In Japan for example, where Starbucks opened its first international outlet, the concept of group harmony and social cohesion is more important in business relations. In China the business relations revolve around personal relation while in Korea for example hierarchical relationships or obedience to authority becomes more crucial. In Northern Europe a participatory style of management is in place. Southern Europe on the other hand has workers that resent the concepts like pay-for-performance and commission salaries.
Managers on international missions face the responsibility of having to exert authority while at the same time trying to be liked by the subordinates. U.S. managers put more weight on being friendly and liked whereas Asian and European managers exercise authority.
Businesses have become global with globalization taking the business world by storm. With global businesses the communication takes place across the boundaries of the continents and countries. This creates a more complex situation as different countries have different cultural and social norms. When people interact with people of different countries and nations these cultural barriers come into play.
There are many cultural differences and nuances that managers must know when dealing internally. Americans tend to use first names instantly in business dealings with foreigners but foreigners may find this presumptuous. In Japan for example, first names are used among family members and intimate friends so much so that even long time business associates shy away from using first names. Even simple phrases can have different interpretations as for example the phrase 'how would u like to' can have different meaning as it could be a command or a question. 'See you later' can mean the same day to some Asians while it would mean indefinite period for Americans. Sitting through a conference without talking is unproductive in the United States but it is viewed as positive in Japan if one's silence helps preserve unity. U.S. managers also put greater emphasis on short-term results than foreign managers but these concepts are also changing with exposure to the international arena. Similarly gestures can also have different interpretations. Therefore it is necessary to understand different cultural nuances involved in the international business.
International businesses have to with unfamiliar political systems as well as different government supervisions and regulations. Sometimes government officials and the general public and political activists view foreign companies as outsiders and are suspicious of their impact on economy as well as politics. Companies have to be ware of government takeovers of property and acts of violence directed against the firm. The examples of such acts can be seen in Anti-American protests on famous American businesses. Since, such acts are not uncommon; companies must formulate special plans and programs against unexpected losses. Political instability is therefore among the frequently cited problem which includes riots, revolutions, civil disorders and frequent changes of government. Political instability in particular increases uncertainty and thus business risk also increases. Although most companies would prefer to do business in stable countries but some of the greatest growth opportunities lie in areas characterized by instability.
Government laws and regulations also differ from country to country bringing new challenges for international firms. Host governments have many laws concerning libel statutes, consumer protection, information requirements, labeling requirements, advertising rules and norms, etc. International companies have to understand these rules and norms and abide by them. For example, in 1994, a coalition of consumer and human rights groups began to pressure Starbucks to adopt standards requiring improved wages and conditions for workers on the Guatemalan plantations from which it sources beans and Starbucks had little choice but to grudgingly concede. Company with a progressive image like Starbucks also had to face more of such issues when it got into international operations and expansion.
Ethical Issues in International Business
Ethical and human rights lapses can seriously effect corporate operations and reputations
Any company should tackle ethical issues well and should not try to rub the harsh issues under the carpet compromising on ethics and morality. The act of knowingly employing atrocious practices to protect operations, and abetting the human rights violations is something that is heavily critiqued by the supporters of ethics, morality corporate social responsibility. Compromises on ethical practices for minor and even bigger gains reflect badly on an international company and its standing in long-term.. If an organization becomes unethical in its practices then word of mouth spreads like fire in the jungle. The reputation of the organization also affects the professional conduct of the employees. Following good principles of governance and conducting business ethically inculcates in individuals a sense of discipline.
There are many way in which an international company deals with different stake holders. Dealings, with customers, suppliers, shareholders, employees, business partners etc. are the part of the routine business life. Window dressing, fraudulent dealings, misrepresentation in financial matters and all such deceitful acts are common in businesses but companies that adhere to basic ethics make a first move in pre-empting any under hand dealings or deception by its members. If the ethics is taken seriously by the organization than employees also owe its responsibility towards ethics. Ethics also relates to dealing with the employees. Starbucks, for example, are helping workplace equality evolve by developing a set of corporate guidelines concerning LGBT employees' treatment.
In the event of tricky political situations management has to adhere to stringent corporate policies & practices that are ethically sound and should steer away from any sort of affiliations with government. Government protection can not succeed the businesses only. It is the support of the community members that can make a business success. If the company involves the community and workers then the situation can be redressed.
As more companies go global, the ethical issues of human rights like child labor, fair wages etc. has come to the forefront. Americans pride themselves on respect for human rights and companies with international businesses have emerged as positive agents of change. More and more companies like Starbucks are trying to address many issues and problems in the host countries through philanthropic efforts to support educational and social programs in developing countries. "Starbucks coffee takes a proactive response to social issues by funding programs such as 'Pied Crow' a children's literary magazine distributed to more than 14,000 primary schools in Kenya. The magazine uses colorful pictures and stories to provide information on health and sanitation, environmental issues, starting a small business and prevention of AIDS" (Daft, 1997).
International business requires different concerns and management has extra responsibilities when dealing with alien cultures and socio-political environment. Ethical concerns also become truly important because it concerns not only the repute of the company but also of the country to which it actually belongs. Starbucks has established successful businesses all over the world and has maintained its reputation of a responsible global citizen but its stints in international businesses have not been without its share of criticisms. Starbucks branding ideology has worked for its management but Starbucks and several other companies have to be more alert for devising international policies and should give more importance to environmental elements like culture, economy and politics.
Stopper, W. (2004). Establishing and Maintaining the Trust of Your Employees. Human Resource Planning. 27(2): 21+.