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by Oliver Laasch , Center for Responsible Management Education (CRME) and Roger N. Conaway ,

by Oliver Laasch , Center for Responsible Management Education (CRME) and Roger N. Conaway , Tecnol ó gico de Monterrey (ITESM ). After reading this chapter…. GlaxoSmithKline (GSK): Managing Global Social Expectations through Differential Pricing.

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by Oliver Laasch , Center for Responsible Management Education (CRME) and Roger N. Conaway ,

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  1. by Oliver Laasch, Center for Responsible Management Education (CRME) and Roger N. Conaway, Tecnológicode Monterrey (ITESM)

  2. After reading this chapter…

  3. GlaxoSmithKline (GSK): Managing Global Social Expectations through Differential Pricing • Pricing a crucial topic due to high research and development costs for medicines • GSK slashed pricesof certain medicines by up to 95 percent depending on the country they were sold • Especially for products of vital importance in the developing world • “Three-tiered pricing structure” differentiates between upper-, middle-, and lower-income countries and charges accordingly. • Cross-subsidizationof poorer countries’ medicines via rich countries’ consumers, without risking the funds needed to invest and develop new drugs and vaccines.

  4. Responsible Management and International Business • The global environment is important even for companies which would not consider themselves global. • Simple sourcing activities offer globally responsible options. For any business with some type of international involvement four main questions arise: • How do we responsibly address globalization and the challenges posed by it? • How is responsible business infrastructure different in one country from another one? • How do we manage global business activities responsibly? • How do we responsibly manage issues arising in managers´ international activities?

  5. Figure 13.1 The Process of Glocally Responsible Management

  6. THE GOAL: GLOCALLY RESPONSIBLE BUSINESS • A glocally responsible business (GRB) is a business that is at the same time globally and locally responsible. • A GRB creates value for stakeholders around the world, in every location, and actively addresses both global and local sustainability issues. It manages global and local moral issues and intercultural ethics successfully. • Globalization“refers to the widening set of interdependent relationships among people from different parts of a world” • Glocalizationis a mixture of the words “global” and “local” and describes global activities with a strong adaptation to local circumstances.

  7. Phase 1 Understanding the Glocal Business Context

  8. Food for Thought

  9. UNDERSTANDING THE GLOCAL BUSINESS CONTEXT • We must know drivers of globalization and how these drivers affect responsible business and management • We must assess the local infrastructure for responsible business in foreign host countries.

  10. Aspects of globalization and their effect on... business in general responsible business Decline in political power of countries with multinationals. Global personal identity and affiliations. Multinationals assume country level responsibilities. Emergence of global stakeholder organizations. Growth of self-regulatory organizations. • Global Media • Global Communication Technology and Access to Internet • Global Transportation • Emergence of Global Standards • The Rise of BRICS • Anti-Globalization Movements and Global NGOs • Global Challenges and Opportunities

  11. Localizing Responsible Business • Strictly speaking, there is no such thing as a “global business”. • All businesses operating outside the domestic borders operate in foreign countries, not on a superior “global” level. • Business strategies for responsible business are crafted from the perspective of a global business interacting with many countries at the same time. • However, the operations of such global business are locally “on the ground” in many different locations throughout different regions, countries, and locations. • A glocally responsible business must be able to adopt responsible business and management to local conditions, • including culture, systems, standards and resulting local issues, challenges and opportunities.

  12. Figure 13.2 Regional Approaches to Responsible Business(1)

  13. Figure 13.2 Regional Approaches to Responsible Business(2)

  14. Figure 13.2 Regional Approaches to Responsible Business(3)

  15. Figure 13.2 Regional Approaches to Responsible Business(4)

  16. Figure 13.3 Analyzing National Responsible Business Policies: Methodology and Results (1/2)

  17. Figure 13.3 Analyzing National Responsible Business Policies: Methodology and Results (2/2)

  18. Analyzing Local Approaches to CSR Explicit Implicit takes a broader and more systemic perspective, based on values, norms, and rules that result in requirements for corporations to address stakeholder issues and that define proper obligations of corporate actors in collective rather than individual terms. • consists of business policies that assume and articulate responsibility for some societal interests. Typical are voluntary activities by individual corporations that combine social and business value and address issues perceived as important to meet particular stakeholder expectations.

  19. Applying the “Diamond Model” to Responsible Business • Responsible managers may use Michael Porter’s “Diamond Model” of National Competitive Advantage to assess local conditions • A “double-diamond” model that may serve to analyze differences in both domestic and foreign locations. • The four local dimensions considered are • The context for responsible competitiveness (strategy and rivalry) • The related and supporting networks (industries) • Sustainable factor conditions • Local Stakeholder demand conditions

  20. Figure 13.4 Applying the Diamond Model to Responsible Business

  21. Phase 2 Assessing the ResponsibleInternat ional Business

  22. Food for Thought

  23. Central Terms • International business refers to all commercial transactions that take place between two or more countries. • International business transactions are all transactions that take place between at least two countries.

  24. ASSESSING THE RESPONSIBLE INTERNATIONAL BUSINESS • Assessing a business global positionmeans an organization develops a comprehensive international strategy to create value with its products or services by assessing where it stands in international markets.

  25. Figure 13.5 Stages of Global Business Responsibility

  26. Assess the Type of International Firm • International firms tend to form distinct patterns • with regard to motivations in strategy, structure, and managerial processes, each of which directly impacts responsible management practices within the company. • You can assess a company by distinguishing among the following descriptions. • Globally-sourcing companies (GSC) • Managers with an international mentality • Multinational companies • Global companies • Transnational firms

  27. Table 13.1 Classifying Global Companies and Responsible Business Recommendations

  28. Phase 3 Mapping International Business Activity

  29. Food for Thought

  30. INTERNATIONAL BUSINESS ACTIVITY • International business transactions (or business activity) are all transactions, that take place between at least two countries. • Examples: trade, foreign market seeking, global sourcing, foreign direct investment, and global partnerships • Each activity bears different challenges related to the triple bottom line, to stakeholder relations, and specific ethical dilemmas. • Also, each activity has specific areas of opportunity to do good.

  31. Table 13.2 Comparison of Guidelines for Responsible International Business Activity (1/2)

  32. Table 13.2 Comparison of Guidelines for Responsible International Business Activity (2/2)

  33. Table 13.3 Global Business Activity Areas and Related Responsible Business Considerations

  34. Terms in Responsible Global Sourcing • Global sourcing is the process of procuring inputs used throughout the supply chain internationally. • Outsourcing refers to a model where a company chooses a third-party company to provide a needed service or process. • Offshoring means that activities that were done domestically are now carried out abroad. • BoP sourcing refers to sourcing activities involving small and medium enterprises at the base of the pyramid.

  35. BoP Sourcing • Base of the Pyramid (BoP)refers to approximately four million people worldwide living with very low income. • Main approaches to engage with the BOP markets: • Country identification • Supplier identification

  36. Food for Thought

  37. Global Trade Pro-Trade Contra-trade Global trade has been widely criticized for many of the ailments of the global economic system. • Potential to • reduce economic inequalities and to • create a truly inclusive global economic system.

  38. Alternative Approaches to Global Trade • Responsible traderefers to practices that mitigate the potential negative impacts of trade and harnesses the potential of trade to do good. • Sustainable trade refers to trade as a tool to further sustainable development, socially, environmentally, and economically. • Ethical trade aims to assure the avoidance of ethical issues in global supply chains. • Fair trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade”

  39. Winnipeg Principles for Trade and Sustainable Development • Efficiency and cost internalization • Equity • Environmental integrity • Subsidiarity • International cooperation • Science and precaution • Openness

  40. ForeignMarkets • Foreign market seeking refers to efforts to expand beyond the domestic home market. • These are three popular forms of market entry that at the same time provide an excellent initial strategic position: • Sustainable market innovation • Sustainable infrastructure creation • Base of the Pyramid (BoP) market seeking

  41. International Subsidiaries: Central Terms • International subsidiaries are business units located in foreign countries. • Foreign Direct Investment (FDI) is a measure of foreign ownership consisting of financial investments and tangible or intangible assets transferred abroad. • Mergersrefer to two companies voluntarily becoming one and exchange financial investments on a mutual basis. • Acquisitions refer to the voluntary or forced majority purchase of another firm’s assets and are sometimes referred to as takeovers. • Due diligence describes the process of checking economic, social, environmental, and ethical implications of a merger or acquisition.

  42. Transfer Pricing • Transfer pricing • refers to the rates paid internally inside the company when products or services are transferred from one subsidiary in one country to another country and subsidiary. • Domestic governments have difficulty taxing the income of multinational enterprises, and ethical issues arise with taxing and transfer pricing.

  43. Global Strategic Alliances • Strategic alliances are medium to long-term relationships created for a common purpose of the partners involved. • Types of strategic alliances: • Scale alliancespool similar assets so each firm can conduct business activities in which they already have experience. • Link alliances combine complementary resources to expand into a new area. • Vertical and horizontal alliances differ on whether levels are added to the value chain (vertical) or companies align on the same level (horizontal). • Cross-sectorial alliancesinvolve partners from different sectors that develop joint activity for a common purpose.

  44. Phase 4 Responsibly Managing in a Globalized Business

  45. Food for Thought

  46. Challenges in Responsibly Managing a Global Business • “How to manage responsibly in an international setting?” • How do I manage a globally diverse workforce responsibly and inclusively, involving among others differences in religion, race, and socio-economic levels? • How can I cope with cultural differences and achieve both mainstream and responsible management objectives? • Which morality should be dominate in my company? • The morality where the company originates from? • The morality of each respective host country? • How do we resolve conflicts between differing moralities?

  47. Cross-NationalDiversity Management • Cross-national diversity management“ • refers to managing a workforce composed of citizens and immigrants in different countries.” • The Globally inclusive workplace • values and fosters differences within the workforce. • If such a workplace has been created, can it be checked through a set of simple questions such as the following : • Are all groups and individuals equally welcome to participate in the organizational decision making process? • Are all groups and individuals equally informed about important decisions made in the workplace? • Are all groups and individuals equally invited to formal and informal meetings and social events?

  48. Cultural Differences • Globally operating businesses • must consider universal global standards • as it must respect local cultural differences. • Cultural dimensions according to Hofstede • Individualism or Collectivism. • Power distance • Uncertainty avoidance • Masculinity or Femininity • Long-term orientation or Short-term orientation • Indulgence

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