In China the business relations revolve around personal relation while in Korea for example hierarchical relationships or obedience to authority becomes more crucial. In Northern Europe a participatory style of management is in place. Southern Europe on the other hand has workers that resent the concepts like pay-for-performance and commission salaries.
Managers on international missions face the responsibility of having to exert authority while at the same time trying to be liked by the subordinates. U.S. managers put more weight on being friendly and liked whereas Asian and European managers exercise authority.
Managing Cultures
Businesses have become global with globalization taking the business world by storm. With global businesses the communication takes place across the boundaries of the continents and countries. This creates a more complex situation as different countries have different cultural and social norms. When people interact with people of different countries and nations these cultural barriers come into play.
There are many cultural differences and nuances that managers must know when dealing internally. Americans tend to use first names instantly in business dealings with foreigners but foreigners may find this presumptuous. In Japan for example, first names are used among family members and intimate friends so much so that even long time business associates shy away from using first names. Even simple phrases can have different interpretations as for example the phrase 'how would u like to' can have different meaning as it could be a command or a question. 'See you later' can mean the same day to some Asians while it would mean indefinite period for Americans. Sitting through a conference without talking is unproductive in the United States but it is viewed as positive in Japan if one's silence helps preserve unity. U.S. managers also put greater emphasis on short-term results than foreign managers but these concepts are also changing with exposure to the international arena. Similarly gestures can also have different interpretations. Therefore it is necessary to understand different cultural nuances involved in the international business.
Managing Politics
International businesses have to with unfamiliar political systems as well as different government supervisions and regulations. Sometimes government officials and the general public and political activists view foreign companies as outsiders and are suspicious of their impact on economy as well as politics. Companies have to be ware of government takeovers of property and acts of violence directed against the firm. The examples of such acts can be seen in Anti-American protests on famous American businesses. Since, such acts are not uncommon; companies must formulate special plans and programs against unexpected losses. Political instability is therefore among the frequently cited problem which includes riots, revolutions, civil disorders and frequent changes of government. Political instability in particular increases uncertainty and thus business risk also increases. Although most companies would prefer to do business in stable countries but some of the greatest growth opportunities lie in areas characterized by instability.
Government laws and regulations also differ from country to country bringing new challenges for international firms. Host governments have many laws concerning libel statutes, consumer protection, information requirements, labeling requirements, advertising rules and norms, etc. International companies have to understand these rules and norms and abide by them. For example, in 1994, a coalition of consumer and human rights groups began to pressure Starbucks to adopt standards requiring improved wages and conditions for workers on the Guatemalan plantations from which it sources beans and Starbucks had little choice but to grudgingly concede. Company with a progressive image like Starbucks also had to face more of such issues when it got into international operations and expansion.
Ethical Issues in International Business
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