Ethics, Business, and the Law

• Code of ethics - organization based rules for behaviour and actors-if you break it, you may lose your job but not go to jail.
• Rule of law - laws refined over centuries
• Ethical vs. Legal - Code of ethic Vs. Rule of law
• Ethical dilemma - ex.Right vs. right ex. Do I make the price lower to help struggling consumers OR Do I raise the wage to help struggling workers?

Cultural determinants:

Geography - Time zones, how does land forms affect culture - Nile river is very important in Egyptian religion and stories.

Climate - Inuit has over 30 words for snow.

Arable Land - Land that you can easily grow food - More arable land means more music, dance and other cultural activities.

Natural Hazards - Volcano is very important in Hawaiian stories and beliefs.

History - Why important to know about history for international business?

• Shaping cultural norms
• We need to be sensitive to historical occurrences in the host country ex. referring to terrorist activity when in Iran.

Religion - Christians have Christmas in their countries.

Negotiation Styles– common error in Canada and America is that you talk about financials too early
- Do not wait for foreign represent at ives t o contact you, take initiative
Language
- Silent Language– sign for okay can be offensive in Brazil
- Personal distance is different in many cultures
- Forms of Greetings– ex. how hard you hold the hand when shaking, in Japan they bow
- Style of dress– suit and tie in Canada for men, skirt /pants, blouse and suit for women
Business Protocol
Gift Giving–example in China, it is okay to give or receive gifts but refuse 3 times
Punctuality - usually be on time, but not always

• In Germany, be 10 minutes early
• In Brazil, they will likely come much later
  - Scheduling of Meetings -
  - Knowing when people in the country can meet ex. In Spain, people rest for 2 hours or more in the afternoon
  - Business Entertaining–knm now the right way to show your client a good time

Employee management

• How you manage employees in a foreign country
• Biggest issue for many managers is work ethic (how hard someone works) ex. In China. Managers may ask workers to work on Saturday but not so in Canada.
• This is because different cultures have different ideas about work and time-we have different ideas about work and time-in Thailand, work is seen as another opportunity for social interaction/ we also have different ideas about how long people should work.

•Understanding Financial Risk
•Currency Risk Factors
Think of a situation where currency decrease makes you lose and gain money
Lose - Host country currency there currency decrease, your products sell for less and gain money
Gain - Home country currency decrease,your international profits can buy you more home currency
Think of a situation where currency increase makes you lose and gain money
- Lose
- Gain
•Strategies to Manage Financial Risk
Foreign Exchange Management-getting consultants to help you manage your currency situation.
Credit Control- making sure you debt are controlled and manageable
Open Accounts-an agreement between the purchaser and seller that the shipment will be stopped is the cost is not paid on time.
Insurance-ex. Non-payment insurance,insurance for losses.

Analyzing Foreign Investment Climates：what you check before entering a foreign market
General political stability- check for government situation
Government policies towards foreign investment-check their laws towards trade
Policies and Legal Factors- check regulations and laws
Economic Environment - look at employment data, market performance, infrastructure, GDP
International payments-checking their currency level

Types of Political Risk

• 1. Risk of General Political Instability: host country government is not stable but it is just a risk ex. North Korea.
• 2. Ownership Risk-risk of losing your company,property,asset etc.-ex. Nationalization of industries
• 3. Operations Risk-new government policies affect your business ex.new taxes,raised minimum wage.
• 4. Transfer Risk: government do something to change currency rate ex. Rate goes up, cause you more money to produce, rate goes down, could cause you to make less money.

•Evaluating Political Risks
•What questions would you ask?
What is the local supply and demand
What are the policies in place for business currently and in the future?
When is the next election and who are strong candidates?
Would a new government emerge and if so, what kind policies will they have?
•Consequences of Terrorism
Less trave because people are afraid
Security is more strict and so transport becomes slower and more paperwork to do
Stock market become more volatile (change often is bad for stocks because people like steady growth stocks)
•Evaluating Legal Concerns
Employment - laws to do with hiring worker, hours, schedule, wages etc.
Consumer protection laws - protects customers ex. Safety, labels that are honest
Taxation Laws -laws related to taxes
Custom duties -tariff rates and laws
Sales -ex. 13% in Ontario
Excise -tax on specific products
Payroll -tax you pay because you have workers
Business Liability laws - law to do with hiring workers, hours, schedule, wage etc.
Property Law - land taxes, how much foreigners can own
Contract Law - what information must be in different type of contracts, how binding is it?

How is international business contributing to a disappearing cultural diversity?

• Homogeneous Markets– markets around the world are becoming more and more similar ex. Starbucks is popular everywhere
• Media – our information is becoming similar too. ex. news, movies, TV shows - we are consuming more and more the same information.

Centralized and Decentralized Marketing Strategies

How does culture influence purchasing differences?

• In China, Tea is much more popular that coffee and so coffee shops must cater to that
• Cultural Marketing –when your marketing department study different cultures and adapt their advertising to that
• What does Christmas look like around the world?
• Sell to a love theme in Japan for Christmas
• Sell to family theme in Canada for Christmas

Jaffa Citrus and Cultural Marketing Example

• An example of an Israel Marketing board selling their oranges around the world:
• In Finland, they advertise with a Viking boat
• In Italy, because they care a lot about fitness, the board emphasize how healthy the pulp is
• In Norway, where skiing is popular, they advertise it as a high energy food for skiing

Ways that the Canadian Government
• Import and export policies - tariffs, embargo(blocking trade with a country),sanctions(limiting trade with a particular country) etc.
• Develop trade policies and regulations - ex. Labour laws
• Assists Canadian exporters - ex. Embassies abroad,mission,developing global presence.
• Matches potential Canadian exporters with international clients
• Maintains and improves relationships with other nations - Canada wants China business so they do things to improve relationship ex. 10 years visa
• assists Canadian companies in adjusting to changing conditions - lower interest rates to help banks during the financial crisis
• Foster innovation and HR development-subsidies to universities,found research.

Political Risk
Unforeseen change in

      -Political decision-What Government Decides? ex.country government decide to private banks
      •Political condition : political climate ex. Protection Trump being voted president.
      •Political event/activity - ex.sudden election, president dies, coup,

-ex sudden election
Leads to losing or make less money than they thought
Types of Political Systems:
Democracy,
mixed,
totalitarian

Political Interdependence:
Pressure to change-change in powerful countries causes change
in other countries ex.America→protectionist, Canada too/populist movement in 2017.
Trade War: US has a trade embargo with Cuba.
Economic Imperialism - America’s investment in Saudi Arabia - help America get oil, Saudi Arabia will also more likely to help US in the UN.
- foreign investment in dient countries- you will have influence on country.
- Loans to client countries-you will have influence on country.
- Infrastructure help - you will have influence

•Economic Systems -
•Market Economies - companies and the market affect how goods and services are produced and distributed
•Centrally Planned Economies(command) - government control how goods and services are produced and distributed ex.North Korea
•Mixed Economies - mix of government control and private companies controlling how goods and services are produced and distributed ex.China
•Global Economic Systems

Business Cycles
Depression - slow economy, consumers buy less, high unemployment.

1. Recovery - new business and consumer demands, unemployment still high but decreasing, people starting to buy more.
2. Prosperity - strong economy,consumers consumed a lot,low unemployment rate-but skilled labour and law materials may became scarce
3. Recession - economy start to slow, consumers buy less, increase in business failures and growing unemployment

•The World Economic Freedom Index (Guess the top 5 countries)
Hong Kong, Singapore, USA, UK, New Zealand.

Canada’s Global Entrepreneurs
• in Canada,1 in 6 started their own business in 2000
•European countries has is harder to be entrepreneurial because employers provide excellent benefits
•New business ventures require a receptive government and flexible workforce
•Ex. new business ventures required less bureaucratic hurdles
•Around -the -Clock Markets
•Trade around the clock in different timezones
•Equity– refers to something that is of value ex. House, stock.
•Common Currency: different countries using the same currency ex. Euro.

Advantages
Usually makes your currency harder
Helps makes business transactions smoother
Tourism is also easier between those countries
Disadvantages
Countries has control over their currency value
If one member country has a problem, it has a bigger effect on other members.