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    IB 2nd year lecture

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    92 views43 pages

    Img 3497

    Uploaded by

    sonakshi singh
    IB 2nd year lecture

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    © All Rights Reserved
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    of 43
    _ Seam even mas ne raoMGy pSUBUUTUTY I RUgUST CUNY, AvANaDIe at Nttpy/ cessed on 29 July 2011, and United Nations Statistic Division, “Country Profile last accessed on 12 September 2011. ilible at httprtidata un.otg/Coun INTRODUCTION After reading Chapters 1 and 2, you must have understood that international business is much more complex and, therefore, different from domestic business. Chapters 3, 4 and $ discuss the basic elements of the international business environment and emphasize the ways in which they are interconnected while looking at them through individual prisms. ‘The economic environment of foreign countries and markets helps managers to predict how trends and events may havea bearing on the existing or planned operations of their firm. Economic forces are among the most significant and sometimes uncontrollable deci- sion variables that international business managers have to consider both for their country of origin (known as the fone country) and for the country where they intend to do business (known. as the: Host country), Economic forces include ¢conomic stability, the existence and influence:of capital markets, factor endowments, the size of the market, and the availability of good economilc infrastructure such as transportation and communications. The economic environment of an international business consists of several variables such as the economic system, the level of economic grewth and development, and the fiscal and monetary policy of the home and the host country, all of which have « bearing on the economic aspects of ‘business decision making. A business firm needs to evaluate all these variables in order to succeed in the international arena: Managers need to understand the nature of diverse econa- mies.around the world if they are going to make wis investment decisions. Here, we will first describe countries according to economic system, income level.and location. ‘Then we will look at key economic indicators, such as economic growth, inflation, au osesiand deficits that affect the decision of the management on where to commit the ‘resources and efforts of the transnational corporation (TNC), ECONOMIC SYSTEMS Ean dhaka bee; sic rules of the game regarding ownership and con- An economic system determines are eercuie available put to multiple uses. ‘The decision-making framework ‘the use of economic resources in activities of pro- ee s and services for the satisfaction of human wants is known spe thelt concepts afosnership and contol of esources coun. capitalist ar market-based economic system at one end ‘state-owned ¢ tem at the otherend. Between ‘forms of mixed economic systems with features of both DSTERNATIONAL Bussiness Free Market Economy: market economy ie market exanamy ded by vale rf weiol the mean of ron and the heedoin ts ems tDicperate {et-ccaniomy, according to which am individuals pursuit of setFintexested esonomi Jeads to the greater good of onciety at a whole! This guiding principle isassociated wig, tallssn in ita purest form, that i, lalsce-faire capitalism, exemplified Wy the toch ‘US coomotiies in which It originated. Under this syrtem, the free fuectioning of the ‘+ ‘determines the answers th the central questions of what, how anil for sehcwn t9 Price, order to rmaxirlze profits, firms choose the cheapest melbeds af prockection of comy ty to: demand the highest prices. There are three central eemieats of the free may tem: (1) freedont of enterprive, (2) competitive markets, and (4) petvate property, maf enterprise i Freedam of enteepelse isthe right ofall Individuals ina wosiety to psrsue any eogea, ht oko Indivklsat in “activity in any form they desire, Freedom of enterprise flourishes in an open society is was 0 purse sryeconoric individuals are free to compete in'the marketplace ard accurnulate yrivate wealth. [py jy yi anty form they desire ‘se2-faire economy, the government takes.on a regulatory robe in response tox perceivediand i the social natural end ecoqomic envisonmant: Transparent and fair regimes of bee, regulation and a stable and timpartial legal framework are peeteqaisites for a heal bx -enterpante ‘Competition is the essence of the market econornyg which is characterised by vatuy ‘combinations of interaction between boyers and sellers in order to deteruisive a fale prise is ‘goods and services. The central economic decinions of what, how and toe wlsam to feeds iavan-economic system are based on the free forces of demand and supply. The key fxn ‘that teak the market economy work are consilmer sovereignty; that t, the righs of ccna et tn decide what to buy and freedom for companies to operate in the snazket, The couse ‘Ts lcewriae five to decide bow te spend the wages and property dmcames gemerated by ts Jabour and property ownership. Thus. this results in a competitive musket, ste onnerthip s lntid ‘The third clement of capdtaliem is private owmerahip of property, such at laboor anda centvesanctewtrin ‘Tal: Private ownership is linked to incentives and rewards in capitalism, The capitals wee infin theantemianms to aim to ensure thet reward from ownership ef property finds its way to the owner How veces that iheyinat ever the functioning of the captalteteystett has seen-an enequal ditiribatine of incec=e anal beshe tenetcanes wealth eading to wide paps berween the rich aid the poor. A-command ecomomy. ali kinénwn aw centrality plarmed eccrmy: ti based on the sec : f han etal apr propery ts == and decisions, ave de pricing end production sede wellate progr alles ft bee but have bee The tele of aatake in Si sxannple a: inte serious hhegueless “The nec revtuce mi tates te fr of econo ‘Transitic IGHOANC BeviRONE LES HnBR States represeet ro countries te matiat etd of thespestrum and Cubs and Nath cea represent Iwo. courtriea atthe command end of the spectrum. ta Hoag Katig and the — United States, the very stuall rule ln economic astivity desiring instead ta 5 ichecononué activity cam take plsce tn comaministcoun- tea {tles, gach as Cubs and North Korea, the government ll gwinh opel Contes tent wipects of hd the ‘SeOnomIC Setivity. China isan example of x eoentounie country that hax made the tranutiocy ‘from being & cosimand econaeny to market ccscanny wih astra role fo the tite. Mixed Economy ‘The mixed econai ‘state sritich originated in the aflerraath of the Geeat Depeticion ix the United States. Coan although the state owns significant resenufces, the allocation ofthe resources cones trom the market-price mechantint ‘The model of marken socialit givet 4 dliyrmabon tof worl jus ‘Boe to capitalists and is characterized by state ownership in hey sectors and extensive soctal ‘wellare programas aimed at reducing the inequalities Inberrat tn capstaliem. The spstern allows for both state and private ewnership of industry. The siahe wsually kexpe indwitriee ‘which are crucial or national inte‘est under ie comtrol sch as hevyy ity, backing, of) and airlines; to ensare that they continue to fanction even ih tbe sbtencef profitability and {6 adverse chrcumstances. Maintaining public enterpriam and running soclal welfare pro- grammes imposes a hage burden cn the state excheguee aud we reeponatle for the bodget deficits discussed later im the chapter. . cp idslans presi lpee neato tote Auraria dud it allows supply and demand gprerniena ume sceort> ee Adore) to tet prices. A mumber of industries, including electricity pan bel toilenys and mictrserys re ucaet partial or complete tate ener, “have been tender strong pressuse to private under European Unie (EX) membership. rte i alse endergotng a change in thls repard, For exam the scquitition ef pull in which Uihed piLEll ice ‘had a 48 per cent stake, wat aa ee ncn ake ery ele wa face cy exits Betvocen the: niarket anit eoomiand yyeenia. Ie n'charactetited — Temntaed acomomy ex Mlerprise ln tome sectors, and significant sane cwnership and gowernment plan: becewenthemerie’ on lng in others. The fundamental concept uiderlying this concept tthe notin ofthe welfare commoner RSET IDI tries sath aa the United Kingsiom, France and Swedes fetlawed this mode! in the developed rope rome sero ‘world, at did Indi and Bean amooige the develop tout len es apse rane anv ‘Another tern} used ta deteribe the mitned canopy ts ssarkel aogllig. Ip thls eyvtem, ondgocrmment wien nce e rystera to another. A wansiben eooneen - Set ie tai ‘one thatta moti tb fitna oer one econ a jeri Union Jada re ‘What does transition meant In general, transition implies: © Liberaliring economic activity, prices, and market operations along os resources to their most efficient use through opening up and lower; i PB ofa + Developing indirect, marketoriented instruments for tiacroeconen, hey ‘tion ‘with s primary focus om bringing inflation under control, eee demand that fellows liberaltiation usually leads to high levels of islation, ya requires dicipline over the government budget and the growth of ry vey (iscipline in Buca and monty pli). and prowess vards visting ‘Achieving effective enterprise managemeitt and economic efficiency : elec, uso Sk to ensure the creation of viable productive epterprises capac? © Imposing bard budget constraints, which provide incentives e to improve effin tiga latina al pal arevoc ear propery co ‘ae andl transparent macket-emtry regul ‘Property rights, thenb, ‘The process of transformation In addition, the various. ee recat ime Ppl ewe mace ee eats Significant opportunities fr TNC Atthe counties in tansiton have beralled aloes Fr nett Cui word. many feign companies have increased heir experi n addition, ty sjialites eats le abana ld ‘sompanicsand enter the market through scquisiticas= ‘The last cenhiry hes witnessed massive eeenaria tu the economic ‘1918, in a violent movement ate aah = : 08 flan development for the next 74 years, Sear plasty tally elccond sil ‘badget constraints, 9 carmicn - sere people btieve ia lod ear AU tenance teative constrains while x conta struggle ging on with Bacal and monetary reform. Chine The Peoplét Repablic of China is an ancient ctvilleition, coms nist rule sige the revatio of 1909. It ideological Se cae ee es ao eral changes ta the tenure of communist rule. The early yeasa, based on the teachled! ™ ‘Comucian cal yg toe eureunity ha Japan Japan faced ‘of ecooomn nds ate supported, ‘ead conte Dusioes serena Thee tothe not seb int Thee bay exempt © County oe ae Hes OF ithiode Matkism“Leninigen 42 phat ania at time, tc ‘wert owned by the site and private enterprise was nelther Liberal, i nee Carat Forms were initiated under the leadership of Deng Xinopiog in'l974, to iano eam Sway from central planning, government ‘Swnershlp, and import pate Pa Mopehens Srtater decentralleation and an opening up of the economy omy has proven : average annual sate of 10, eee Hitthgarrehies 1990 to 1999, itgrew st an all enter. permitted ‘These economics had soveral features in Sonunon, bat also significant differences. ‘They ‘wereall mixed economies, combining market forces with sate guidance, Homers therene, sensiderable variation in their perception if the role of the state, varying from a regulatory 2 more interventionist stile, asin Kores. While the Coafuclaa ethle ix Sentral fo the Asian model, this generalization alte conceals a good deal of cultural diver- sity: Some countries are predominantly Muslim, while in the countries that have a common Confocian cultural heritage, this heritage has evalved aver time. The family firm a1 a fesus ot layalty is much more prevalent in Taiwan and Korva than in fapan, where the Gompamy ux comunity han takers the plice of the farnily c ithe Herculean task of rebuilding {us indasttes oer World ‘War IDwith the ele f : js hence, isofien considered a “developmental Serer nmctakctoiea is ea cate er than simply a source of income. work ethic (ns Toahy than indi eames Boe the leodite cause in righ recteneamice acai le wil bctluy fgr ‘adapt ts pobal competition. ; Enot Aslan Countries “Te Ent asan consis ofS Koren: Sngapone. Twat aad Hep Kg, toes, hiss pe ere poner the Wau even ia” THY te ref! pata cratic. och athe Pippen, Malls stein and MAUS in theca neve of wate coptllg, which persained gorerement intervention inthe operwicn a, chernise ciptalict ecomsceny. This led tm spectacular growth Guritiy the 170s, Ly; Atha eal 10m wih amma hs inabrapt halk Py LOH7 wih setied of fact! cig _ Ray factors which cots hel groeh wre their eoeaman Chinese ‘Creofuctan work qth ar the: olef thr abate: For instance, Ti \coport ociectation Wonpsidr state-owned Indamrten in: bey pretove: Similars South Fang -seccanikeAevelipaens Gest pets 2 the large lacy owed conhierate. ests Feil renin expanded eranas ring the 18 ‘The cep aie of: alos ems I gronth to Mate intervention, but inthe Bars sc pesitive nnade unvatdsorelge deger Sevestncea (FDR) (Be ety state cas chem 5 ‘temational compasten wihin lc heeders Sangapotesns have tolerated a high dewere! sae ater finn, bt ree taa a ecanpin,athe goyernnt thas prs 4 economy nd coca bape Ts the bade if the “soul cece? ‘beowcen Regipereh preernres and in tree mln nhabetabs: Fellowing = aa Sa eh See ean Mer ini bth Yl lei eo es amis boulder str welfare burdens were ety Deperre mnie pride China ’ (Bia seared sway oem ate ceriod tywards copies 197K- uae u masave ‘Sune ol Userlealin Te key Sete othe Chee ods are bes tance ‘oarfet within the (tetreteerk of one-party rule Saat then, the CRineut cece bas gre Saati an weer aul ie of shout Eger cent foie tvree big tive cr lane tema fn dhe World Trade Onpasiraton (W10) further surnames hermits niwerds fore tle: Esooonu fred tango htedr he rong Soe na ‘freon ss bexrgroning srban middle cla, bet there contirise tbe whe “ariations le rial soe urban seandanks of bving sad borwrce ta proppennus vesantal areas eae! U8 raat bet Seu ECONOMIC INDICATORS — “Tha section enumerates sane Kees tha aye conser ioporton oe thing deci epldlng chesce of mart x rodecibn Watan’ of «hem by in Ieterpaticesl alow muraget Income Level and Oistribution ‘Ay determina of managerial devaios makings a5 atestencit of demand a he met ‘ender consideration An impoctast-varlible which indicates the siné af elfective dematel In tbe proms national incon (GN), formerly called the gross uattoral product (GNP. | TNTURNATIONAL BUSSES calculations can be misleading i'they do mot consider Wifcrey.., Seu kude desere een of living, per capita GNI Baste be adhuneay ts, power This.is known as purchasing power parity adjustment, and it allay, for comparison of living standards In different countries, For instance, Indiv gay) val buy moore goods anil aeeices in India than il will the Lnited sans <9 Aifleences in the siandand af iving: The concep of purchasing over panty (ppp ate ‘he number of unlts ofthe foreign currency needed to buy a certain aroun, of \gsrioar a ‘services In comparison to the number of US dollars required for the same Sa eee ‘What tt-the implication of all this for the international busin 88 Malaper) fara Poe aston 6 ‘in Iiving standard between» country Whe tein and the: United States signi ge the plantiicapectty fas eae pring pt thigh he poten Ils hatut meet peepee many predicts that may be highly priced. Hence, from a managerial pery tetas a ‘cy ith ale GNI like Inia tay neverthelee present huge rmarket porcine eee of ts bargectiing middle clam In fac. ip comparison ta eountries of the developed i, “Bae Dee cane Em mace iy ce hat pony é a Westar . ‘ is : people cbabed 3 Co ‘roductioe ahlft to its Pune plat for the manaixn, Pe eaten Meet oe thea ‘Economic Growth: GDP ae Betide ONL another useful enti indicator ifthe GDP which allows us: meee Sebi a ecoocsny ie owing, Tha, we se that Waeiaieelart sch tom Ga Soe ae ste etal hey low GN as compared to cheic more den ' oe SMES? seek icteric Ste See MAM sey vary they tng rt wher Seow ACoA (Gros domedth Tere ateton te whine Per cia ain te Peon ks to GDP per cpl for the oniespare rmutie OS a ee dobar ane Ao Maloy Cornparlaoeit of Aatlons economies, ceeccne vac ron cates fe with : onetasiGtid This is due ta the following reasoox. Frock matin eS Pilon ae Aeticleny te estan oft. arrive at-4 common base of US dollars Ef US Goll the WB und other inteenational egxacis going a matures raisons peogrest ‘The Bank exchange Seok hae ebeoprs uh fe hat year ata the previa two yeas ane detigaierecr Mane sa ee featre tomers Pee of Tete aie 10 teans of coin. hese ine ae cinly generally availabe ec: fewot tl HD per capita a merely an arth netic mean eta ‘Human deve Papallen Ate rr tate opening vignesé on tana The human do Hone, ae let WF can cachadle samarios A natin with w lowes GDP bat ¢ mon en co Bp oo ae ee S67 BS dnl ase can ee sient 2 SHeved aitintion of icon n'a nition save la oe tees Be ee Ale ut cote elec BEE 6 fie fer tle eM Ned GDP meomslesnpriueabal sind oan shaw cag ae tit lsrton ofc wihin ie noon Rooke abana ae vgn, ih tate of proweh can cosxisn with «very ancy! rd {0 Been « EANATIONAL BUSINESS | _ — SS)NACTION | Dalmle Expands ia odie Ss | The warts secon = —— iaegertlumarycrehicle mater Dei Plans bo Invest USO 7 ailion AG, she oof in India, According to-an Oct = | Tesces Gh msi Reecieieetueaeecs conor bins e ote ae | eam Theadgnion of the procuction is ‘estivatad teat ve ration, met or hwy goer wl fg. eS U0 14.7 bation by 205, “ay | soem by ae sana b iy, a be ord \ fat tiny wth, ah = if hes ler. ton Gross domestic product isthe weal market alse of deal i uve? ba aed very ie he Gemaesti a reeset eta ager? iar 2 Nt ae pe ccuanber hat pees pope on en of the wate ofc county temoamy. brother 5 0 tbe Meee alres an bru pou the ite of cennomte row a conatty and oneerc ' eet ote toa wore of bx macs Herr peo commen AO : ee ca aocpoea ne care tien re bei a soe the ‘pation’ progress and eel being cannot be Ete othe incnine goes ‘Asa result, se ber apn comedy icin nee jes rings pane messes iy to se ot popubiticg ew IEG cts f on in bee: thave A bage Deazing a2. of age contig wth high bir wats #8 markets for fast-moving consumer goods (FMOGs), hoy ich belp in the orerall growth ees ea, ‘When the majocity of a nation’s population falls within the work ‘ postctity ofthis group can produce a tise i the rate of economy, ot Py Meats ectaatigs of ils fact ren place ‘This Ls knoe oe dead in fact the combined effect of this large workis in aah daliand hiaman capital policies can effect ee “iin ce Mi : we phens felon cure and economic gow hs tale en » Soe mographic trends in the developing workl, asc, developiag coontries have been undergoing a dem, seek ines fe bh oon tes of movty ed eli Tenn 7k ies bi Lape hiot be ty This teansivion is py a er than those jmmediately before and cf eS ‘radial ying esha age structures: The East Asian aoe forefront transition; ‘Tegions, including Latin America, began, the a here ks an apposite concern in the devel Europe ros loped countries of Wr Gh vounE People her choose at to get married or nar no aca and a ceaeeefapan bas fice as many old paste pala the changing rr ; Weare. I=urbati ratio as more acd ee i r employment and highe: i ACOnonay Wik scustmmeiiurise cher idee aprient, Foreign er A ‘searcity led Sih tone ate ne os me E rate policy: which Varies heiwees Sagat 1 The hate eae ye theca tthe care re ‘Permbadble ecuiens mation All hse ‘ork eto the end of the ric ing peeary prods pain proce ed fed gece com forpedintia eda Ieoured oo beth rade thon Brit inthe 1eR0c and tatunen. it eed Bernt werd tari which taced then {Ue fre nae rant ars rote ef promotor setogical besa rechnoloen ce ins 2002 the pe market. Unciab! Inte the coustey Internot defic Arternal deficit | ‘ment expendi lead to internal sun state eter ecelel ntungie deficits ts the 9 the gervernamen Two impor reas follies 1. Fal pe and gore alee thi INDUSTRY Focus. {ntermationalization of Argentina's Manutacturing Sector SetTay corm 10 sales valerie anda bare presence ‘leading technological actors ‘hv atom Of these factor. FON roe Argentina has boen n decting im recent yoars although investment iutives have ikon vase form are here heen i avidly cf aan Of productive actyiry Outbound west from Argenta wat lity tted to neighbounng undeveloped coun ‘Unt, rex aeriad Oftime, It mcved to Dra anc the NAFTA _, COU a the Ue States, Menico and Canada with » “ney lift presen Aad. f thi conte, the ands ot foe iovestmeet By local buniess Ineo ich a Lon labo aoe Teer that were mance ny the dear, tak raterah ir Baa, Urecpany Baldy Uh production of soybeans. hi oper 1 Youn, the growing pleseret a! Argentine manutocna- 7 in the global ecorcmy bs a tint phase in the wm . {ution of en nde Beticy, ts moet eecere phase beer 3 wtswith corporatetiarigurency/ seere wider apni up to ghia trade ned capeal wth domestic ms faced by theca frrisintheiroutteund companies iepouricing sre eclnening themaniers to face had a relatively low invests iy AD) jeomnperitioa, z allowed to float, that is, fluctuate according to the foreign exchange sectesUnubte economic cottons such thes cto eerie note ‘nto the country, fr ‘ clement sea perere. | fternal ina given yea: There area ember of reasca ment expendinare exceeding ite revense elence spending, inctficiently 4 deficit, ictodling bugs velfane programs J Governments all over the “dead to internal aa Sift ete Ne ei cece eal whose louses are often subsidized by aed by governments co repute agartyste demand git policy instruments through the fiscal instruments of taxes ff policy refers to regulation dependent of the market and apn earn general rule, high level of tution to | crmmanownnnmest ae red tape Feads to the emergence and gro and oppressive government So a a sclicy incay policy Instruments are aimed at inflesci, ji rupply in the eccnomny, infs wed by the central bak OF the courtry yet 8 leerert rate through instruments such as changes in the bank rate ang operations. % ‘Countries all aver the world continue to use a variety of fiscal and Monetary pi, ‘binations for economic stabilization. 7% External debt ‘Many developlag countries borrowed beavily front international financial Insti» other governments during the 19905 to fuelexparsion. This resulted imam external dy, tocreditors outside the country, Expernal debt can be measured in two ways: (1) the total amount 6f the debt and in, 34 percentage of GDP. Increasing debt levels Jead to Increasing instability. Forcign ine, ‘peed to monitor debt to determine if the governinent will need to take corrective sctey reducer debt, normally by slowirg down economic grawih. CLOSING CASE | Index ef Economic Freedom Te Scale in which 100 represents the ideal falling eae sreonomic feedom score for the 2010 index: POLITICAL AND LEGAL ENVIRONMENT ‘After going through this chapter, you shovld be able 10: * ldernfy the dominant political ideolsaiis of tHe world © Understand the charging sele of tranesnia © Apprecant the difftrant dimensions of pot ‘Assess the dynamics of ethics in international business nal ane renional feces bn Shaping political systems al Frareworks in the neers Comruption seems to be India’s second mame. Politscians busi: fessmen and bureaiucrats are all inthe thigh oft ht it scaled unimaginable heights in the USD 40 bsfiion scam iewolving the Uunign telecemn minister ln the secarel generation (AG) spec- trum allotment, Almost-simultaneouniy, « housing scars was vunesrthed in Maharashtra, where # housing cooperative orig nally Intended far wat widows wes found to be illegally cor structed and oxcupled by bureaucrats in downtown Mumbal, Members of the coopetative included the chief minister’ reta- tives. Another real estate related seam hd the ehiet executive and saven others fram the public sector insurance giant Life Insurance Corporation (LIC) and state-civsed banks embyctled In it, On top of everything elie, it wis discovered that execu thves of the non-banking finance company Money Matters hod _been sanctioning large loans to builders in retum for bribes. ~ Hecomies 2 no sveprite to find India ranking poorly on the Corruption Perceptions Incex (CPi) published anrually by “Transparency International (Ti). Indiahad ascore of 3.37 2016, and even some countries fn Alsica. India was ranked 16 In the Asia-Pacific region and ‘had an overali mink of 87. China (3.5) was one rank anestt Asis ithile the leaders were New Zealind (9:3, Singepare 2 and Australla (6.7). Ower the years, thers hay been a deciee! India's ranking: It was ranked 72 (3.5) in 2007, 8 {3.4} in 2 ard 04 (34) In 2009, i At the Some time the Neveenber 2010 Global ‘Funct Inteority’s (GF report in Washington Incicated tha? Iela hil Soat a total of USD 213 billion fromy 14 to 2008 due t0 ic} flav. The total valve of iter sssets helo! abroad represent about 72 per cent of me see at inden underproune econcey which haa been estimated at 50 per cent of India’s GDP bt bout US 640 billion at the eed Of 2008) according ip TeDort. An Interesting point In the renort is that the outfit of iit funds has actually gone up in the pott-liberalnee Beriod. In the enlriion of some economists, liberalization ME led to a rise In adulation for the wealthy, regacciess of that wealth was acquired. Hence, there seems to be no 8 penalty attached ta having illegat weatth, and tcis rare fe one—businessman ot paliticiar—to be caught and pet forcortuption, In the West law ertorcement is regarded as ane of the least India regard the poli gemrupt prafeisions. In contrase, the majority of tha péople In just sero 34 corrupt, giving thar pride of place Infermation from Tho wh a noe hi inbaage School, “Caples ight: What Drives Comurstion in india lnta Kriawiedgea matter, 2 Decesbe: 2010, ne pertonupennaditecWarttte ited ASA Ut accrssed 0 90. igfipidoCUmanMtsTEOELS Tindal tia pet in ae ee INTRODUCTION ‘The nenes legal stvironinent is a critical variable in the successful operation of & pene seal area With increasing global business: sctivity, the interaction 8 ness in a tranuparent and stable business eavireament assimace geal significance. As the opening vignette shows, corruption seems to be a part of both the political and the business system, urd internal as well asiand caternal factors have a role to play in the political dynamics ofany country. The functioning of the political system depends ‘on internal government structares and processes as well as the impact of regional and global ‘The functioning of's TNC is also determined by the legal environment, which sets out the Tiles of governance. They define the parameter of logitimase business astivity through the laws enacted by elected legislative bodies, TNCs have to operate in countries with different political and legal conditions, This requires u careful analysis of the strategic ft between cor: porate objectives and the politica-legal environment. POLITICAL ENVIRONMENT “The term polities is derived trom the Gresk word polis, which literally nieans a city tate, that is political coma: Although the term poitis hus been talaly deine esBhaeg ie Lonction of contlic:resabution in sackehy a gencral definition ofthe tet refer tomeet at peoctises in which a social group gives be exerci ope td story 7% ad renal toa nelect few. This gives rise to the ntlon of the polcal yr Se cconcieny An decoy na sof inte- The pola apse # he ‘Th pla SpE bebo jayater. Polidea) deol. spsenofgoeerorceinat rand in hand with econo ke philosoptiy. For example, the potiteal | sorom Anieeciony 4 Jett ce Pt anal eh eared Soviet i. rf ; docwinas which is thebos _hih believes natalie eT? SF cekevaac of 8c Oras epositioal yale. pers, which form pe speaiony of portica oye (1) cect se "There are two broad seoclated with politcal systems ate the nations ae espe ence dese nhl section: society ay atcha over the Reet Pee as toe opal eine Oe collectivism, which traces wy thelr wages He thetefore, the fruir, OF state ente catitalist tn the saeiy fthoughe which, 1. Comin, aclieved coat es electoral systesn Jas shalaned the votesce of comment thing favourin cout ies auch 4s France. Germany: Sweden. the Norway, and $7 ; Poli ra ‘that = Retina | oS Qicaineccsunramcscs| = Ba ot iter cect ae eves ee ee nda = acide the niles of governance: Demweracy «et cwerrhOne, FoATEA,ANotmcasraontonsener | 4 links with the Action of demosracy (erally the powes of the people), ‘the basic feanuces of democracy ane: * The clectlon of representatives for w ined period of tise ‘© Anindependdent juisary wo protect individual property and tights Separation of the lepislirure trum the executive arm of the gavernment © The right toexpress opinions tcaly © Ando-political bureacracy aid deferice tnsfiasichare ® Accessibility 10 the decision-making prices Democratic: gavernnicitis ase found in countries wuch as the United States, Canada, the United Kingdom, Australis. and fndia, among athers Totalitarianism SEERA ‘Totatitarienkom i a system of government in which one individual or poliical party main "7 NMI A taina complete cantrel by vittue of seligiow bell, tribal power or ideology and cither refuses inne or pieced parry ‘th recognite other partica or completely suppresues them, Communism and fascism are ngomint complete ARS! ‘totalitarian concepes which stress the role of trong central governmhents, such as that of the ena ls el former USSR, China, Cubs, Noeth Kofea, Germany andes Hie, and Spain wader Franca, TO after the Sparta civil Was “Totalitarianism exists in different forms: x Enon forty of totalwarianisen, in which political and xco- et eutan tees tie Corcinibs blew Gs cea Clabes ‘of weulth Therefore, the government omns al puperty Re ere ee A i ee Ts operaaing paren ¢ Inde evakation of couiry Ate ge cn prignee eeg S = Penge, musta LEGAL ENVIRON The ing tonsa oh derpesel aad bene sie by ati Tepal ‘Mites causongl Senders bun the feamewar Legal Systems ‘ave rx mainly thine rac lam Chil awe Theres i aw ake pa ete Sd fo ‘There are hee ma eases af poh ak wid ae a in Denial Face anal Latin 4 1 hl tier: Any ares hat happen duns sndden ‘fuser is swosems se Caynion fon fas sage, ns Hes Wolaions or up sntooutyritin he ary ase SNe oh : orden There tere 2 Externat efarions gees eb urate i cre ao Bre acy pak fetal work: stoppage prose, the forced divestment afcpents the Joss of supplies and markets POUTICAL ANB LecaLenvixcoiuaner | 4. Changin podtieal loaderhap. Preqaent change in. political eaderip anne cbunyen taeperatiegregultir, uch asta on orsign exchange rmltnonest usr Iss ory asek Soch changer na ead tn hibensh of xing ectiets othe abeoves of ats investor's property ‘Types of political risk imere aie three types of political skh, which ine veline teach epee They are ai foe: ie Ghrererabip risky ty refers to a likely change tn the ours enepifg ot RUVETEARCE, waructure of & TNC, which be bon yout extreme, fern is the decitioe cof the host a" vDrment to nationalize ot transfer owner. Milde fore of owen ik eevsase ward ora foroal chang i lzwesimeh es that once conto ebdce thet abs foc ecareple. sharing owner we «foal fim. ts She 14 137 the Loan government evtablabiel sch odes tad seueaed iva irategic Sate tenant sr niReatenr end evennually witeeredccofemeny eee TOS 2. Operoticnal Gt eters a change i te "rie he gree URI the reas Cr eel co eh OF owemarship sik ut ean be ec vdcoapegl dt bauble renin rE x ance i; wefan comics fee TT TET at cocci nih rset te eee certain sectors EE paruaseecee RS lett exclostvely on the legal cou its pie ee et donee anc la The inp, fester are suntan, Fe utance Ja comme lav, Orcehin gh, se) ty soma tac and arepronially beter protected. Common Law. homrage TM, (ASEANL The meine ibe np. scopesben uppliodt natal dicaters, Civ law 8 asinclited with high, a ; aa) + Chri tends ws beens adversarial than common law because jodges rely ‘ecco preety #eci8og ces Thi ie ran lihand Atsetcan tw ftw tebe ecxnpetitiee. adversril erpmch hase bw evitement diffu te practice 7 “Reta peo gel ys tect ste that ic Peale es ope ede ee eck a nal lin ab the Bais of yesh, Countries sch Bndoveta wie Lies cma arc lm Bla ‘ine into exintence in the tenis century, has rerine repeats tai wccwerti te eahasen tae an Chirk feta = is moral rather than cemnmetsil Law acd ik more ike «code soet thich goreeens il aapacra of life. Ds the Context a eee ef interoational business he itn a meiegercel of Ta a ic a el aah hich ebids te payment of interest oc hos ecivee ces pe ec pletion yt ea i evn SS oe E desu enpeycl tanec bint pach aa ee eee quebec Eni il ey te eee ‘eat termes at a mh pcan be ai Tddabaan eee Sa eee ne eee Fae ee tri eile 8 eet went cach exber ana compeicrce x Farr ae 2h at oe ee eine wer sok eu wht So soe SCoperntions.At the internaticeal vel 0 industria Carmarge In eity Yo 0b 3 cnt | ha eneateng of toes 3 ti mata ues fC pene Ss ace od tt es Seek een bee Chopin ana bet we 6 | eet soem, UO fad not eS epilation aa repel et Asichins of Seuthens Anas = se (ASEAN). The more i evel. At the national level the ln of both the home and hist country rem tant and relevant fot s TNC, ahhoogh is & ufien difficult to detesr fiction és applicable in a particular case. integraved the region, the mage imnportaet ate the ln a edt thay a REGION Focus: | Insti Gamage a Bhopal ‘On 7 donee 2010, a lands checision of the diithick court at ‘Ghopat convicted all eight accused in the Bhopal Gan rage ‘Sy Inctuding the then Chairman af the indian subsidisey of Union Cartode—Keshus Mahindra. They were held guilty Under Sections 304-4 icauving death by neglgencet. 3° Wicullpabo homicide not amounting ta manite). sod 236, 357 and 334 [gers negligence) of the indlin Perel Coxe Sweniy throe years alter thé trial commenced and awarded, a maximism of two years imponoriment. For 25 yvine the “survivors had to not cry battle the alter effect ef the re ‘hy! nocyanate (MIC) yas. but asa govelmmenit apaahy and ‘Wdaerers Andetion, the chaiernan of Unien Carbite Compo PIF lion i an ama. eich was deny poms wh ‘appemnimately 122000 pope. “The plant vbr not desigoed to hance a ztaumeph of sruch a magrinude. At the tine of the dvastee, MIC was flow ng through the scrubber immara toneurralice MIC emissions) st ete B00 er ete capac. MC oe tank ws Mie 46:87 ber cent of fa Eapeciy ile th muni (eredentie bret was 50 per cqod Wms aso found tet weal iaauges and indicator in Wat MDC tan, wert defection AS 2 part of he BCE global concen dv, the repiat land cooking yates in tue foctory had beon that dn Br morta belo the divi ewer though MOC ik mand Bot zee Mero give Celta, Ti cataitrpie was ahs Wet rata of deaeh tod inpury ot tse Sheps plant in 1381, a plant operator wat led by = phone DSTERATONAL BUSINESS SET OCC eDIed pence ME ein org whine, hc ct inact, 0 OF 80 operas ol behoncar meine: fence hn the kos wary nove ofthoth home ant Coster, ee Eruiss IN INTERNATIONAL BUSINESS fo the values, norma Human Rights aa a these righ. aie re ace mamas ight reeds uphold the righ of ho evento of faoan rights abe rester oppoetiny Mata her | secregemed wih 5 beng vl ee dane eg wh pt lnklling deur eget arom and phn Mlecung dharchokfer gad crm desing prs he A conan perry shat seach there quarters oft tem (igh ean ete hl fem oad na Demat sn sopee of 1 fellowed cy by ta eine Of 1.8, felled by Glebally maceptabie corrspt Finland ays the Unind King Potency un the process of ace sae ell ak very igh PORE Sith arepaun, abe Sea dlstnte apd rerun fo COT reunion of public esrerse = Ube agape and sabent “ei uy diferent ‘Als Sezer smnsces Iconic like Fe secu of ey i hen thant nob if “deddte I POLITICAL AND LGAL ENViREniAhisey eedino uphold the rights of thove who are associated wath it. It implies s shift teow mete ‘prevention of human rights abyse (and the associated business risks} to the creation af preset opportunity. Somme facets ofthe sole of business In the centest af human rights are concerned with: ‘* Having the social licence tn operate and legitimacy in the eyes of ttakeholders ‘© Managing legal and operational rik ad reputstion © Modelling doe diligence and quality contral © Motivation and performance of staff, workers, and management - ** ‘Meeting shareholder and investor expectations © Codbficathot af existing practice and Lmpact '@ Strategic petitioning in bey markets including emerging markets Environmental Issues Feet ipo aay sine te ervopt a toda aly Pane ‘is comsnicnivirate with suntainable developement. This iraplics having a rysterm of environ ‘mental management, Inclading contingency plana for preventing. mitigating acd controlling ‘serinsn environmental and bealth daciage, alo suggests the adepticn of technology ad operating procedures that do not compromise the me of ratcral revources and emconrage recycling and safe disposal. Corruption and Bribe! ee Tureen wants cc alco purties which har an infisenct on the allocation of reicaces abd inves vignette ea ie denen tht oe eas isk the puniahinert suffered by viclating| camper ee eee eee ee provided by Tranmparency International tedicaes ee ‘lean results indicate 4 settont corruption ye PLS Kea reauod asin etd uth the Lin with Pecan b eee an Sandip g epee) by hag ser ioc cet sue oa a i owes to quality of Mf) atecriated Finland, there fa tremendous CuuTURAL ENVIRONMENT F monsoons Ake png thomg this chapte, you should be able aa: (© cert the differen dimension of cutture and its imolicatans for interiational business ‘© Eno thncferertFacenso! tha Cut.tal eibeerients Of scat “= Giamine behaviour factors e@jencing eourtses busines practises © Axett the importance of euural values anc mspeessionsin the modam géobal envircamant TT ‘Tw Chinese march tewerds capa fs penetrated every ‘eat and comer of tocial and pobical spew and Scie evirey “censured oF ans cure fat penta) the ery gest maitat. The ieapes of culture Globalization that arp visible iy ‘Cina nada inicate a eso for caumarien ted bythe Eingtors of ting fot wth op Met ard arlery batch bea lmagens nd contumer ads i cistomioed, meted and rrami hel to maken welcome 0 the Chinen, Fo namie: stn Coca-Cola and Pepel were fat impatied t0 Os, ew ‘People ied ther an they kunee 2 itera row Chinese en, ‘which had been Ce natignal 6A rink for Sve twa thou ‘aed jyebr, Then tarsnegona capes aed Coca-Cola and Pepa! eorulteted into tos Re and 84 Ree, meaning “poo tale and Fy" ant al ejoyabi” by Chena: Aa that thay quietly bream populyt inChina because the Chines abt great stove by sours and names. of things hat tpn bby Westen cultural critics a1 symbcic with-Fullioge: AB these adoptions wane strategies of glebaltation invented ta ope ‘the door af the Chinese mur. fi The McDonalds epsperaton tha has breaded the mets man: ket with 25.000 hranchiues in 195 countries Hatane per cent af fhe wreaks population bteally cating ou of ts Rural 20 ees fschters hich ape ocally tun ane corse tc kcal eet fegulacy recy thelr Segscra mens to conform ta calte® Mato nald hen shou 460th inchived icDonald estas ‘A bmallend big eles of China, ‘The frit one started in Shenzhen i 80 amin the =? Frese the stent ons appeared in Weongfujing. ihe busiest 27 SESE ere ting the ang comme Shier the werd by thon, e 5 8 ear a Rea Serves Sctnien spicy chicken, seaet so sand sather loca! nema: Skndlaily HRC: Pizza Hut. #! rice etd Ad ether cies in China ragulaty ale? Senile cereeomrteeelare ‘aw can have Peay duck served in 3008 deen a ts served ty Kh and mek ah tet {20d restaurants in Chien yey toro i sosiee mince atanege Fhe ony Shpete Ib & oncetnsanta seca eh? Himant of some deep-anbtie desine for the nem Modeth, 0d the Grate ugsitring an access to soot 0% of socal and etal EABaL The Chinese palate oot trea Wetierm ‘wine ane quer like thee familia aa the symbolic capital attached to them andserved in Chi-- North America. counterparts: Instead. they ace WRAL RaTOERForiyroute go yn Ice cues: 1, s0merNING, hese manner. French or Celrformian Fed win, Ft example, “Garam ltooration from shacho Ke Dior Lire Diferenct A Croat ‘om eaiabl ldo cabhaecalcceeing OSS A a associa mast neuen MERA YEE INTRODUCTION “The opening vigncus inthis chapters. pointer towards the emergence of albarderiess wort in arhich ccomornts glabalization i leading to cultural globalization ‘Also referred 10.5 cul- tural hemogenteation, cultural globalization refers to thie power of large THCe to create 3 ‘givbal consumer who demands global products nach aa the McDonalts burger the Nike Alternate promoted within the Local : pe cpatentualization and meaning ee-aitibeticm in which foreign © fresh meanings within the local receiving culture? “Today, buslriess tales place all thes between societies : anita a oe thermal ms Ob oh wclety The busines environ foe ee abusines oy ‘with the irtoediate it within culture refers to learned patterns of bet, ingen ween Path aes oi rom pares tht chide for behaviour prerest groups. the government, schools, and church, ¢ ba cing nd behaving tat ar developer then reinforced through wna cout and adjusting. is called accieturation. ‘This leads to learned. beg interrelated set of symbols Whose meanings provide a set af orientations for ¢.°h soclety! Hence, we can say that there are fiveimmpartant characteristics of cuj.y. {Culture 4 learned behaviour: The individual learns. through the expen. group, & Culnire isshared: The group transcends the individual and defines one trey snciety. 3 Cala 4s cormpelling: Sometimes individuals are not aware that thei beh, determined by culture. “4, Culture is imderrelated: Bach facet of culture can pot be unilerstood in isclitin nitst be studied as a complete entity. 5, Cllfure provides arientofiors Groups react in the sume way 10 a given simada fore, understanding culture can help to determine how individuals miges teats, ‘fereat situations, ‘Cultural Environment The world sl intemationel ‘The world ofimternational business today consist of people from diffecent countrin a! Rusoreniwres manages tutes coexist ts teal end wits workplaces. To be. successful {n international base oer owny oman r noe diferent -counizies and how to adaxt O% “ ime, managers etluoceatric approach snd are used to doing tae Sear sya sel oneness phils hem mee “ He ttituxle of "th e crank-cubunat inning oe thy Hapanese way” navi fore ee “rcreimte than lenmacren nad txter nem ofttamdiasandrant. ELEMENTS: slow genegrteuicon, ——‘Cilre a complet = rma ced Te aecd meee oe aU TATE te dere basic nat ecepeolen tome rightto fenedigtecrme ‘Language . ihey men Ire hiph-context Language is the key to culture ar it is the primary tea ‘cure. ipeotherhoed sat, which facitates sock interaction and fone ee much gon unis dpentog Language Mt more thun the Vobulay and geanisar that ake wy wreuea tl 0% fo. low-contert culture, comzycnication is clear and dicect point anal say exactly whyt they mean. Americt js 4 pod cx Soca OF Tr highiconess edardialic ice Goda Bercegieg eee serie bore speakers, each 10: this frustrating. 35 thd by the speakers; each is able to read between the Hines and interpret bosy language, Asian cultures fall into this category. For Americans, mecting people frem high-context cultures can seem: frustrating, as they are uouuse of where they stand, while thele Astan counterparts are unset ‘ed by their directness of approach, which may come across as insincerity, Spoken languages can, act both-as « common thread ond as a barrier between nations ard regions. Africa, for instance, has over a hundred languages for communication but French is the lingua franca or “Link language" of several former French colonies. actly as an ffee- five communication device for managers of internaUorsal business, Likewise, in India. the [rineipal official language is Hindi and English ithe secondary offelal langage, with 3 eral regional Langoages being used in different patts of the couatry. The opening op sf the economy since: 1931 has seen a huge influx of TNCs whose executives enc fimplish as their tain mode of communication. Communication dithculties for international hasiness managers arise when! The munager does not speak or imderwanal the tacal inguage, ‘The mutager speaks and understands the lungunge alittle, but not mufbclettly to uncer stand the nuances of meaning which are present in all languages, The manager has to eely on the services of a traulator who may wot be equally fucot in both languages ind either misses a point ot mlsizanslates i Knowing the local language ts a good idea for a mamager and helps thers to comntaunieate ‘better with the local workforce becacte: ©. Direct kagwledge of a language helps in acdear and explics undetstanding of the tua ‘tion. The hae fely 00 someone else to interpret or explain thing “ca Language provides ditect access to cal people, who ave fem more at eave ane com fortable in communicating with someinsc who speaks ihetr Lge @ An undetstanding of the local language allows she usage of implied meanings, PManEES ‘and ether information that is not stated ° cscs a local anges a Hnporsbcre AE eaten inadequate ot mvideading. d'|| DeTERRATIONAL buisness eee ‘There are tines when we may understand the languse bu Hf m08 thy abhough Australians peak English, there is alo the local j ue ng that ay eg Ftatons and confusion during communication. Ar instanceof Aug] nah “That was boogal aad the bevan ase washed down a sact-btock yi before jumping on hs trey to go back 10 ls prvi" Literally trnales os Mp ‘as great, said the rough young ma:nas he washed down a vanilla ice hes ihren bikce to go back to his govermment-built Canbetra house” Te ‘The same language can offen mean completely dlferent things to lee ‘sider the use of business jargon. fn the Indian context, cutting corts can mean i] tlio dover oe coffee and biscuits at sal meetings ta looking for cheaper ‘materials but ina European or American TNC 3 may mean that theyre hie tt bets oft stall, Another instance of different meaisings being attributed oe = when the tndian country smanager ofa Heth TNC was ovebced eying Ss eae as aubordinate, implying that he had baled uta junior; however. hls Beiah none thought that he had sacked the employe. Non-verbal Communication Nan-Verbal communication or the ungpoken Language ten says more than the spa ‘Unfortunately, the differences in custons among cultures often couse uae such enntinitiecation, ‘Gestuses ate a. common farm of cross-cultural communication bat wary from one sy ip ahother. Eryotional gesnares Nach ax bugging, Kissing on the cheek, and gevturigy wi your hands are commonly accepted practices in Mispanle and Latino’ cultures Tee am Commonly ued gesture of saying yes bs # forward shaking of the head in countrin Hirt Matted States and parts of Europe, but the Grocks, Turks and Bulgarians mowr ther bad Sideways to indicate the same. eligion is systeen of pared beliefs aid rituals that ane concerned with the real oe sacred” Religion shapes and influences leestyles, beliefi, values and antitudes aod Be} significant bearing on the beluviour of pecpte with each other and with wociety. Teo = approximately 15,000 distinct religions and religlous movements in the wotld today: he ‘permuanent. The two bax tenets 61 wirvase ae! beliefs Their teachings emphasize that tme® of birth, ait Hindutam Handuiar 8 p> coca dihrent the weed is seals (atmam fhe sar 57 ted evo Hinduism ‘Hindclsm Is prectised by more than’80 per cent of India? population and also in parts of Nepal, Bangladesh, and Bali It does not have a aingle founder or x central ahcoey not does iuhave any one sacred scripture. Ir in characterized by the fact that its followers worship several different gods through different sets ritual Most Hindus believe that everything in the world is subject to an cternal process of death and tebirth (samsara) and that individual souls (atmans) migrate from ene body to anothet. They beliews thet one cin be liberated from the sarisars cycle and achieve eternal lis (nirynea) through yoga (puriication of mind and body}, devout worship of the gods, or good works and obedience to the lives and customs (charmas) of ones caste. ani Importunt aspect of Hiniiulam ls the caste system which has been the basis of social dom im India since ancient times, The highest caste, the Brahmins or the priesthood, ‘was followed by the warriors ot Kikatriyas and then the mefchast class or the Vaishyet and finally the lowest cast o¢ the “untowchables the Siadras, An indvidaals postion jn the social caste hierarchy was inherited and determined the work they were pevanitied to, ‘Although the Government of Inia has outlawed discrimination based on the caste syttera, i occupies an Important place in India’ yoetal strata even today with both evonontic end jpolisical implications “The Japanese socicty follow’ & Hilir tacia order, Tegacy banded down Few the Toke va regiase of the seventeenth century, ‘The social stata finds the watrlor-adnuiniststoy Ccmntital at the tp, followed by the farmserr and artaana, then the merchant das, aad finally the slauphterers, butchers and tanners ‘whi eccupy’ the lowest rang of the social Tudder:"This social aystern exists even in the present day, with descendants of uve ows Japanese class Known asthe Bairakursin orthe "ghetto people” contimaing to work 18 small familly units producing kiited garments, ‘bamboo wares, fur and lather goods, end shoes and sandals Sloe jo fndla as a reform soovement agalnse the yrannies of Hinduism. Its ‘be traced to the enlightenment ‘of Prince Gautama as the Boddba as the ape of ofl the pleasures of a the path of arvana. He : ret de Hindusand the extceinies of sel-induletce, elf disc ae che eye of webby The Bidet teachings 91° goes through eiferent cpsles Confucianism ; Cactanism was founded ty Chinese philosopher Confoctus in the gf, ecroinieanirs aed fine thai a teligbr, The basic plage n , focianlam ta the family and loyalty towards the family. The Asian ration, otha s Japan are followers of the faith wad, hence, have sang family: ised rata agp, ny! tame of Coals inseparable rom Chinese cure ond cvzation, wig ig} dercloped when he set out 10 transfor ancient traditions Ito-a ystem capatge gg <4 atannal snr ‘onal and social behaviour, Confucianinn may be considered areligion, since Goa ey, guy teigiows este philosophy on the noth that al reality is subject to an eternal mandate fora beng, ¢°8 ack bm lati soe taught thst each person bears within himself or here the petciple at unset gg a emai {es the cultivation of which is it own reward. A second jrrinciple, i, prenctites.a peas, {mallactions and may accoon far the Chinese erphatis ain piers sel deferens ae oe : ic diay Treen a pASouphy propounded by Lao“Th, contemporary Of Confit Ig ee Ang Dali that al beings are an enibodunent of both male and female energici—in : : dg —_ayhs bot bale cs that gore the cosmos, Itt focused on meditation apd rituals designed to freethexgg) Surana ate tbe ee distractions and become empty and, thus, allow commie forces to act ypon aah bs Whee ama, fest ‘ounigy Ube Heel Shintolm “coer ieee ‘Gases 28 Shiatolse, subicb is Japan hncigenous religion, believes that the fiatding of Pe lian ealgion bas 3 7 -empize was a Commic-a&t and, thax, accords divine status to the emperor, cren tho ‘etarnns it ar ones sa emperor wat forced to senounce bis claim as apart of the World Wer ll settlement Ith lane the resrvestroat elaborate rituals of wonhip, However: small Shinto sbtiae adorrs many Jopanes: bee nanan i sha Teer pel islam Lac baieeed i frlam ft the second largest religion In the world after Chitstianity, with about 1:57! lowering the sant» followers: i swers coraprisiaig bout 23 per cent Of the world's population." The teachings af tame ethical tenets of lot ‘based on the Koran, collection of Aah (God) revelations to Muhammad, who lanes peel yee ‘by: Mualimsas the measenget of God. Misharamad was nat only the paophet af God, ba ‘hat becn insiruare ‘ed the fret Ielarnic state, ee ‘Por the Muslim, retigious nna is a part of everyday life. Idlamis code of conduct oi" joa cocrmecnia fovremat p for all aspects of life tnchading social relations. serial betas = ierescanibte for “for the conmuritption ef food and drink, and the role and acceplusce of women in society BE ‘exiplioyers feel th atic spiritual duties of pals of fah(1) accepting the cob workweek has 108 in the Messenger of God), (2) Ihave the samme de boirelplace, (3) giving acharit ‘early before Wear time, Valuesand A ‘Vakaen gee bask er retu(ys work togetlacy, there may even be strife within the workforce. Managers mast rexprect the religious belicts of others and adapt business practices to the teligious constraints present in other cultures. Of course, 1o be able to do this, they niust first know what the constraints iof those beliels are. ‘National institutions (in particular) and business firrhs try to adept practices that will satisty religious decrees without undermining modern business practice. For instance, banks in Islamic countries tase shaves to depositors and. charge barrawess’ fees and commissions to maintain profitability without charging interest. alnce bank interest is prohibited under Islamte law. In Islamis countries, from Saudi Arabia to Indonesia, believers do not eat hiring daylight hours during the month of Ramadan, curtailing lunch business at cestanrants but creating opportunities for traditional bullet dinners after dark. Religion also alfects work and social customs frm the days of the week an which people work to thelr dietary habits apd religioits celebrations. For example, ta most parts of the world, the working week lx from Monday to Friday, with Saturday and Sanday being boll; days, bat in Islamic countries of the Middle East such x Qanar anal Saudi Arabia, Fridiy anal, Satunay are the weekly holidays and the working week begins an Sunday, Similarly, Christ mas is the major festival of the Chhristians but Diveali isthe mayor festival of the Hinds, fs ‘coantries like India, which subscribe toa secular jyay of thinking and Lave » population comprising different faiths. anc religions, the Muslim festival nf Eid or the Sikh festival of (Gurupurab is ax important as the Hindu festival af Diwali, Religion has a strong iniluence on work ethics For example, the Protestant work ethic believes {1 is ones duty to glority Ged by hard work. 1X sigs bot of mpertance 19 98 pett tne evimvestrvent ef apltal Ths belief ed tbe practice of thi, mblch was sponte for the development of capitaisns in the United States” In eoraparlion she ditional His Fille tx a won-mmateriallatic way f i va mpensbl fa weak emeepeescutil of busiiiess, Ee ek tn China, Korea and Japan, Confucian Kleology 1s pupae > sets, helping in thelr economic success This 6 0 368 Jowering the costs of business, de: its others propa ‘ srecipracal obligations, dnd honesty to. dealing sthical tenets of loyalty, seo'P oval that oekers have towards thie cePlo¥ers gated by, Confucianism: ippapessieentaraes the two classes, that by, the workers 5 Lin se rar a reciprocated by the biewatags Wich fs oot wat factors j feeling of ty. ane Se veer workers and that ey may not ‘ ity of the young wy srs ene nara and some INTERNATIONAL BUSINESS: Inlamic hacis appewred on the mera scent as acti pay “© over te decades aga abhough many of the principles upon which blamic banling it haved Rave been common!y -exepted 2 ver Wi wed fr cemtuies rather thon dec- vsdes, Intamic trance was practised jsmdeminantly in the ‘MusEms world throughout the Muddie Apts. fostering trade. siod buns activites islam! that Ware frac wits be advanced that Fulopean Foanclert and bucressrien liter adoperd many concepts, techniques, and inutramarts ‘.llamle finance ty the present contest. corent acccurit ‘upline: of o-emporting idlamis tocntnes, the introduction ‘of trod macroeconomic and structural sons in Fanci Sorters the liberalization of capital mons (9 acontivatus greet of tid feared rr Thu ilar finial yruet hs ae Wd Ih a net of fey end Loe A ‘ery countable ieroase of capital meter koa orale. This prbibston a based ee argos if gece Sy sed property ight. lam enésurage the aug ted. "bat forbids the charg of iteret because pects deter ined cx port tbased on sctull elu smbatae succenafl and ai ‘he error thie tos es gaa ‘the peofite. This practice'is kriowm 4a nj A fe, money 6 abwars weit eninge sce tag becomer eee nen tien etn, esbutes te undertake a procsstve ac i eae tse see cis ab capital. not wher Ris poten Me Hiking he most develope part oii ‘a sytem, linc banks ee stereo hn Berenbated stay enews shaven (gs (ent depontt in order to erause tomnct pear tage mcke ya ee OF countries hie fran weal Pakistan fee 10 wirah 10 angoge rllaost boring. eh | ‘este barks sac bank Resquartared in blir ne | (let pecrlde such hikamic elnciows. Francine suchas Lariion Zune Gepava egg Stigagore hue ever medined or changed exit ben

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