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CONFLICTS IN INTERNATIONAL BUSINESS Whenever two individuals opinion in different ways, a conflict arises. In laymans language conflict is nothing but a fight either between two individuals or among group members. No two individuals can think alike and there is definitely a difference in their thought process as well as their understanding. Disagreements among individuals lead to conflicts and fights. Conflict arises whenever individuals have different values, opinions, needs interests are unable to find a middle way. Individual level conflict: Intra-individual conflicts arise within a person and are of psychological nature. Many times, the individual remains conflict-ridden, but he fails to perceive it. Conflict due to frustration: Frustration model can be useful in the analysis not only of

behavior in general but also specific aspects on on-the-job behavior. -Aggression -withdrawal -Fixation -compromise Goal conflicts: another common source of conflict for an individual is a goal that has

both positive and negative features, or two or more competing goals. Whereas in frustration motives block one another -Approach- approach conflict -Approach- avoidance conflict -Approach-avoidance conflict Role conflict: an individual performs a number of roles. Although all the roles, which he

brings into the organizations, are relevant to his behavior, in the study of organizational behavior, however, his organizational role is most important. There is four types, Intra-sender role conflict Inter-sender role conflict Inter-role conflict Role self conflict

Inter-personal conflict: inter-personal conflicts arise between two individuals having competition for achieving scarce things, such as status, power, position, promotion or values.
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-Personal differences -Information deficiency -Role incompatibility -Environmental stress

* Group level conflict: 1. Intra-group: Intra-group may be thought in terms of group characteristics and to some extent interpersonal conflict, especially if two persons are from the same group. It may arise in three situations, When group faces a novel problem of task Where new values are imported from the social environment into the and When a persons extra-group role comes into conflict with his e-intra-group role. Intragroup conflict is visualized more when people con from different socio-economic backgrounds and have different political and religious views. 2. Inter group: inter-group conflict arises out of the interaction of various groups. There are many factors in the organization, which determine the inter-group relationships. Completion for resources Task interdependence Jurisdictional ambiguity Status struggles

Organizational conflict: In an organizational situation, conflict may manifest itself in a number of different modes. Such conflicts may be within the organization itself or between various organizations. Intra-organizational conflict: the reasons of conflicts in an organization are many but mainly three kinds of internal strains can be identified: -HORIZONTAL CONFLICT -VERTICAL CONFLICT -LINE AND STAFF CONFLICT

INTER-ORGANIZATIONAL CONFLICT: Its may include: -Conflict between Organization Pursuing Similar Objectives. -Conflict between Government Agency and Organizations.
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-Conflict between Head Office and a Manufacturing Unit.

SOURCES OF CONFLICT IN INTERNATIONAL BUSINESS: HOST COUNTRY FACTORS: The international business often creates direct conflict of the host country with MNC investors and MNC home country. The various divergent goals placethe host government and the MNC management at ods with each other. There are innumerable issues over which endless conflicts may arise, but the major concerns are as follows: Size and equity Sovereignty Information disclosure Visibility Regulation and competition Employment Technology Balance payment Taxation Specific concerns of the less developed countries.

HOME COUNTRY FACTOR: The number of issues for home country concern ar countless, but main concerns are; National security Dumping Embargos and sanctions Exports and imports control BOP Local industry Local jobs

COMBINED FACTORS: Nationality Business practices Taxation Local laws

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CONFLICT RESOLUTION ACTIONS IN INTERNATIONAL BUSINESS

1.CONTRACT: It is essential that conflicts in international business e avoided to the extent possible. One of the best ways to avoid conflicts in international business is to have a clearly drafted contract with all terms and conditions well-understood by both parties. 2. Resolving dispute: Despite the insertion of all precautionary clauses into a contract , disputes may emerge. Usually, the method adopted to deal with such situations is either arbitration or litigation, but there are some interim dispute resolution methods that quicker and less expensive. 3. Local courts. Local remedies : If dispute are not resolved by the informal methods, parties to the contracts have at least two possible paths of dispute resolution to pursue, commercial litigation and international arbitration , which assume that other method of dispute resolution have been ineffective. 4. Principle of comity: The principle of sovereignty provides for international etiquette in the form of countries reciprocal respect for each others laws and powers regarding the actions of citizens aboard. 5. Litigation : The litigation of international disputes involves the use of courts to apply both domestic and international law to resolve conflicts between parties.

NEGOTIATION IN INTERNATIONAL BUSINESS: Negotiation uses persuasion rather than power to resolve an issue. Although this is a fairly succinct definition and a good starting point for capturing the basic essence of what a negotiation is ,i.e , a communicating process with the intended outcome of reaching a joint agreement, it does not necessarily cover a large part of its salient characteristics. Basic elements of negotiation 1.process: The process refers to how the parties negotiate: the context of the negotiations, the paties to the negotiations, the tactics used by the parties, and the sequence and stages in which all of these play out. 2. Behavior: The behavior refers to the relationships among these parties, the cordiality of communication between them and the styles they adopt.
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3. Substance: the substance refers to what the parties negotiate over: the agenda, the issues, the options, and the agreement reached at the end.

Factors affecting negotiations: Language variation Trust Cultural differences professional Professional conflict Negotiating goal and basic concept Protocol Communications Risk-taking propensity-uncertainty avoidance View of time Decision-making system Form of agreement Power distance Personal style

Negotiation process: Planning Impersonal relationship building Exchanging task-related information Persuasion Agreement.

Role of international agencies in negotiation: Role of international finance corporation -IFC performance standards, common approaches, equator principles-opportunity to raise standards. -Importance of conflict risk -social and environmental risks

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Role of multilateral Investment Guarantee Agency: MIGA promotes foreign direct investment into developing countries by insuring investors against political risk, advising governments on attracting investment, sharing information through online investment information services, and mediating disputes between investors and governments.

Role of international center for settlement of investment disputes (ICSID) in negotiation: The international center for settlement of investment disputes,was found in 1966 pursuant to the convention on the settlement of Investment disputes between states and nationals of other states. Its an institution of the world bank group. In total, 155 countries had signed the ICSID convention. ICSID has an administrative council, chaired by the world Banks president, and a secretariat.

Role of international chamber of commerce in negotiation: The international chamber of commerce is an international organization that works to promote and support global economy, in the interest of economic growth, job creation, and prosperity. As a global business organization, made-up of member states, it helps the development of global outlooks on business matters. 1. ICC international court of arbitration 2. World council, national committees, and international secretariat 3. Business actions stopping counterfeit and piracy (BASCAP)

Role of world trade organization in negotiation: Step: 1 Consultation- up to 60 days Step: 2 The panel-up to 45 days for a panel to appointed, plus 6 months for the panel to conclude: Before the first hearing First hearing Rebuttals Experts First draft Interim report Review Final report

Cross cultural negotiation strategies: 1. Competitive negotiation 2. Problem-solving negotiation.

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INTERNATIONAL BUSINESS ETHICS Introduction: Ethics is a set of standards, or a code. Or value stystem, worked out from human reason and experience, sby which free human actions are determined as ultimately right or wrong, good or evil. Ethics may be defined as the science of the highest good. It is the science of the supreme ideal of human life. It is the science of the highest end or purpose of human life. This as the name implies is that part of business ethics that deals with international issues. It encompasses moral judgments made about these issues, as well as the various theoretical considerations connected with explaining and or justifying such judgments. Beyond this, the term has no precisely defined agreed upon meaning and it is used in many different ways to refer to a variety of topics. For some people it refers to the ethical dimension of any business relation involving two or more countries.

IMPORTANCE OF INTERNATIONAL BUSINESS ETHICS 1.Ethics corresponds to basic human needs : It is a human trait that man desires to be ethical not only in his private life but also in his business affairs where, being a manage, he knows his decisions may affect the lives of thousands of employees. 2. Values create credibility with the public : A company perceived by the public to be ethically and socially responsive will be honored and respected even by those who have no intimate knowledge of its actual working. 3. Values give management credibility with employees : Values are supposed to be a common language to bring leadership and its people together. Organizational ethics, when perceived by employees as genuine, create common goals, values and language. The management has credibility with its employees precisely because it has credibility with the public. 4. values help better decision-making : Another point of great importance is that an ethical attitude helps the management make better decisions, i.e., decisions which are in the interest of the public, their employees and the companys own long term good, even though decision-making is slower. This is so because respect for ethics will force a management to take various aspects-economic, social and ethical-in making decisions.
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5.

Ethics and profit go together:

A company which is inspired by ethical conduct is also profitable one. Value driven companies are sure to be successful in the long run, though in the short run, they may lose money. 6. Law cannot protect society , ethics can:

Where law fails, ethics can succeed. An ethical oriented management takes measures to prevent pollution an protect workers health even before being mandated by law.

ETHICAL ISSUES IN INTERNAIONAL BUSINESS: 1. sexual and racial discrimination : Various U.S. and European laws prohibit business from discriminating on the basis of sex, race, religion, or disabilities in their hiring, firing and promotion decisions. However , the problem of discrimination is still a reality in the world. 2. Human Rights : Corporate concern for global human rights emerged in the1990s as news stories depicting the opportunistic use of child labor, payment of low wages, and abuses in foreign factories helped to re-shape the attitudes about acceptable behavior for organizations. 3. price discrimination ; A major ethical issue in international business is how products sold in other countries are priced, when a firm charges different prices to different groups of customers, it may be accused of price discrimination. 4. Bribery: In many cultures, giving bribes also known as facilitating payments is an acceptable business practice. In mexico, a bribe is called la mordida while south Africans call it dash. In the middle east, India and Pakistan a tip or gratuity given by a superior, is widely used. The germans call it schimengeld grease money and the Italians call it bustarella a little envelope. 5. Ethical dimensions of labor conditions: A major challenge facing MNEs is the globalization of the supply chain and the working conditions of laborers. Pressures from external stakeholders to adopt responsible employment practices in overseas operations are extensive. 6. Harmful products: Governments in advanced industrialized nations have banned

the sale of certain products considered harmful. However, some companies in those nations continue to sell such products in other countries where they remain legal.
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7. Environmental issues and ethics ; Whereas many legal and ethical violations have limited impacts in the case of environmental issues the effects of abuses can be far-reaching and long-term. 8. Telecommunications issues: With the advent of satellites, e-mail and the internet, information can be accessed in a matter of seconds instead of weeks and as a result businesses can become the victims as well as the perpetrators of unethical actions. The ease of information access poses ethical issues, particularly with regard to privacy, that can differ by country. Some internet-based firms have responded to privacy issues responsibsly whereas others have not. 9. Intellectual property protection: Intellectual property refers to the ideas and creative materials people develop to solve problems carry out applications, educate, and entertain others. It is generally protected through patents, copyright, and trademarks. 10. world trade organization : The world trade organization was established in 1995 at the Uruguay round of

negotiations of the general agreement on Tariffs and Trade (GATT). Today, the WTO has 133 member nations and an additional 33 nation that have applied for membership and hold observer status. On behalf of its membership, the WTO administers its own trade agreements. Facilitates future trade negotiations, settles trade disputes and monitors the trade policies of member nations.

Ethical decision making: According to Alvin trailer, The very speed of chang introduces a new element into management, forcing managers to make more and more decisions at a faster and faster pace. Nowadays mgt simply has become the process of decision-making. All the parts of management pass through decision-making towards goal achievement. The following principles are the ones most commonly appealed to in applied ethical discussions; Personal benefit: the framework acknowledges the extent to which an action produces beneficial consequences for the individual in question. It also acknowledges a person right to life and freedom over his/her actions or physical body, information, privacy, free expression and safety. Social benefit: Acknowledge the extent to which an action produces beneficial consequences for society.
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Principle of neutralization: it is used to lessen the possible impact of norm violating behaviors. Categorical imperatives: this framework is based on the principle that an action is either morally right or wrong regardless of its consequences. Duty: an action is inherently right because of the duty, arising out of a stated or unstated belief or value system that one possesses. Principle of justice: acknowledge a persons right to due process, fair compensation for harm done and fair distribution of benefits. Principle of lawfulness: do not violate the law.

Ethical model for decision-making process -Recognizing an issue as an ethical one: while the ethical thing to do; is often also the legal, economic, or political thing to do, failing to recognize the ethical dimension is not inconsequential. -Making the ethical judgment: ethical dilemmas require ethical responses.while generally agreeing that the process of formulating a responseis a cognitive one, experts disagree about is nature and, in particular, about the role of reason in this process. -Resolving to do the ethical thing: once we determine an ethical response, we must take the next step, and accord it the highest priority among all alternative courses of action. Doing so successfully depends on how we perceive ourselves and the importance we attach to ethical values. -Actually acting ethically: to be ethical, our intention to do the ethical thing must be followed by our really doing it. Thus, individuals who despite the negative pull exerted by rules, have recognized an ethical issue, decided on an ethical response, and resolved to act on it, still need to contend with pressures and other obstacles the interfere with actually implementing their decision. FEATURES OF ETHICAL MODEL FOR DECISION-MAKING PROCESS: Values Ego strength Field dependence Locus of control Moral development Moral approbation- magnitude of consequences , - Certitude of evil
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- Degree of complicity - Extent of pressure to comply. Organizational culture Decision processes

Problems in ethical decision-making: Nowadays, people who look decent, who seem to be ethical, do involve in unethical practices, though they do not think of doing anything illegal or immoral but they get backed into something unethical by systems and practices of their own firms Due to globalization, as companies deal with other countries where cross cultural diversity issues arise. Managers working in MNC find it very difficult to standardize ethical standards as they do change as society change. Sometimes the decision-makers do not follow what they must follow as they have conflict in individual values versus organizational goals. Individual moral standards affect whole organization decisions if they are morally strong, ethical decisions would be the outcomes. Poor decisions without deep thinking of implications. Ambiguous situations create problem which put the manager in dilemma as to which decision they should make and follow. Pressures of budget systems.

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B.Narayanan, Assistant Professor, Shivani School of Business Management