UNIT V - CONFLICT MANAGEMENT AND ETHICS IN INTERNATIONAL BUSINESS MANAGEMENT
Disadvantages of international business:
 Adverse effects on economy
 Competition with developed
countries
 Rivalry among nations
 Exploitation
 Legal problems
 Publicity of undesirable fashions
 Language problems
 Dumping policy
 Complicated technical procedure
 Shortage of goods in the exporting
country
 Adverse effects on home industry
Conflicts in International Business:
 Business and financial institutions have
an important role to play in avoiding or
resolving conflicts that are associated
with economic production.
 International conflict is the clash of
interest between the host country, home
country and MNC or the firm related to
these two countries.
Nature of Conflict :
 Functional versus Dysfunctional
Conflicts
 Competition and Cooperation Conflicts
 Social, Ethnic, and Racial Differences
Conflicts
Types of Conflict:
1) Individual Level Conflict:
 Human behaviour is need motivated. A
person joins any organization to satisfy
his needs.
 An employee faces a conflict within
himself when he perceives that
organization is not satisfying his needs
in accordance with his perceived
standards.
Individual Level Conflict – Types :
 Intra Individual Conflict
 Conflict due to frustration
 Goal Conflicts
 Role Conflicts
 Inter Individual Conflict
 Personal differences
 Information Deficiency
 Role Incompatibility
 Environmental Stress
2) Group Level Conflict:
 Intra Group (Within the Group Itself)
 Facing New Problem
 New values imported from
Society
 People from different socio
economic background
 Inter Group (Between Groups)
 Competition from resources
 Task interdependence
 Jurisdictional Ambiguity
 Status Struggles
3) Organizational Conflict:
 Intra Organizational Conflict
 Horizontal Conflict
 Vertical Conflict
 Line & Staff Conflict
 Inter Organizational Conflict
 Between Organizations
pursuing similar objectives
 Between Govt. Agency &
Organizations
 Between Head Office & a Mfg
Unit
UNIT V - CONFLICT MANAGEMENT AND ETHICS IN INTERNATIONAL BUSINESS MANAGEMENT

Sources of Conflict in International Business:  Negotiation is any form of meeting or

 Host Country Factors discussions in which you and/or the
 Home Country Factors persons you are in contact with use
 Combined Factors argument and persuasion to achieve an
 Host country factors: agreed decision or action.
 Size & Equity – Alan Fowler
 Sovereignty  Negotiation can be between home and
 Information Disclosure host Government, foreign company and
 Visibility local company, foreign company and
 Regulation & Competition Employment host country Government and the
Technology company with its home Government.
 Balance of Payment Role of Negotiations:
 Taxation  Persuade Opponents to revise their
 Specific concerns of the Least BATNAs (Best Alternative To
Developed Countries Negotiated Agreement)
 Home Country Factors  Determine the other Party’s Interests
 National Security  Re-Assessing one’s own BATNA
 Dumping  Building Trust
 Embargos & Sanctions Factors Affecting Negotiations:
 Export & Import  Language Variation
 Control Balance of Payment  Trust
 Local Industry  Cultural differences
 Local Jobs  Professional Conflict
 Combined Factors  Negotiated Goal
 Nationality  Protocol
 Business Practices  Communications
 Taxation  Risk taking propensity
 Local Laws  View of time
Conflict Prevention Strategies  Decision making system
 Participative Decision Making  Form of agreement
 Collaboration & Team Building  Power distance
Conflict Resolution Actions in IB  Personal style
 Contracts Negotiation Process:
 Resolving Disputes
 Local Courts & Local Remedies
 Principle of Comity
 Litigation
Negotiation in International Business
 Negotiation is face to face decision
making process between parties
concerning specific products.
– J.L. Graham
UNIT V - CONFLICT MANAGEMENT AND ETHICS IN INTERNATIONAL BUSINESS MANAGEMENT

Role of International Agencies in Negotiation: Ethical Issues:

 Role of International Finance  Sexual & Racial Discrimination
Corporation in conflict resolution (IFC)  Human Rights
 Role of Multilateral Investment  Price Discrimination
Guarantee Agency in Negotiation  Bribery
(MIGA)  Ethical dimensions of Labour
 Role of International Centre for conditions
Settlement of Investment Disputes in  Harmful products
Negotiation (ICSID)  Environmental Issues
 Role of International Chamber of  Telecommunications issues
Commerce in Negotiation (ICC)  Intellectual Property Protection
 Role of World Trade Organization in  W.T.O
Negotiation
Ethical Decision Making:
Ethics in International Business:
Ethics is a set of standards, or code, or
value system, worked out from human reason
and experience, by which free human actions are
determined as ultimately wrong, good or evil.
Importance:
 Ethics corresponds to basic human
needs.
 Values create credibility with the public
 Values give management credibility
with employees
 Values help better decision making
 Ethics & profit Ethics & Profit go
together
 Law cannot protect society, Ethics can
Ethical Values: Problems in Ethical Decision Making:
 Utilization of Natural resources of the
host country  Rigid Rules and Regulations
 Utilization of Natural resources of the  Individual Values Vs Organizational
home country Goals
 Enter the foreign country through joint  Managers look for shortcut routes
venture  Competitive Pressure
 Transfer of technologies to the  Poor Decisions
developing country  Ambiguous Situations
 Develop the managers and human  Budget
resources of host country
 Discharge the responsibilities to various
social segments of the host country