National Institute of Technology 2009-1st Sem M.B.A International Business IV Sem - - Question Paper

However and international division might have to depend on the domestic divisions for products to sell, personnel technology and other resources. provided the separation ranging from domestic and foreign operations this structure is probable best suited for multi domestic strategies those in which there is little integration and structurisaation ranging from domestic and foreign operations.

(b) Worldwide Functional Structure.

In this, every functional department or division is responsible for its activities around the world. For example, the manufacturing department is responsible for worldwide manufacturing activities, so also with finance, marketing, R&D, and human resource management. This design used by MNCs that have narrow or similar product lines. It outcomes in what is often called a U-form organization, where U stands for ‘Unity’. beneath figure illustrates the functional structure. British Airways is the next example for the U form of organization design.

British Airways is essentially a single business firm (it provides air transport services) and has company wide functional operations dedicated to marketing and operations, public affairs, engineering, corporate finance, human resource, and other basic functions.

Since every functional area deals with global market, specialization and concentration of functional expertise can be taken advantage of. Control of different functions can be exercised relatively easily. The global functional design focuses attention on the key functions of the firm. Managers can easily isolate a issue in marketing and distinguish it firm activities in other functional areas.

Q: six (C) What is social responsibility? Advocate why social responsibility is important?

Ans:
Social responsibility and International business:

An International business faces several challenges while undertaking social actions. 1 such challenge relates to managing the kind of government obtaining in a host country where subsidiary of an MNC is located. Militarized non-democratic governments operate in many countries of the world. Central America, for example, has been the scene of powerful military rules and attempted takeovers in nations such as Panama, Nicaragua, Guatemala, and Elsalvador. A small, wealthy class is sometimes allied with the military government, with its members serving in high level government posts. Human rights and democratic freedoms are generally curtained by the government. Labour unions, religious organizations and other interest groups are watched carefully by the government authorities to keep them from becoming political opponents.

Military regimes current serious conflicts and strategies issues for International business leaders. In an effort to generate economic activity, such regimes may make attractive deals with foreign firms. Low taxes, low wages, freedom from criticism in the press, and weak environment rules and regulations are among the attractions that a military regime can create through its power. Still, if a company knows that human rights are suppressed, that military leaders are filling their own pockets with money that should go to the country, an that corruption and abuse of power are part of the standard operating procedure, business leaders must pause and think about long term consequences. The strategic problem in this situation is: Do the benefits of doing business in such a system outweigh the economic, human and social costs?

Secondly, relations ranging from home country and host country pose challenge to the International business. If 2 countries are at war, for example, there will be no trade ranging from them. When Great Britain and Argentina went to war over ownership of the Falkland Islands, British companies, such as Unilever, obtained themselves in a serious dilemma. Unilever subsidiaries conducted business in Argentina but were barred by the government from doing business with the enemy Great Britain. Similarly, Great Britain ordered all British companies to cease commercial transactions with the enemy Argentina. Unilever was, therefore, under orders from the warning governments not to send or receive messages ranging from its headquarters and all its Argentinean business. The dilemma facing Unilever’s managers was resolved when it was determined that the headquarters and business units could both report to Unilever’s office in a neutral country (e.g. Brazil) without violating the dealing with the enemy rules of the 2 warring nations.

Thirdly, social actions of an International business are influenced by host government’s attitude towards foreign investment. Host countries use a variety of sanctions and incentives (“sticks and carrots”) to shape and regulate foreign investment, attempting to, lure investors but also trying to prevent excessive manipulation by them. Host country governments use laws, rules, and regulations to ensure that International business do not engage in certain kinds of conduct. These standards usually apply to all companies in a nation or to a specific industry. In a few countries, however, national governments may wish to o single out MNCs for special treatment.

However international businesses can meet the challenges if they design a corporate social strategy. The subsequent ques. are a good place to begin the process:

• Are we being socially responsible in what we do? Do we meet the expectations of our host-country as well as our home country? Would stakeholders in either country ques. our behavior?
• Are we responsive to the stakeholders in every country where we do business? Do we treat employees, customers, suppliers, local communities, and others in a fair and just way?
• Do we recognize emerging issues, as well as immediate social issues, in the countries and communities where we operate? Are we anticipating change rather than just reacting to it?
• Do we abide by the host governments regulations and policies? Do we have good systems for ensuring that our employees and the agents who represent us follow our corporate policies?
• Do we conduct business in ways that respect the values, customs, and moral principles of every society? Do we recognize that there may be times when they conflict with principles of other societies? Are we ready to address these conflicts in positive ways?

Firms that address these ques. before trouble strikes are better prepared to react to global challenges to corporate responsibility. They are better prepared to prevent cries, anticipate changes, and avoid situations that compromise the values and principles for which the firm stands. A corporate social strategy helps International managers achieve both the economic and the social goals of the firm.

International business and Ethics:
Two ethical problems are prominent in International business: bribery and corruption and work practices and worker remuneration.

Bribery and corruption: Bribery is a deliberate attempt to persuade someone (usually in position of power and authority) to act improperly in favour of the root of the bribery by offering money or gifts or any other material gain. Bribery has been at the root of corruption in many countries. Corruption is understood as the abuse of public office for private gain. The problem of bribery is controversial mainly because it depends on how it is described and practiced. In a few Middle East Countries, it would be perfectly acceptable to provide a gift to, an official or host as a token of appreciation for the time and consideration provided.

Work practices and worker remuneration: 1 of the main reasons for International firms to invest in production facilities abroad is to take advantage of the availability of relatively low cost labour in order to remain competitive in International markets. Indeed, they are actively encouraged to do so by host governments. The ethical dilemma facing an International firm is what kind of technology it should employ in the host country. Inappropriate technology, especially in a 3rd world country, may fall to make sufficient use of the host country’s resources and increase its technology dependence.

Because of the cultural differences discussed thus far, 1 might expect an International firm to vary its work practices to suit the local culture and avoid ethnocentrism. But does this mean the firm should.

Earning:   Approval pending.