Concept Check 3

Basic human rights

Freedom of speech Freedom of assembly Freedom of movement

Strawmen approaches to business ethics

Friedman doctrine Cultural Relativism Righteous Moralist Naive immoralist

Global market opportunities

1. Decide which market to enter 2. Screen countries to identify target markets 3. Identify candidate countries by assessing each based on: 1. size and growth rate 2. market intensity 3. country's receptivity to imports 4. economic freedoms and country risk

Stages Model expansion as a process of organizational learning

1. Home market only 2. Indirect export 3. Direct Export 4. Foreign Production

Universal Declaration of Human Rights

A 1946 United Nations covenant binding signatory nations to the observance of specified rights. 1. Everyone has the right to work, free choice of employment, just and favorable conditions of work 2. everyone has right to equal pay for equal work 3. everyone who works has right to just and favorable renumeration ensuring for himself and family an existence worthy of human dignity and supplemented by other social protections 4. right to form and join trade unions

Advantages of joint ventures

Access to local partner's knoweldge Sharing development costs and risks Politically acceptable

Promotion

Advertising, Personal Selling, Sales promotion

experience curve pricing

Aggressive pricing designed to increase volume and help the firm realize experience curve economies

Country of origin effect

Consumers general perceptions of quality for products determined by where it was made.

Place

Distribution channels: Direct marketing Direct exporting Using an intermediary FDI

Most common ethical issues in business involve

Employment practices, Environmental Regulations, Moral obligations of MNEs Corruption

What can firms do to ensure ethical employment practices

Establish minimal acceptable standards Audit foreign subsidiaries Take corrective action as necessary

Marketing mix Approaches

Ethnocentric approach polycentric approach geocentric approach

Non-Equity modes of entry

Exports and contractual agreements 1. Turnkey 2. Build-operate transfer 3. Licensing 4. Franchising

Cultural Relativism

Host country standards should be followed

Born global strategy

If you wait too long, you miss the window of opportunity

Sullivan Principles (GM)

It was ethically justified for GM to operate in South africa as long as: 1. company should not obey the apartheid laws in its own operations 2. company should do everything within its power to promote the abolition of apartheid laws

Equity modes of entry

JVs and wholly owned subsidiaries -Greenfield investment (develop buildings and then set up) -Brownfield investment (buildings are already there, just purchase the building and set up)

Managers face uncertainty on many fronts

Lack of market knowledge Lack of international experience Perception of risk in dealing with foreign partners

Disadvantages of licensing and franchising

Loss of control over IP Loss of control over product/service quality May create potential competitor Lose full benefits of sales

Advantages of licensing/Franchising

Lower costs Less transportation costs Share resources from licensee/franchisee Lower production costs

Pull strategy

Mass marketing appeal: When: consumer goods distribution channels are long sufficient print/media

Convention on combating bribery of foreign public officials in international business transactions

OECD convention that establishes legally binding standards to criminlalize bribery of foreign public officials

Gatekeepers

People or corporations who control access to information, licenses and registration, cost of operations

Why do managers behave unethically

Personal ethics Societal culture Leadership Unrealistic performance goals Organization culture Decision-making process

Push strategy

Personal selling, industrial or complex new products, lack of print or media available distribution channels short

Strategic pricing

Predatory pricing, multipoint pricing and experience curve pricing

4 marketing mix

Product, Place, Price, Promotion

FCPA

Prohibits american companies from making illicit payments to foreign officials in order to obtain or keep business

Combilift

Rapid internationalization

Formal and informal barriers to entering foreign markets

Registration, Licensing, Taxation, Reporting, Inspections

most likely countries to offer bribes

Russia, China, Mexico, indonesia

predatory pricing

Selling product below cost to drive out competitors

Organizational culture

Set of values, ideas, attitudes, and norms of behavior in an organization

Price

Standardized pricing vs differential pricing

product

Standardized: Same product design across regions customized: different product designs each region

Friedman Doctrine

The only social responsibility of business is to increase profits, as long as the company stays within the rules of law

Rapid internationalization can be sucessful if

Venture capital is present Strong ownership advantages can be exploited And first mover advantages exist

ethnocentric approach

adopt domestic marketing mix for global markets

polycentric approach

customize the firm's marketing mix for each market

Grease Money

facilitating payments made to expedite routine government action

Righteous Moralist

home country ethics should always be followed

Product design consideration

infrastructure needs, culture, legal requirements, religious customs economic development level

Disadvantages of joint ventures

lack of control over technology Inability to engage in global strategic coordination Inability to realize location and experience economies

Standardize marketing mix advantages

reduces marketing costs centralized control of marketing efficiency in R&D Results in economies of scale-production reflects globalization trends Country of origin effect

geocentric approach

standard a global marketing mix for global market

Kantian Ethics

the belief that people should be treated as ends and never as means to the ends of others

Tragedy of the commons

when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. It is used at the expense of others

multipoint pricing

when pricing strategy in one market may have an impact on a rival's pricing strategy in another market