Presentation on theme: "International Business"— Presentation transcript:
1 International Business Wendy JeffusHarvard Summer School
2 Introduction Chapter 2: National Differences in Political Economy Quiz #1: “Country Characteristics”Report Proposals Presentations (1 slide 2 minutes)Chapter 3: Differences in CultureComments on Team BuildingAssignment #1: “Culture”
3 Telepresence version 1.0 Submitted by: Fernando Zolko del Valle
4 Chapter 2: National Differences in Political Economy Wendy JeffusHarvard Summer School4
5 Political EconomicsPolitical Economics - Stresses that the political, economic, and legal systems of a country are interdependent; they interact and influence each other, and in doing so they affect the level of economic well-being.
7 Socialism You have two cows… … And the government takes one and gives it to someone else.
8 Communism You have two cows… … And the government takes BOTH and gives you milk.
9 Capitalism You have two cows… … And you sell one to buy a bull. Anonymous first source, although several websites have versions of this including:
10 Political Systems “The System of Government in a Nation” Individualism DemocraticCollectivismTotalitarianDemocracy and totalitarianism are at different ends of a scale with many shades of gray in between
11 Political Systems: 1st Dimension Collectivism vs. IndividualismCollectivism-needs of society are more important than needs of individualPromotes state intervention in economic activityCollectivism is expressed through socialism.Socialist ideology is split into 2 broad campsCommunism (believe that socialism can only be achieved through a totalitarian government)Social democracy (state owned enterprises run for public good rather than private profit)Individualism-emphasizes individual freedom in politics, economic activities, and culture.Translates into an advocacy for democratic ideals and free market economies
12 Communism & Socialism Current Communist Countries: Over 60 years years years years years years Under 10 yearsCurrent Communist Countries:People's Republic of China,North Korea, Laos, Vietnam, and Cuba.Source: Wikipedia.org Map shows all countries who declared themselves to be socialist states under any definition,color-coded for the number of years that the country in question claimed to be socialist:.Note: World Map:
13 Individualism vs. Collectivism Fostering independence and individual achievementPromoting self-expression, individual thinking, personal choiceAssociated with egalitarian relationships and flexibility in roles (e.g., upward mobility)Associated with private property, individual ownershipCollectivismFostering interdependence and group successPromoting adherence to norms, respect for authority/elders, group consensusAssociated with stable, hierarchical roles (dependent on gender, family background, age)Associated with shared property, group ownershipExamples: USA, GB, Australia, NZ& CanadaExamples: China, Korea & JapanSource:
14 Political Systems: 2nd Dimension Democratic vs. TotalitarianDemocracy – citizens elect representatives and political freedoms are granted by constitutionTotalitarian state – One person/party exercises absolute control over all spheres of human life (competing political parties are banned)ExamplesCommunist totalitarianism (North Korea & Cuba)Theocratic totalitarianism (Iran & Saudi Arabia)
15 Democracy IndexSource: Wikipedia.org Map displays the Democracy Index as published by the Economist in January, 2007.The palest blue countries get a score above 9.5 out of 10 (with Sweden being the most democratic country at 9.88),while the black countries score below 2 (with North Korea being the least democratic at 1.03).
16 Economic SystemsConnection between political ideology and economic systemsCountries where Individual Goals are prioritized Free Market Economic Systems are fosteredCountries where Collective Goals are prioritized there is State Control of Markets
17 Economic SystemsMarket Economy – prices are free of control and private ownership is predominantMixed Economy – elements of bothCommand Economy – prices are set by central planners, productive assets are owned by the state, and private ownership is forbiddenThere is no nation that has a pure market economy- Macroeconomics for Today by Irvin B. Tucker p. 491MarketMixedCommand
18 Legal Systems Common Law Civil Law Theocratic Law Evolved in England over hundreds of yearsBased upon tradition, precedent, and customJudges have the power to interpret the law so that it applies to the unique circumstances of an individual caseCivil LawBased upon a very detailed set of laws organized into codesCourts interpret civil law with regard to codesMore than 80 countries operate with a civil law system; these include Germany, France, Japan, and RussiaJudges have less flexibility than those in a common law systemTheocratic LawBased upon religious teachingsIslamic law is the most widely practiced theocratic legal system in the modern world, although both Hindu and Jewish law are still practicedBased upon moral behaviorWhy is law important? Businesses must observe: home country laws, host country laws, international Laws and Treaties
19 CorruptionCorruption will be discussed in more detail later in the course, for now it is important to note that its prevalence differs among nations.U.S. - Foreign Corrupt Practices ActThe act was passed during the 1970s following revelations that U.S. companies had bribed government officials in foreign countries in an attempt to win lucrative contractsThis law makes it illegal to bribe a foreign government official in order to obtain or maintain businessThe act allows facilitating or expediting payments to secure the performance of a routine governmental action
20 Corruption Perceptions Index Developed by Transparency InternationalRanks countries of the world according to the degree to which corruption is perceived to exist among public officials and politicians.16 polls and surveys from 10 independent institutions are compiled to create the index.2007Denmark (least corrupt)Somalia (most corrupt)
21 Economic DevelopmentDifferent countries have dramatically different levels of economic developmentSource: Wikipedia.org World Distribution of Wealth and Population in the Year 2000
22 Human Development Index HDI (measures quality of life in different nations)Based on life expectancy, educational attainment, and PPP based average incomes.Developed by the United Nations, See:Map Source:
23 Economies in Transition Nature of Economic TransformationDeregulationRemoval of legal restrictions to free markets (i.e. energy, transportation, banking, postal services)PrivatizationTransfer of state ownership of property into private hands (frequently the same industries listed above)Examples: See the Privatization Database (Examples: Argentina (’89-’99), Australia (’80s), Japan (90s), New Zealand (’84-), Russia (90s), EU & UK (’97)
24 Property RightsXingbake Xing, means “star” in Chinese, and bake, pronounced "bah kuh" sounds like bucksThe name, logo, graphic elements and meaning are all subject to copyright infringement.The Shanghai Daily said the Starbucks ruling was the first of its kind under a 2001 Chinese law meant to protect well-known international trademarks.
27 Rum & Coca Cola "Rum and Coca-Cola," perhaps the best-known Calypso song of all time, became a big hit for the Andrews Sisters in the 1940s.Sparked a famous U.S. court case brought to establish the authorship of Trinidad musician Lionel Belasco, who had written the score for the song several decades earlier. (The original song was about a girl who became a prostitute in Trinidad.)The original author, Belasco, won recognition for his creation and also received compensation for the unauthorized use of his work.The U.S. protects intellectual property (i.e. inventions; literary and artistic works; and symbols, images, names, and designs used in commerce) because doing so “fosters economic growth, provides incentives for technological innovation, and attracts investment that will create new jobs and opportunities for all their citizens.”
28 Intellectual Property Rights (continued) Additional ExamplesThe "recipes" for makingPepsi or Coke constitutetrade secrets closely heldby the Coca-Cola andPepsi companies.The California Institute of Technologyprofits from its patents for the NASA roversby licensing their image to toymaker Lego.Barbie is one of toymaker Mattel'smost successful trademarks
29 So far…Country differences in terms of political systems, economic systems, legal systems, corruption, and economic development have been considered.QUIZ #1: What characteristics would you hope for as you select a foreign country in which to invest?
32 Report Proposals Report Proposal Presentations What country do you plan to enter?What product do you plan to offer?Remember this should be brief – imagine it is an “Elevator Speech”1 slide – 2 minutes (timed) – 3 copiesSuggestionsHave backup projects and countries in mind.Be willing to change!
33 Chapter 3: Differences in Culture Wendy JeffusHarvard Summer School33
34 Perceptions: “Americans” Americans are stupid. And they are fat and bad dressers. (England)Americans are always in a hurry. Just watch the way they walk down the street. (India)Americans are distant. They are not really close to other people -- even other Americans. (Kenya)Once we were out in a rural area in the middle of nowhere and saw an American come to a stop sign. Though he could see in both directions for miles, and there was no traffic, he still stopped! (Turkey)In the United States, they think that life is only work. (Colombia)In the United States everything has to be talked about and analyzed. Even the littlest thing has to be 'Why, why why?‘ (Indonesia)The American is very explicit. He wants a 'yes' or 'no'. If someone tries to speak figuratively, the American is confused. (Ethopia)The first time my American professor told me 'I don't know, I will have to look it up', I was shocked. I asked myself 'Why is he teaching me?‘ (Iran)Source:
35 Culture of a SocietyValues and norms are influenced by political & economic philosophy, social structure, religion, language, and educationValues – what a society believes to be good, right, and desirableIncludes concepts like individual freedom, democracy, truth, justice, honesty, loyalty, social obligations, collective responsibility, the role of women, love, sex, & marriageNorms – social rules and guideline that proscribe appropriate behavior in particular situationsTwo CategoriesFolkways (i.e. dress code, social manners, attitude towards time)Mores (i.e. punishment for theft, alcohol, adultery, etc.)
36 Culture, Society and Nation States Society is a group of people who share a common culture it extends beyond national boundaries (i.e. “French Culture”)Nation states are political creationsMany cultures can co-exist within a nation state.Example: Canada (“Anglo culture;” “French culture;” and “Native American culture”)Example: East Coast vs. West Coast, North vs. South…
37 Boston’s Many Cultures… Example: Boston“Italian Culture”“Irish Culture”“African Culture”“Asian Culture”“Brazilian Culture”“Turkish Culture”North End: Black Rose:the-black-rose; West African Dance: See also:Chinatown: Rio Brazilian BBQ:brazilian_with_a_dash_of_elegance/; Film festival:
38 Determinants of Culture Political PhilosophyCollectivism vs. IndividualismDemocratic vs. TotalitarianEconomic PhilosophyMarket Based vs. PlannedSocial Structure – Individual vs. Group & the class systemReligionLanguage – Spoken & UnspokenEducationLiteracy ratesAvailability of Skilled WorkersChapter 2
39 Social Structure Two dimensions The Individual versus the Group U.S. “Rugged Individualism” and the desire to be one’s “Own Boss” could spark entrepreneurship. Managers are more mobile and bring new business ideas (because don’t stay with the same company).Japan Cooperation and life time employment allows managers to gain extensive company and industry specific knowledge.Social MobilityBritain’s Class SystemIndia’s Caste SystemChina’s Rural vs. Urban Culture
40 Religious and Ethical Systems Economic ImplicationsChristianity“Protestant Work Ethic”IslamIslamic FinanceCharityHinduismSacred status of the CowPromotion & the caste systemBuddhismStress the afterlife
42 Language Spoken Unspoken Spoken Language Language is closely associated with culture.Countries with more than one language often have more than one culture.UnspokenBody languageThe “OK” sign is vulgar in Greece & Turkey“Thumbs Up” is obscene in Greece“Crazy” vs. “Smart”Personal spaceClose vs. AloofSpoken LanguageChinese is the mother tongue of the largest number of people.The most widely spoken language is English.
44 Culture and the Workplace Study on the relationship between culture and the workplace at IBM.Geert Hofstede40 countries100,000 employees
45 Culture in The Workplace Four dimensions of culture:Power distance - cultures are ranked high or low on this dimension based on the particular society’s ability to deal with inequalitiesIndividualism vs. collectivism - this dimension focuses on the relationship between the individual and his/her fellows within a cultureUncertainty avoidance - this dimension measures the extent to which a culture socializes its members into accepting ambiguous situations and tolerating uncertaintyMasculinity vs. femininity - this dimension looks at the relationship between gender and work rolesPower Distance - U.S. Managers in IndiaIndividualism vs. Group – Hopkinton Park ExampleUncertainty Avoidance – Student’s Comfort Level with Vague AssignmentsMasculinity vs. Femininity - Sweden -women in the workforce
47 Cultural Change Culture is not a constant; it evolves over time Since 1960s American values toward the role of women are changing.Japan is moving toward greater individualism in the workplaceExamples of woman participation/ Chile, Germany, Finland
48 Heaven & Hell In an ideal world… In a not so ideal world… The policemen would be EnglishThe car mechanics would be GermanThe cooks would be FrenchThe innkeepers would be Swissand the lovers would be ItalianIn a not so ideal world…The policemen would be GermanThe car mechanics would be FrenchThe cooks would be EnglishThe innkeepers would be Italianand the lovers would be SwissSource:
49 Managerial Implications Determine the educational profile of the countryAffects products offered, promotional materials, availability of skilled workers.Determine the religious profile of the countryAffects products offered, key marketing messages, and the work environment.Are there any major cultural issues that will impact your company?
50 Some Comments on Team Building Remember Culture, Stress, and Priorities all Play a Role in Your Success!
51 First Case Assignment Nike: The Sweatshop Debate Group 1: The Case Against NikeGroup 2: Nike’s ResponseEach group should present a 5-10min (timed) assessment of the case (answer case questions)All group members must participate.Due next class.Source:
52 Assignment #1 Handout: Assignment #1 Find a partner that is: Not in your groupNot from your “home” country