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Published by shanarch

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Published by: shanarch on Jan 26, 2011
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IBE – V UNIT – Conflict in International Business.Conflict in International BusinessIntroduction
Since the end of the Cold War the incidence of violent civil conflict has beenon the upswing. This is especially the case in poorer countries, with the last decadeseeing widespread civil violence in 15 of the world’s 20 least developed nations(UNDP). Consideration of such conflict figures prominently in corporate investmentdecision-making. A 2001 survey of the mining industry sought to identify the reasonscompanies refrained or withdrew from otherwise sound investments in the last 5 years.78% said political instability – in particular, armed conflict – was a key reason.Violent conflict disrupts markets and destroys infrastructure. Workers can be displaced or kidnapped and supply chains broken. Moreover, companies face accusations of complicity in violence, of fuelling or even causing civil war.On the strength of such allegations, some firms have been publicly shamed and targetedwith sanctions. They have faced popular protest, legal action, stock divestmentcampaigns and consumer boycotts. Prominent examples include Shell in Nigeria, andTalisman Energy and Lundin Oil in the Sudan.Business can finance – directly or indirectly – the repressive efforts of one group againstanother. It is alleged that that Talisman Energy is directly complicit in conflict in theSudan, by letting government forces use the company’s airstrip from which to launchraids. Talisman is also accused of indirect complicity through oil revenue being used tofinance military operations and purchases.Companies can benefit from a conflict situation. It was recently reported that Lundin Oil,a Swedish oil company, was granted a concession in southern Sudan. Allegedly, in order to guarantee the safety of the oil company’s operations and clear the area for a road to theconcession, the government waged a ‘scorched earth’ campaign against the localcommunities.Companies can be a target of conflict. Combatants may target companiesto gain indirect access to political decision-makers. The continued criticism of Shell’soperations in Nigeria in spite of apparent efforts at reform may illustrate underlyingsocial problems in the country more than injustices associated with the company’sactivities.International conflict is a state of opposition, disagreement or incompatibility betweentwo or more countries .
IBE – V UNIT – Conflict in International Business.International conflicts are conflicts that involve two or more nation-states.International business conflicts
are conflicts that involve business enterprises that arelocated in two or more different countries.“The international business community will increasingly need to promote greateeconomic inclusion and social justice in its operations, or it will be blamed focontributing to the conditions that lead to violent conflict.”
Conflict may of two types
: Constructive conflictDestructive conflictConstructive conflict:
In can introduce different solution
Power relationships can be clearly defined
It m ay encourage creativity and the testing of ideas
It focuses attention on individual contribution
It brings emotion out into the open
It can release hostile feelingsDestructive conflict:
It may distract attention from the task 
It may result in disintegration
Looser may go into denial
Damages co-ordinationConflict indicators in International business:
Strong public statements
Airing disagreements through media
Desire for power 
Open disagreement
Increasing lack of respect
Lack of clear goals
 No discussion of progress
Blocking or ignoring communication
IBE – V UNIT – Conflict in International Business.Factors causing conflicts between nations, there by affecting International Business:
Conflict typically emerges from a complex mix of causal factors, such as
insecure or inequitable access to resources,
competition between social groups for political power,
incompatibilities between groups with distinct value systems.
Personal differences in global issues
Role incompatibility
Power based Domination
Political Instability
Threat for Security
Terrorist activity
Inter communal violence
Abundant availability of valuable resource located in particular area – oil, water 
Environmental Stress :
Climatic change – change in rainfall
Resource scarcity – decline in water supply,
agricultural productivity,
Environmental related -Migration
Factors causing conflict in International business:
Business can cause conflict
over control of the resource or area
. In the Alligator Rivers/ Kakadu region in northern Australia, a national park was proposed, asubstantial body of uranium ore was discovered and the issue of Aboriginal landclaims was raised. Competing uses of the same resource-space have led to over 25years of unresolved conflict.

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