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Chapter 03 - Doing Business in Global Markets
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lecture link 3-4
FOREIGN ETIQUETTE TIPS
As more businesses engage in global trade, cultural pitfalls increase. Every day business deals are
jeopardized or lost when foreign associates are offended by Americans unaware of other countries’ cus-
toms, culture, or manners. Sue Fox, the author of Business Etiquette for Dummies, provides the following
tips for avoiding embarrassing gaffes.
India: Avoid giving gifts made from leather, because many Hindus are vegetarian and consider cows sa-
cred. Also, keep this in mind when taking Indian clients to restaurants. Don’t wink, because
it is seen as a sexual gesture.
Japan: Never write on a business card or shove the card into your back pocket when you are with the
giver. This is considered disrespectful. Hold the card with both hands and read it carefully.
It’s considered polite to make frequent apologies in general conversation.
Malaysia: If you receive an invitation from a business associate from Malaysia, always respond in writ-
ing. Avoid using your left hand because it is considered unclean.
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lecture link 3-5
BLOOD TYPE MATTERS IN JAPAN
Among the more unusual cultural behaviors is the Japanese obsession with blood type. In Japan,
“What’s your type?” can be an important question in everything from matchmaking to getting a job. Alt-
hough the belief has been scientifically debunked, there is still a widely held notion that blood tells all.
In 2008, four of Japan’s top 10 best sellers were about how blood type determines personality.
The books’ publisher, Bungeisha, says the series—one each for types B, O, A, and AB—has combined
sales of well over 5 million copies.
lecture link 3-6
BRIBERY PITFALLS
The passage of the Sarbanes-Oxley Act in 2002 raised the stakes for corporate responsibility.
CEOs and CFOs now have to personally sign off on company financials, making those executives much
warier of letting a bribe slide through. Conducting business globally exposes U.S. companies to all sorts
of potential minefields that don’t exist at home.
The Corruption Perception Index—based on bribery data and surveys conducted by the Transpar-
ency International, a nongovernment organization dedicated to fighting bribery—finds signs of “rampant
corruption” in no fewer than 60 countries. Bangladesh and Haiti are the worst of that group. Russia and
several other former Soviet republics are included.
SEC policy and the Sarbanes-Oxley rules, however, now call for disclosure of both the incidents
and the steps a company takes to address them.vi
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lecture link 3-7
DOES TRADE PROTECTION PROTECT OR RISK YOUR FUTURE?
No topic in this chapter generates more differing opinions than that of trade protectionism.
Whenever the topic is reintroduced, stories in newspapers and commentators on television begin referring
again to “Smoot-Hawley.” When trade protection comes up, this question is inevitably asked: “What is
Smoot-Hawley and why does this term appear every so often?” Some history may help clarify the issue.
The result was world trade fell by one-third, and a global trade war started. Exports dropped from
$4.8 billion to $1.7 billion from 1929 to 1932. Imports dropped from $5.4 billion to $2.4 billion. Other
countries were plunged into depression as world trade fell. In 1934, Congress passed the Reciprocal Trade
Agreement Act to reduce tariffs, but it was too little too late.
The issue of world trade regulation continued. From 1987 until 1993, the General Agreement on
Tariffs and Trade (GATT) discussions often reached impasse points or stalemates. A collapse of the nego-
tiations would have actually pleased protectionists. Instead, the GATT agreement was passed by 124 na-
tions in 1994. Still the growth of several key trading blocs such as NAFTA and the EU raised the fear that
coming from Egypt was authenticity. After all, anyone can make a social media account and post whatev-
er they want from whichever perspective they choose, genuine or not. That’s not to say the social media
flood from Egypt was untrustworthy on the whole. However, when these false accounts show up among
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the thousands of other tweets about the revolution, it’s difficult to parse the reality from the fiction among
the inundation of information.
lecture link 3-9
GOOGLE VS. CHINA
Ever since Google began a Chinese version of its website in 2006, the company has been beset
with ethical dilemmas. Chinese law required that Google self-censor its search results against subjects
considered to be pornographic or subversive, such as the 1989 Tiananmen Square Massacre. Critics felt
Google’s collusion with Chinese censors betrayed the company’s famous “Don’t Be Evil” slogan, but for
Google, the world’s largest market of Internet users was too big to pass up. Then on January 12, 2010,
Google discovered that it and 20 other U.S. companies had been attacked by computer hacks originating
in China. Google even found that the hackers attempted to break into the Gmail accounts of prominent
other silver lining for Google is that China accounted for only $300 million to $600 million of Google’s
annual sales of $24 billion. But only time will tell how the Chinese market will grow and how Google’s
decision will affect its future in the country.ix
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lecture link 3-10
INDIAN CALL CENTERS EXPAND TO THE UNITED STATES
More than a few of America’s established business practices were topsy-turvy when the U.S.
economy turned from boom to bust in the 2000s. Among the most common practices that were impacted
was outsourcing. For years, American companies exported jobs to countries with cheaper workforces and
tions contained fraud or technical violations. Furthermore, H-1B visas were originally intended to entice
high-level foreign talent to work challenging technical jobs. Now that companies use the visas to bring in
low-skill call center workers, however, lawmakers are attempting to curb H-1B applications. One such
roadblock set in place by the Obama administration adds a $2,000 fee for every H-1B applied for by large
companies.x
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critical
thinking exercises
Name: ___________________________
Date: ___________________________
critical thinking exercise 3-1
WHICH COUNTRY?
The Internet gives students access to endless information sources. One of the most surprising
sources is the online database maintained by the CIA. The agency’s World Factbook gives extensive data
For this exercise assume you are the owner of a small electronics firm based in the American
Midwest. Your research department has developed a cellular phone that translates conversations into any
of 24 languages. From conversations with business associates and friends, you have identified two espe-
cially attractive overseas markets—Brazil and Australia.
Use the CIA World Factbook to research these two countries.
1. What is the total population for each country? Which country’s population is growing the fastest?
What is the median age?
2. Compare the government types for each country. What type of legal system does each have?
3. Which country has the largest number of cellular phones in use? What percentage of the popula-
tion uses cellular phones?
Chapter 03 - Doing Business in Global Markets
4. Based on your research, which country, Brazil or Australia, would you choose to introduce your
product? Why?
critical thinking exercise 3-2
EVALUATING GLOBAL EXPANSION
Greenwich Industries entered the Latin American market in the 1950s by forming a joint venture
1. What are the potential problems that face the new venture?
2. What are the potential advantages of this venture for the company?
3. Would you recommend entering the joint venture? Why or why not?
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4. If Greenwich Industries partners with Industro Viejes, would you recommend hiring local man-
agers or American managers for the top and middle management positions? Why?
notes on critical thinking exercise 3-2
1. What are the potential problems that face the new venture?
2. What are the potential advantages of this venture for the company?
3. Would you recommend entering the joint venture? Why or why not?
4. If Greenwich Industries partners with Industro Viejes, would you recommend hiring local man-
agers or American managers for the top and middle management positions? Why?
Chapter 03 - Doing Business in Global Markets
Name: ___________________________
Date: ___________________________
critical thinking exercise 3-3
CURRENCY SHIFTS
cation mentioned.)
Country Country Country Country Country
(Currency) (Currency) (Currency) (Currency) (Currency)
___________ ___________ ___________ ___________ ___________
(__________) (__________) (__________) (__________) (__________)
1. ___________ ___________ ___________ ___________ ___________
2. ___________ ___________ ___________ ___________ ___________
3. ___________ ___________ ___________ ___________ ___________
4. ___________ ___________ ___________ ___________ ___________
5. ____________ ___________ ___________ ___________ ___________
6. ___________ ___________ ___________ ___________ ___________
7. ___________ ___________ ___________ ___________ ___________
8. ___________ ___________ ___________ ___________ ___________
9. ___________ ___________ ___________ ___________ ___________
10. ___________ ___________ ___________ ___________ ___________
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11. ___________ ___________ ___________ ___________ ___________
12. ___________ ___________ ___________ ___________ __________
13. ___________ ___________ ___________ ___________ ___________
critical thinking exercise 3-3 (continued)
Country Country Country Country Country
(Currency) (Currency) (Currency) (Currency) (Currency)
___________ ___________ ___________ ___________ ___________
(__________) (__________) (__________) (__________) (__________)
14. ____________ ___________ ___________ ___________ ___________
15. ___________ ___________ ___________ ___________ ___________
16. ____________ ___________ ___________ ___________ ___________
17. ___________ ___________ ___________ ___________ ___________
18. ___________ ___________ ___________ ___________ ___________
19. ___________ ___________ ___________ ___________ ___________
20. ___________ ___________ ___________ ___________ ___________
21. ___________ ___________ ___________ ___________ ___________
22. ___________ ___________ ___________ ___________ ___________
23. ___________ ___________ ___________ ___________ ___________
24. ___________ ___________ ___________ ___________ ___________
25. ___________ ___________ ___________ ___________ ___________
26. ___________ ___________ ___________ ___________ ___________
27. ___________ ___________ ___________ ___________ ___________
29. ___________ ___________ ___________ ___________ ___________
30. ___________ ___________ ___________ ___________ ___________
Chapter 03 - Doing Business in Global Markets
notes for critical thinking exercise 3-3
What effect would such currency shifts have on your business trade with each of these countries?
bonus
cases
bonus case 3-1
MAKING A MINT ON MAKE-BELIEVE
Chances are that when most Americans think of theme parks, they envision places like Disney
World where all the fun aspects of childhood are celebrated. However, at KidZania, a new brand of “edu-
tainment” theme parks headquartered in Mexico, role-playing activities based on all the trappings of
adulthood attract millions of patrons a year. The parks are kid-sized replicas of real cities where children
role-play a variety of careers such as firefighters, dentists, painters, and more than 100 other occupations.
are encouraged to keep their hands clean by using the company’s Safeguard soap. A representative from
Procter & Gamble said she hopes the exposure turns children into lifelong customers of the brand.xii
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discussion questions for bonus case 3-1
1. Would “edutainment” parks like KidZania find success in the United States?
2. Is corporate sponsorship at KidZania intended only to build future customers?
notes on discussion questions for bonus case 3-1
1. Would “edutainment” parks like KidZania find success in the United States?
2. Is corporate sponsorship at KidZania intended only to build future customers?
Chapter 03 - Doing Business in Global Markets
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bonus case 3-2
GAP’S EVOLVING VIEW OF ETHICS
In the 1990s, shoe and clothing retailers faced a flood of stories focusing on wage and safety vio-
lations in their overseas factories. Did Nike use child labor? Were Kathy Lee’s sweaters produced in
“sweatshops”? Companies were forced to confront critics and repair the damage to their reputations.
The first reaction of Gap, the corporate parent of Old Navy and Banana Republic, was to clam up
and go into fix-it mode. It built an elaborate monitoring system, which performs more than 8,500 factory
black box, we now have a window into data that can really help us make a judgment on how the company
is progressing in handling of these issues,” says Conrad MacKerron, a director at As You Sow, a nonprof-
it shareholder advocacy group. “This will put pressure on other retailers to do the same.”
In 2006, Gap Inc. was named as one of the “100 Best Corporate Citizens” among major U.S.
companies by Business Ethics magazine.xiii
discussion questions for bonus case 3-2
1. Are you impressed with the effort that Gap has made to respond to the need to have more worker-
friendly suppliers? Would such information lead you to buy more goods from Gap, or are things
like price and quality and value more important?
2. Gap explored wage, health, and safety issues in its plants. What other issues might the company
explore if it wants to ensure the best working conditions possible?
3. If you were a stockholder in Gap Inc., would you be as impressed with its efforts to satisfy the
needs of its workers? Would you be more interested in revenues and profits than good wages and
working conditions? What concerns might a Gap employee working in one of its stores have be-
cause of its social stance?
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notes on discussion questions for bonus case 3-2
1. Are you impressed with the effort that Gap has made to respond to the need to have more worker-
friendly suppliers? Would such information lead you to buy more goods from Gap, or are things
like price and quality and value more important?
2. Gap explored wage, health, and safety issues in its plants. What other issues might the company
explore if it wants to ensure the best working conditions possible?
3. If you were a stockholder in Gap Inc., would you be as impressed with its efforts to satisfy the
needs of its workers? Would you be more interested in revenues and profits than good wages and
working conditions? What concerns might a Gap employee working in one of its stores have be-
cause of its social stance?
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bonus case 3-3
COOLING OFF THE SWEATSHOPS
In the late 1800s and early 1900s, labor conditions in the United States were certainly less than
ideal. The average workweek was 60 hours, but it was not unusual for workers to spend 80 hours on the
job every week. Children toiled in unsafe conditions sometimes 10 hours a day, six days a week; wages
the building due to locked doors and the lack of a fire escape. News reports faulted the company and
brought to light the harsh conditions in which these women worked. The fallout from Sinclair’s book and
the Triangle Shirtwaist Company fire generated an impassioned public outcry and eventually led to strong
federal legislation that improved working conditions throughout the United States.
The issue of sweatshops again is a hot topic in the media. However, today’s issue does not deal
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Apparel companies contend that their businesses involve thousands of factories operating in very
diverse economies. They claim the idea of establishing a formal living-wage structure is impossible and
discussion questions for bonus case 3-3
1. An argument can be offered that developed (industrialized) countries in the world experienced
poor working conditions as their economies matured. Therefore, over time, workers in developing
countries will gain the same benefits as their counterparts in countries such as the United States,
Germany, and Japan. What’s your opinion?
2. What role, if any, should the U.S. government take in this issue of setting fair wages in develop-
ing countries? What is your definition of a “fair” (living) wage? Would it vary by country?
3. Would you buy an apparel item with your college name or logo on it if you knew it was produced
in a country where workers toiled in sweatshops? Why or why not?
notes on discussion questions for bonus case 3-3
1. An argument can be offered that all developed (industrialized) countries in the world experienced
poor working conditions as their economies matured. Therefore, over time, workers in developing
countries will gain the same benefits as their counterparts in countries such as the United States,
Germany, and Japan. What’s your opinion?
2. What role, if any, should the U.S. government taking in this issue of setting fair wages in develop-
ing countries? What is your definition of a “fair” (living) wage? Would it vary by country?
Chapter 03 - Doing Business in Global Markets
3. Would you buy an apparel item with your college name or logo if you knew it was produced in a
country where workers toiled in sweatshops? Why or why not?
bonus case 3-4
AFRICA: THE NEW INDIA?
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discussion questions for bonus case 3-4
1. Is Indian expansion in Africa a sign India is becoming a dominant global competitor?
2. What is the major problem India faces as it expands economically?
1. Is Indian expansion in Africa a sign India is becoming a dominant global competitor?
2. What is the major problem India faces as it expands economically?
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endnotes
ix Sources: Michael Liedtke and Jessica Mintz, “Google Ends Four Years of Censorship in China,” Associated Press,
March 22, 2010; Miguel Helft and Michael Wines, “Google Faces Fallout as China Reacts to Shift,” The New York
Times, March 23, 2010.
x Source: Paul Glader, “As Indian Companies Grow in the U.S., Outsourcing Comes Home,” The Washington
Post, May 20, 2011.
