GBA2013

CH. 6
Sep 22
The Challenges of Globalization

Globalization refers to the increasing movement of goods, services, and capital across
national borders.
- Is considered a process- an ongoing series of interrelated events
o International trade and financial flows integrate the world economy, leading
to the spread of technology, culture, and politics
o Globalization is not simply a trend or a fad but, rather, an international
system

How Businesses Enter and Compete in the Global Marketplace

Develop global market channels
First build a successful business in their home country, then export products
or services to buyers in other countries
Establish global operations
Locate manufacturing plants or service operations in other countries as a
way to cut costs
Develop global supply chains
Purchase raw materials, components, or other supplies from sellers in other
countries; work may also be subcontracted

Major Transnational Corporations (TNCs)

Defined by the United Nations as firms that control assets abroad
104,000 TNCs operate in the modern global economy
They, in turn, have nine times that number of affiliates (suppliers,
subcontractors, and other entities with which they have some business
relationship)
Most global commerce is carried out by a small number of powerful firms
Next slide lists top 10 non-financial transnational corporations, ranked in
order of the value of the foreign assets they control

The Acceleration of Globalization

The worlds economy is becoming increasingly integrated
Higher share of output is being exported across national borders
One-fifth of all goods and services produced worldwide is sold to other
nations, rather than domestically
This is almost double the percentage of 1960
In earlier years, most exports were of goods. An important recent trend is the
globalization of services, such as travel, insurance, financial, and information
services.
Driven by several factors:
Technological innovation
 Easier to communicate with employees, partners, and suppliers all
over the globe in real time
Transportation systems
Improvements enable the fast and cheap movement of goods and
services from one place to another
The rise of major transnational corporations
Bigger, well-capitalized, firms are better equipped to conduct business
across national boundaries than smaller firms
Social and political reforms
Rise of Pacific Rim growth economies, collapse of communism in
Central and Eastern Europe have opened new regions to world trade

International Financial and Trade Institutions

Three institutions that set the rules by which international commerce is transacted:
World Bank (WB)
International Monetary Fund (IMF)
World Trade Organization (WTO)
No business can operate across national boundaries without complying with rules
set by the WTO
Many businesses in developing countries are dependent on WB and IMF loans to
survive

The Benefits and Costs of Globalization

Globalization is highly controversial
Clearly, some benefit from globalization, while others do not
What are some of the major arguments advanced by both side in the debate
over this important issue?
ETHICAL Challenges of Global Diversity
Diversity and complexity of systems that transnational corporations face creates
challenges
If a company does business in a nation that does not grant women equal
rights, should that company hire and promote women at work, even if it
violates local laws and customs?
Should a company enter into a business venture with a government-owned
enterprise if that government has a reputation for violating its citizens
human rights?

Meeting the ETHICAL Challenges of Global Diversity

Notion of constructive engagement
By operating with strong moral principles, transnational corporations can be
a force for positive change in nations where they operate
In some circumstances this is not possible due to extreme conditions, provoking
dilemma
At what point do violations of political, human, and economic rights become
so extreme that a company cannot morally justify doing business in that
country?
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GBA2013
CH7
Sep 27th
Global Corporate Citizenship:

Global Corporate Citizenship

Refers to putting an organizations commitment to social and environmental
responsibility into practice worldwide not only locally and regionally
Entails putting corporate social responsibility into practice by
Proactively building stakeholder partnerships
Discovering business opportunities in serving society
Transforming a concern for financial performance into a vision of integrated
financial and social performance
Concept is consistent with several major themes discussed throughout this book:
Managers and companies have responsibilities to all their stakeholders
Corporate citizenship or responsibility involves more than just meeting legal
requirements
Corporate citizenship requires that a company focus on, and respond to,
stakeholder expectations and undertake those voluntary acts that are
consistent with its values and business mission
Citizenship Profile
- Research by Gradberg and Fombrun argues that corporate citizenship activities
should be viewed as strategic investments
o Create intangible assets that leas to improved legitimacy reputation and
competitive advantage
 o Particularly true of a global firm where citizenships activities overcome
nationalistic barriers and build local advantage
- Important for global firms to choose a citizenship profile which matches the local
setting

Management Systems for Global Corporate Citizenship

Global corporate citizenship is more than espoused values; it requires action
In order to become leading citizens of the world, companies must establish
management processes and structures to carry out their citizen commitments
Could be assigned to committee of the board, senior executive committee,
single executive/group of executives, or departments of corporate
citizenship
International Organizations that support corporate Citizenship Activities for Businesses
BSR (formerly Business for Social Responsibility),
Canadian Business for Social Responsibility (CBSR)
Corporate Social Responsibility Europe
Forum Empresa
The African Institute of Corporate Citizenship, or AICC Africa
CSR-Asia
Asian Forum on Corporate Social Responsibility

Stages of Global Corporate Citizenship (Fig. 7.1)

Stages of Global Corporate Citizenship:

- Is a developmental change process, involving new attitudes, routines, policies,
programs, and relationships
-

Assessing Global Corporate Citizenship

 As companies around the world expand their commitment to corporate citizenship,
they have also improved their capacity to measure performance and assess results
A social audit is a systematic evaluation of an organizations social, ethical, and
environmental performance
A companys performance is evaluated relative to a set of externally imposed
standards
The results of the audit are used to improve the firms performance and to
communicate with stakeholders and the public
Six benefits of Social Audits p.150?
- Identified by scholar Simon Zadek
o Help businesses know what is happening wth their firm
o Understand what stakeholders think about and want from the business
o Tell stakeholders what the business has

The Auditing Process

Companies have several choices in carrying out an audit
Internal audit: company hires and trains its own staff of auditors whose job
is to inspect factorieseither its own or those operated by contractorsto
determine whether or not they are in compliance
External or third-party audit: company hires another organization to carry
out the audit and report back to the company
Crowd-sourcing audit: company gathers information directly from workers
using their mobile phones

Social and Environmental Reporting

When a company decides to publicize information collected in a social audit, this is
called corporate social reporting
When companies clearly and openly report their performancefinancial, social, and
environmentalto their various stakeholders, they are acting with transparency
The term transparency refers to a quality of complete clarity; a clear glass
window, for example, is said to be transparent
Trend for such reporting is increasing

Triple Bottom Line

- Bottom line refers to the figure att the enf of a copanys financial statement that
summarizes its earnings, after expenses
- Occur when companie report to stakeholders not just their financial results- as in
the traditional annual report to shareholders- but also theur enc=vronmental and
social impacts
- Firms in europe
GBA2013
CH. 8
Oct 4th
Business-Government Relations

How business and Government Relate

 Government cooperates with business for mutually beneficial goals through
collaborative partnerships
Governments goals and businesss objectives are in conflict
Companies operating globally may find governments whose legitimacy or right to be
in power is questioned

Governments Public Policy Role

Public policy
A plan of action undertaken by government officials to achieve some broad purpose
affecting a substantial segment of a nations citizens
- There are public policy inputs, goals, tools and effects
- Think of a cell phone usage while driving
Public policy inputs shape a governments policy decisions and strategies to
address problems
Public policy goals can be broad and high-minded or narrow and self-serving
Governments use public policy tools involving combinations of incentives
and penalties to prompt citizens to act in ways that achieve policy goals

Types of Public Policies:

Economic policies
Policies that concern the economy such as fiscal and monetary policy
Social assistance policies
Policies that concern social services for citizens such as health care and
education

Types of Economic Public Policies

- Fiscal Policy
o Refers to patterns of government taxing and spending that are
intended to stimulate or support the cononomuy
- Monetary policy
o Refres to policies that affect the supply, demand, and valuye of a
nations currency
- Taxation policy
o Raising or lowering taxes on business or individuals
- Industrial policy
o Directing economic resources toward the development of specific
industries
- Trade policy

Government Regulation of business

Regulation
The action of government to establish rules of conduct for citizens and
organizations
It is a primary way of accomplishing public policy
Reasons for regulation
Market failure
 Negative externalities
Natural monopolies
Ethical arguments

Types of regulation: Economic

Economic regulations
Aim to modify the normal operation of the free market and the forces of
supply and demand
Includes regulations that
Control prices or wages
Allocate public resources
Establish service territories
Set the number of participants
Ration resources

Types of Regulation: Social

Social regulations
Aimed at such important social goals as protecting consumers and the
environment and providing workers with safe and healthy working
conditions
Includes regulations which apply to all businesses
Pollution laws
Safety and health laws
Job discrimination laws
And others that only apply to certain businesses
Consumer protection laws for businesses producing and selling consumer
goods

Antitrust: A special kind of economic regulation

- Antitrust laws prohibit unfair, anticompetitive practices by business
o If a group of companies agreed among themselves to set prices at a
particular level, this would generally be an antitrust violation
- Predatory pricing
- To main antitrust enforcement agencies
o Antitrust Division of the U.S Dept. of Justice
o Federal Trade comission

GBA2013
CH 9
TEST 6,7,9-16

Influencing the Business-Government Relationship

 - Business leaders and scholars agree that firms must participate in the political
process
o Stakes are too high for business not to be involved
o Government acts on issues that affect basic operations of companies
- Companies therefore must formulate a corporate political strategy
o Involves the activities taken by org. to acquire, develop, and use power to
obtain an advantage

Business as a political participant

Many business executives and managers see their role in the political process as
vital to the progress (and possibly survival) of their company
2011 Harris poll showed concern about business influence:
88% of public polled felt business had too much political power
87% felt political action committees (a favorite business political tactic) were
too powerful
At the same time only 5% of respondents felt small business had too power
in the political environment

Stakeholder Groups in Politics

Various stakeholder groups, representing many varied concerns and populations,
have a voice in politics and the public policy process
Labor unions have a longstanding role in U.S. politics
AFL-CIO (a federation of unions) and the Teamster Union have formed
political action committees to influence electoral races and legislation
Ad hoc coalitions
Diverse business organizations and interest groups band together in support
or opposition to a specific legislative or regulatory initiative

Types of Corporate Political Strategy

Three strategic types
Information strategy
Businesses seek to provide government policymakers with
information to influence their actions
Financial-incentives strategy
Businesses provide incentives to influence government policymakers
to act in a certain way
Constituency-building strategy
Businesses seek to gain from other affected organizations to better
influence government policymakers to act in a way that helps them

Figure 9.2
The Business Roundtable
One of the most effective organizations for promoting direct communication
between business and policymakers
Organization of CEOs of leading corporations
Studies various public policy issues and advocates for laws it believes foster
vigorous economic growth and a dynamic global economy
Considers issues like corporate governance, education, health care, and civil justice
reform

Promoting a Financial Incentive Strategy

Political action committees
Independently incorporated organizations that can solicit contributions and
then channel those funds to candidates seeking political office
Economic leverage
Occurs when a business uses its economic power to threaten to leave a city,
state, or country unless a desired political action is taken

Promoting an Information Stategy

- Lobbying
o Lobbyists communicate with and try to persuade others to support an org.
interest or stake
Levels of Business Political Involvement 9.6

Managing The Political Environment

The role of the public affairs department is to manage the firms interactions with
governments at all levels and to promote the firms interests in the political process
Eight of the 10 most frequently performed activities by public affairs officers and
departments involve a political action tactic
More than half of the senior public affairs executives, 55 percent, sit on the
corporations strategic planning committee

Promoting a Constituency Building Strategy

- Stakeholder coalitions
o Businesses try to
- Advocacy advertising
- Trade associations
- Legal challenges

Ch16
Employees and the corporation
 October 18th

The employment relationship

Employees are an important market stakeholder group
Employees are responsible for carrying out the work of the company
At the same time, employees are dependent on the company for their livelihood
Nature of the employment relationship conveys rights and duties on both sides

Rights and Duties of Employees and Employers

Fig 16.1

Workplace rights
- Employees in the US enjoy important legal guarantees. They have the right to
o Organize and bargain

Right to Safe and Healthy Workplace

Occupational Safety and Health Act, passed in 1970, gives workers the right to a job
free from recognized hazards that are causing or likely to cause death or serious
physical harm
This law is administered by the Occupational Health and Safety
Administration (OSHA)
Since the agencys creation in 1970 the overall workplace death rate has
been halved

The Right to a Secure Job

In the United States, since the late 1800s, the legal basis for the employment
relationship has been employment-at-will
 Employment at will is a legal doctrine that means employees are hired and retain
their jobs at the will of (i.e. at the sole discretion of) the employer
The equal employment and other laws prevent discriminatory terminations as well
as those that would constitute a violation of public policy
Privacy in the workplace
Electronic monitoring
New technologies enable companies to gather, store, and monitor
information about employees activities. A companys need for information,
particularly about its workers, may be at odds with an employees right to
privacy
Management justifies the increase in employee monitoring mainly for the
reason of:
Employee efficiency
Office Romance
Requires careful balancing between legit employer concern and employee
privacy
Today most companies try to manage office relationships rather than ban
them outright
Drug and alcohol testing
Drug abuse costs U.S. industry and tax payers an estimated $181 billion a
year
Drug-Free Workplace Act (1988) required federal contractors to establish
and maintain a workplace free of drugs
About two-thirds of companies test employees or job applicants for illegal
substances, according to a 2011 study
Drug testing is typically used on three different occasions:
Pre-employment screening
Random testing of employees
Testing for cause
Alcohol use and addiction causes twice the problems of all illegal drugs combined
About 9 percent of full-time employees are heavy drinkers
Up to 40 percent of all industrial fatalities and 47 percent of industrial
injuries are linked to alcohol
U.S. businesses lose an estimated $88 billion per year in reduced productivity
directly related to alcohol abuse
Employee Assistance Programs (EAPs) offer counseling, rehabilitation programs,
and follow-up
Employee Theft and Honesty testing
Employee theft has emerged as a significant economic, social, and ethical
problem in the workplace
Employee Polygraph Protection Act (1988) severely limited polygraph
testing for employers and prohibited approximately 85 percent of all such
test previously administered in the U.S.
Although controversial, many companies have switched to written
psychological tests
Whistle blowing- When an employee believes his/her employer has done something wrong
or harmful to public and reposrts to media, govt, hi-level company