2005). There is further proof that political resources are not taken as fast mover resources among firms. These are resources that can give firm an advantage during entry in markets.

A political support can aid in the entry in new markets on an international perspectives (Lieberman and Montgomery, 1988; cited in Frynas, Mellahi & Pigman, 2006). This is so with transitional economies which are recently experiencing free market competition. As such the literature focusing on the fast mover resources has failed to address the non-market effects or factors. The neglect of capturing this may be regarded as surprising because there is already wide range of literature regarding relationship between the government and the business sector.

In specific Frynas, Mellahi and Pigman have noted that shareholder value could be created through political resources. (2006). In the United States, firms have already developed political strategies. The literature has not handled the international perspective of political influence on business according to the aforementioned researcher (Frynas, Mellahi & Pigman, 2006). In comparison with the areas of marketing and technology, it can be said that the literature relating to international political influence on firms has been underdeveloped.

Such exploration may be very important because it may help firms to know how they can be helped regarding using the political process as a political strategy when there is limited support at home in the political perspective. It is important for the firms and the people as a whole to understand how transferable, and the extent of transferability do political resources. In addition, it may help them to exploit other alternatives, for example balancing a political climate at home with that of the international arena, if that of the host government is contradictory.

However, literature has not ignored the fact that firms engage in political activity, and has discussed the reasons for this trend. It has, for example, been observed (Aidan, Daniel, & Bernhard, 2005), and that they do so using many methods. (Aidan, Daniel, & Bernhard, 2005), it is possible that firms can influence actions by the government through establishment of a political strategy, either as larger coalitions or as individual firms. Various strategic taxonomies have been proposed by various proponents of political strategies by firms.

An integrative taxonomy approach was considered by (Aidan, Daniel, & Bernhard, 2005) and discuses the involvement of firms in political behavior. There strategies (political) have been suggested and includes constituency building, financial incentive and information. Another strategy in this respect is lobbying for financial support. There has been a direct target for decision makers in the political scene by firms. This is what has been referred to as the constituency building by the aforementioned authors. This is through involvement of media-directed activities as well as activities sin the grassroots (Baysinger et al.

, 1985; cited in Aidan, Daniel, & Bernhard, 2005). Since fast mover advantages seeks to render firms to have asymmetry in relation to its competitors when used while entering a market, adopters of this strategy can gain. Largely, literature has handled the role of government as being against investors and a barrier to fast mover advantages. The political impacts on fast mover advantages has however been captured by a study by Nakata and Sivakumar (1997; cited in Frynas, Kamel, & Geoffrey, 2006) who notes that for foreign markets, fast mover advantages were reduced as far as such political instability factors were concerned.

On the contrary, privatization and economic liberalization achieved a positive impact on fast mover advantages and have lesser impacts of governments on markets. The authors however left out the fact that fast mover advantages mechanism can arise from intervention of governments. Empirical evidence emanating from studies dealing with political science and business history support the fact that early market entry of business can be assisted by political resources. For instance, examples that have posited this have been discussed.

D’Arcy and Burmah Oil obtained a political support from the British government at different levels so as to “gain an early foothold of Persia” (cited in Frynas, Kamel, & Geoffrey, 2006). That happened in the beginning of the 20th Century (Jones, 1981; cited in Aidan, Daniel, & Bernhard, 2005). A good and clandestine political network and specific skills in Sierra Leone and Angola assisted the entry of market of South Africa firms who reaped benefits from this. There has been no leveraging on this research to aid business research.

Lack of literature regarding the impact of political dimension on fast mover advantages does not allow researchers to have an understanding on how some firms used it to gain international market access. Writers have only mentioned the impact of the government on these domains. However, there has been mention that early movers in China markets have gained as a result of their collaboration with the government (Luo and Peng, 1998; cited in Frynas, Kamel, & Geoffrey, 2006). Such research has focused on such companies as Volkswagen.

These authors call for the attention of government regarding the government policy in transitional economies that favor early entrant and their actions to enter the markets. There were shortcomings for this study, because there lacks inclusion of political resources in the research design and there was no more exploration on the importance of political resources. The researchers could not investigate the political resource because of the limitation posited by the tool of analysis.

The limitation of the classification of fast mover advantages has been exposed by literature, for example with the studies by Luo and Peng (1998) and Nakata and Sivakumar (1997) as posited by cited in Frynas, Kamel, & Geoffrey, 2006. Such classification can have the aspect of politics added, by inclusion of “political” as a fifth mechanism. The shortage of exploration of the political dimension for fast mover advantages does not mean that it has not been exploited in other areas of business.

Remember that in the above, the literature can help understanding only further how businesses can gain by having a specific political strategy, namely, getting into the market as fast movers. That is why there is need for specific concern over fast mover advantages. This literature bring out such issues as asymmetric effects will result on competing firms from regulation (Shaffer, 1995; cited in Frynas, Kamel, & Geoffrey, 2006), and that the performance on a firm will be influenced by the government’s activity on a competitive position.

There is recognition of existence of uneven distribution for the capabilities of the firm to cope with new regulation, as far as the relationship between regulation and firm performance is concerned. This was discussed by such authors as Oster (1982; cited in Frynas, Kamel, & Geoffrey, 2006). There is a possibility that a firm could target on the overall impact of legislation adopted such as giving them a better overall competitive performance, even when it was initially damaging to it.

Such may occur when there is asymmetrical impact of the regulation on individual members such as raising the rivals’ cost disproportionately (e. g. McWilliams, Van Fleet, and Cory, 2002; cited in Frynas, Kamel, & Geoffrey, 2006). This leads to understanding that firms need be vigilant enough and knowledgeable as far as the impacts of political climate on business is concerned-and particularly where there is development of mutual political strategies.

Literature has also come up, in the academia, with terms such as ‘political competences’, ‘political resources’ and ‘political capital’ because of impact of business by government. More than one factor for political resources have bee considered in theory. These are ‘intelligence and cognitive maps about nonmarket environments, better access to decision makers and opinion makers, and better bargaining or non-bargaining skills’ as po

An in-depth look will be taken on the obstacles that may arise due to culture, adjustments that need to be made, and any ethical conundrums that may arise due to different cultures. Literature Review D. Eleanor and d. Karol, state that “Macs should not underestimate the Importance of the cultural specificity of the host countries because different staffing, selecting, training, motivating and compensating practices should be applied in accordance with the characteristics of the local cultural context,” (2008, p. 1). A unique perspective on culture is taken by Hill, Haynes, and Johnson by analyzing the International student in the American business culture. “A relatively unrecognized challenge Is knowledge of contemporary American business customs and culture. International students enrolled in two business schools formed focus ropes to discuss the impact of their unfamiliarity with U. S. Business on their learning,” (2011, p. 17).

On the other side of things Lung-Tan gives a unique view on how to measure culture; “How to measure culture has been a fundamental challenge for scholars in the field of international business and still is in debate (Gould & Green, 2009; Venial & Brewer, 2010; Lung et al. , 2011). It Is necessary to understand the concept of culture In order to discuss the relationship between culture and International business,” (2012, p. 109). Preparing, Poor, and Seville state “corporate cultures will continue to be important. For managers, the key to making business decisions is business interests.

However, there will not be only one corporate culture (I. E. Us-dominated), but Instead diversified corporate cultures as multinational companies (NCSC’) will originate from more than one country,” (2008, p. 23). Mahoney James is under the belief that, “Claims of widespread corruption in International business has stimulated a considerable amount of activity both In academia and in International organizations,” although strong arguments have been made that bribery and corruption are not cultural characteristics, as they have so malfunctioning economy,” (2012, p. ). Lie preformed an analysis determining, “We hypothesized that, overall, Chinese students would be more likely to make less ethical decisions than their American peers due to the differences in four cultural dimensions: (a) small versus large power distance, (b) individualism versus collectivism, (c) difference in socioeconomic values, and (d) rule of men versus rule of law. The logic regression results strongly support the hypothesis,” (2011, p. 15).

Almandine, Branch, and Lies bring the concept of different managing systems for HER in the Middle East, “Arab management faces an ever-increasing challenge to keep up tit management in developed countries due to globalization; the introduction of MEN operations can result in the “transfer” of best practices in HARM, as in Israel. A study into transferability of HARM practices in Joint ventures based in Iran, found that ownership and control of critical resources, the compatibility of national culture, socio-cultural differences, mutual trust and respect between partners and the compatibility of management styles were important factors,” (2012, p. 68). AY-Syllabi, Immune, and EBITDA discuss the reception of American Culture in he Middle East where bias is a large difficulty, “The West, driven by its interests and blinded by bias and hostility, has been keen on colonizing the Middle East, empowering Israel, and foolishly disregarding the aspirations of Arabs and Muslims, which tremendously contributes to generating anti-American sentiments and bitterness,” (2011, p. 156).

Archivist, Correction, Condole, Kiosks, Lie, and Audiogram study is on, “managers’ and employees’ perceptions of the state of ethical cultures in business organizations and explores similarities and differences among the four largest merging economies, commonly referred to as the Brick (Brazil, Russia, India, and China (2012, p. 415). Bond, Redding, and Witt focus on the Asian business system, “This region contains immense cultural variety.

Language and ethnicity illustrate the flows of ancient peoples generally moving from west to east and southeast, often pushed and then overrun by newer arrivals. This flow of populations has led to all the world’s axial religions being represented. They are dispersed across the region and nowhere is there a tidy overlap of one country and one religion. Except for Islam, the norm is for people to adopt several religions and blend them into their daily lives as need be. Three aspects of religion tend to intervene in the process of affecting societal behavior.

Some religions are more constraining than others, some more Worldly, some import an external worldview,” (2013, p. 6). Change, Line, and Tu compare the BRICK countries culturally, “The results showed that there was a significant difference among Brazil, Russia, India and China in individualism/collectivism attitude. It indicates that India has highest individualism attitude compared to Brazil, Russia and China. China has highest collectivism attitude imparted to Brazil, Russia and India. Brazil has higher individualism attitude compared to China… people from individualistic cultures tend to be more concerned with their own rights, benefits, and outcomes,” (2011, p. 179). Chelsea, Chunk, Park, and Ream describe, “How culturally sensitive mental of Asian Americans,” (2011, p. 2374). Perkins and Joggle study showed that “people from different cultural groups experience and respond to a particular leadership style in different ways, and how specific dimensions of transformational leadership are enacted in an Asian culture more strongly than in Western cultures.

Furthermore, the purpose of this study was to investigate the influence of cultural forces on leadership practices and processes. In doing so, we found that leadership styles are not universal behaviors, because leadership differs as a function of cultural factors when cultural attributes moderate the relationship between leadership behaviors and outcomes,” (2012, up. 545-546). “It is not possible to fully neglect the influence of the national / regional culture.

Therefore, although these enterprises often run expensive programs to establish a common organizational culture, the behavior and thinking may differ from one unit thin the multinational enterprise to another,” (Sufficient, 2011, p. 73). In summary many authors have had interesting points to make about culture and the role it plays in international business. All of these points will be addressed as the concept of culture, obstacles, operations, and ethics are investigated further. Objective During this project I will look in depth at the effect that culture plays on organizations when operating overseas.

This includes aspects of obstacles that may arise due to cultural differences, adjustments that corporations have to make in order to operate internationally successfully, and lastly any ethical decisions that may arise due to differences in culture, values, and/or beliefs from one country to the next. Research Questions There are a few questions that will be addressed during the course of this paper, these questions will help to shape the project and ensure that all aspects of culture in business get addressed.

The following are the main research questions being answered: Does a country’s culture play a role in international business? Are there any cultural obstacles corporations can face doing business in different countries round the world? How must corporations adapt to doing business internationally vs.. Domestic business? It is through these questions that we will see exactly the impact of culture on international business, and begin to address the steps that should be made, as well as the different implications that culture has on a Multinational enterprise.

Hypotheses While thinking about this topic a couple hypotheses became apparent to me; it is through the work of others as well as going in depth a bit more that I hope to prove these hypotheses correct. HI: Without taking a countries specific culture into count an organization will struggle to succeed within its borders. H2O: Culture is one of the major factors that need to be addressed in globalization. It is my belief that culture is in fact a huge contributor to globalization and if it is not taken into themselves, but almost downright impossible without a little luck.

It is due to the nature of the people within a countries border that a business begins to exceed, without taking into account their actions, beliefs, and values an organization becomes less attractive to its people and therefore has difficulty succeeding. Cultures Role in International Business thin the multinational enterprise to another,” (Sufficient, 2011, p. 73). This statement by Sufficient is a reoccurring theme throughout this paper. The fact of the matter is that a more true statement cannot be made, despite the size of the organization the fact of the matter is that the national and regional cultures cannot be ignored.

Eleanor and Karol, make the statement in their paper about cultural differences in a small country, “Cross-cultural differences play an important role in international business together with differences in communication, managerial styles, and business practices. International Human Resource Management (IHRAM) has increasingly been recognized as a major determining factor of success or failure in international business and human capital is more often seen as the main source of sustainable competitive advantage available to companies. In the recent years, many companies have generated considerable revenues outside of their home countries.

When involved in international business, Macs should not underestimate the importance of the cultural specificity of the host countries because different staffing, selecting, training, motivating and compensating practices should be applied n accordance with the characteristics of the local cultural context,” (2008, p. 71). It is in their paper that they examine the cultural influences in Cypress and their effect on international business there, they come to the realization that there are essentially two parts of the country which Just so happen to be broken up in the north and south.

The south is the Greek influenced part of Cypress which has little to no language barriers and is favorable in many different ways to foreign investors. When looking at the northern part there is a significant Turkish influence which Just so appends to create an almost completely outlook on the region in the same country due to the culture established. They clearly state that while the south is easier to transition to the north should not be ignored as there are great opportunities available; special attention should Just be paid to their values in order to maintain a successful operation. Every country has its own cultural specificity, which we believe is an important indivisible part of the contemporary globalization business world. Thus, it should be paid special attention in international business, as it often proves to be the key to success,” (Eleanor & Karol, 2008, p. 7). This point one that actually gets emphasized by Lulu’s paper regarding measuring culture, “For managers in multinational enterprises, one of the most difficult aspects of doing business in a foreign country is to understand the similarity and differences in cultural insights and values.

A difficult issue with any cross-cultural research is to keep a balanced and comparative frame of reference. Cross-cultural studies using an ethic approach 1996; Offering & Hopper, 2006). First, analyses may be too generalized – they presume a group of people living in a society or country, such as the Chinese, to be relatively monogamous. The researchers pay little attention to cultural diversity in a society or country or to interactions between mainstream and ethnic cultures. Second, such studies tend to be stationary and to disregard cultural change.

Third, they assume that the concept of a people (e. G. Chinese) is objective, while it may be subjective in nature,” (2012, p. 112). The idea of not classifying one country all into the same cultural beliefs and roles becomes an important one, as discussed with Cypress it is split up into multiple influences, this is in-fact the case with many countries no tater their size, but more frequent within the larger ones. Sub Cultures need to be identified and recognized and then used to the Mines advantage and made a part of their plan for proceeding with business on the international level.

Also when we talk about culture there are a few different aspects that need to be taken into account as well. A significant part of this is adapting culture to fit the people of the region / nation, but what exactly does this entail? The fact of the matter is that culture bleeds into every aspect of business when operating internationally and therefore needs to e examined on a very detailed level. Aspects like communication, managerial styles, business practices and human resource management need to all be adapted, this includes such practices as staffing, training, motivating, and compensation practices.

Each and every part of these standard operations within a country can have both a negative or positive influence based on the culture of the area and that way that they are handled by the organization. “A framework has been developed for analyzing ME (Middle East) HARM which recognizes its social, cultural, institutional and political perversity and stage of economic development. It emphasizes national factors (culture, institutions, sectors, business environment), contingent variables (e. G. Organizational size, age, ownership, life cycle stage) and organizational strategies (e. . Generic strategies, HER policies). They particularly emphasize the influence of national cultural and institutional factors,” (Almandine, Branch, & Lies, 2012, p. 468). In this study a look was taken at the human resource management practices when dealing in the Middle East, it makes it very clear that in this case practices used in other parts of the world re not likely to work due to Middle Eastern beliefs with religion, culture, and even the economic, political, and legal environment in action.

They mention that special attention is paid to the national culture when it comes to work values and management practices; this is due to the differences between the Islamic values and the Arab traditions. Cultural Obstacles While exploring the Middle East culture we are able to identify a few aspects which turn up as obstacles to Mines attempting to begin business practices there. “American policy in the Middle East has been dictating the relationship between the US and this part of the world.

Being imbalanced, this policy has been the cause of bitterness and anti-American sentiments reflective of displeasure, anger, frustration, and disappointment at the role America has been playing. This role doesn’t meet the expectations of Arabs who have been pinning their hopes on the US to settle the sacrificing its interests, undermining the peace process, losing its credibility, and damaging its reputation as a leading power,” (AY-Syllabi, Immune, & EBITDA, 2011, p. 160). The statements made here show exactly the type of conflict that may arise if a

US based organization attempted to open up shop in the Middle East. With anti- American sentiments being well known any American practices would likely see a significant amount of resistance if attempted to implement in an Arab or Muslim culture. It is because of beliefs like this that an organization would have to completely revamp their procedures to fit the people of the surrounding region; this would entail a great amount of prep work as well as take significant effort to fit the culture they are moving into, with no promise that they still won’t see resistance to their entrance.

One of the key obstacles that Mines, managers, and even employees operating overseas run into is making ethical choices. Often the case when you enter a new region is that the standards in which things are done are not up to the same standard in which the employee/manager/organization is used to. This happens when going from one country to the next and often times Men’s find themselves in a tough situation where they need to make ethical decisions due to unethical practices which are common place in the new region. An absence of a fair, equal and transparent recruitment policy which may lead to favoritism, nepotism, and irruption, discriminatory or undeclared criteria, restricted information, and a lack of accountability, lowering the quality of employees and the image of public sector employment,” (Almandine, Branch, & Lies, 2012, p. 482). This is not the only sort of ethical question that may arise though, such things as discrimination in compensation, abuse and corruption through bribery, promotions and career advancement based on personal or political criteria, and corruption throughout the company are common place throughout other countries. Two aspects dealt with are: ) the existence of perceived corruption in international business, including graft, kickbacks and preferential treatment and b) workplace conditions that are considered unethical by generally accepted world standards. There are many other aspects of international business which lend themselves to ethical examination, but they are not appropriate here… In addition, the rapid movement by Western companies to developing countries as a source of supply based on cheap labor has accentuated the previously “invisible” problem of working conditions in these areas,” dames, 2012, up. 1, 15). With the labor laws being different in other parts of he country it is a viable idea to move production in order to save; however, the problem that has been brought to light over the past decade are the unfavorable labor conditions for both adults and children. Organizations need to have a framework already in place for dealing with aspects such as these ethical issues if they do not wish to become a part of the problem. In order to combat and avoid such conflicts of interest, HARM must ensure impartiality in personnel decision- making, foster competition, build in transparency and openness, structure and operational competence and merit requirements, enhance collective decision- aging, foster an ethical regime through scrutiny, standards and audit, strengthen the appeals and grievance systems, extend ethics requirements to contracted-out/ interest,” (Almandine, Branch, & Lies, 2012, p. 482).

The problems with attempting to set up these sorts of things are not easy due to the significant changes you see from country to country in values of both beliefs and ethics. Lie and Persons discuss how their findings show that Chinese students are more likely to make less ethical decisions in such areas as proper use of company assets, inside trading, and reporting unethical behavior, (2011, p. 5). Whereas Archivist, Correction, Condole, Kiosks, Lie, and Audiogram state “that no homogeneity of responses is evident among the BRICK countries.

The results show that significant country differences exist across all the ethical business culture-related items. Furthermore, the country differences were not consistent across items. In general, India and Brazil had higher scores than Russia and China, which could be interpreted as a sign that respondents in the latter two nations find that standards of business ethics are lower in their organizations. (2012, p. 424). Ultimately it comes down to the simple idea of risk vs.. Reward and if the possible outcome of moving into the area outweighs that of any problems they might come across then the company should invest. “Nevertheless, it also has to be considered that different cultures not only bring challenges but also widen the view and with this enable the multinational enterprise to face unimagined opportunities,” (Sufficient, 2011, p. 77). Adaptation Part of the problem when attempting to adapt to culture in international business comes in its extreme diversity from one part of the globe to the next.

A good example f it is like taking care of an only child of a rich family who is used to getting everything he/she wants, compared to dealing with a middle child of a middle class family who has little to nothing of their own and shares with their siblings. In order to make the first child happy you are going to have to act completely differently with them than you are the second, the first might be rude and you will have to deal with that; whereas, the second child could be nice, kind, and listen well. This all depends on their upbringing and social values instilled within them from their parents.

This is he same concept when moving your business to a new area, you do not know what your customers and employees are going to be like or act but it is your Job to manage, control, implement, and attract those individuals to support your business whatever it may be. Change, Line, and Tu discuss the differences of their study comparing culture of Brazil, Russia, India, and China “There was a statistically significant difference between the individualist/collectivist attitude among Brazil, Russia, India and China….

It indicates that India has highest individualism attitude compared to Brazil, Russia and China. China has highest collectivism attitude compared to Brazil, Russia and India. Brazil has higher individualism attitude compared to China…. Russia has higher individualism attitude compared to China, and both Brazil and Russia have no significant differences in individualism/collectivism attitude. Hefted found that people from individualistic cultures tend to be more concerned with their own rights, benefits, and outcomes,” (2011, p. 79). This is also then backed up with a study justifying if culture is indeed important to Mac’s and Men’s, “For managers, the key to making business decisions is business interests. However, there will not be only as multinational companies (NCSC’) will originate from more than one country. In the future, for instance, more and more Chinese and Russian Macs will appear with their corporate cultures being influenced by the national cultures of the countries of their origin,” (Parsnip, Poor, & Seville, 2008, p. 23).

An example of successful implementation of dealing with culture was provided by Chelsea, Chunk, Park, and Ream in their article: Working with culture: culturally appropriate mental health care for Asian Americans. In this they discuss how mental healthcare providers adapted to it the needs of Asian Americans within their practices. In the study they found that the culturally appropriate care for the Asian Americans was able to identify any cultural issues easier, respond to culture specific situations, and incorporate solutions much easier.

Though international business has experienced tremendous growth in the recent times, there are still some factors that affect its growth. Such factors are: i. Political stability: Different countries vary on the way they handle and deal with issues related to international business. Some countries encourage foreign businessmen and companies to invest in their land by reducing investment taxes and offering them a favorable and level playground while others impose tough conditions.

Therefore when an individual or company is considering investing on a given country, political stability should be an issue of great concern. A country that is politically unstable is prone to making quick decisions that can negatively impact on the fate of international businessmen and investors (Dunning, 1999:481). For example, a country can decide overnight to change its policies towards engaging itself in international business.

Political instability has also been the cause of civil wars in most countries resulting to serious economic catastrophes. ii. Foreign currency: Transacting in foreign currency has also been a major issue affecting the growth of international business. Foreign currency usually fluctuates in value posing a serious danger to foreign companies as well as the businessmen. These parties could lose an enormous amount of money especially if the foreign currency loses value before they can exchange the currency to the desired one.

Another case that involves currency is that some countries do not usually have the cash necessary to purchase a particular product. The only means of carrying out transactions with such countries will only be involving in exchange of goods for other goods or counter trading. Such kind of trade used to exist in pre-historic times and it was majorly known as barter trading. An example of counter trading involves a foreign company exchanging cars for steel with a certain country. The company then uses the steel to manufacture other new cars.

iii. Self sufficiency: Another issue that has been affecting the growth of international business is self sufficiency. Self-sufficiency is a situation in which a given country does not want to involve in international business with other nations. Such countries prefer taking this route mainly due to their strong political and cultural beliefs. An example of this is the former Soviet Union. The Soviet Union imposed policies and restrictions that prevented practicing whatever kind of trade with other nations apart from their allies.

The major reason why the Soviet Union avoided involving themselves with international business was due to the fact that they wanted to carry out their leadership without being influenced by other external forces. iv. International Trade Policies: Another important factor influencing the growth of international business is taxes. Most countries impose excise tax on imported goods and commodities. Excise tax is imposed on imported products due to various reasons. For example, a country could impose a revenue tax on a particular product.

This kind of tax is majorly used by such country to generate its own revenues to be used in other forms of development. Revenue tax is usually set at a lower cost and does not have much impact on international business. But there arise a situation whereby, the domestic companies compete for a local market with foreign companies. This usually prompts the government of the affected nation to impose protective tax on the imported goods (Kline, 2005:7). This is normally done in order to make imported goods more expensive than the domestic ones thus protecting the domestic companies.