1. Welcome to class of Global Business Environment The Forces by Dr
Welcome to class of Global Business Environment The Forces by Dr. Satyendra Singh University of Winnipeg Canada

2. The Current Global Environment
No fighting!
More confidence in governance/people/system!
Economic reform/free market policies
Tariff/quota ↓, FDI ↑, investors as partners, deregulated industry, privatization of state-owned firms
Sense of market development in EMs
Two market segments (Urban and rural)
First mover advantage/educate customers
Change in culture
Social mobility ↑  demand for expensive products
Buy now, pay later

3. Political Forces Left vs Right

4. Eastern Europe Czech Republic and Poland Hungary and Romania
Quick to implement free market policies
Hungary and Romania
Slow  bureaucrats from communists days
Yugoslavia
Ethnic and religious divisions – Albania, Bosnia
Czech, Hungary, Slovak, Poland  OECD
I.e., accept the obligation to modernize the economies
Baltic statesEstonia, Latvia, LithuaniaWTO/EU
Quick to move away from soviet-style economies
Drop Rubal, tariff-free, free-market economy

5. Asia 4 tigers/dragons  HK, S Korea, Taiwan, S’pore
From assembly line to electronics, machines, ship building
Japan is lagging behind
S Korea links with China, USSR, and influences the region
China  dual economy  socialism/capitalism
By 2015, GNP of China = USA
China now in WTO  should follow the WTO rules
Human rights, legal system, corruptions, protectionism
India
free-market economy, > 51% share, no import restrictions
400m MIG/HIG, 800m LIG consumers

6. Economic Forces

7. Levels of Economic Development
Developed
Nations that are the most technically developed
Newly industrialized economies (NIEs)
The fast-growing upper MIG and HIG economies such as Taiwan, Hong Kong, and Singapore
Newly industrializing countries (NICs)
Brazil, Mexico, Malaysia, Chile and Thailand
Developing
Nations that are less technically developed
Emerging Markets
Transformation from controlled to market economy

8. Dimensions of the Economy…
Gross National Income (GNI)
The measure of the income generated by a nation’s residents from international and domestic activity
Preferred over GDP
GNI/Capita
Used to compare countries with respect to the well-being of their citizens and to assess market or investment potential

9. Dimensions of the Economy…
Purchasing Power Parity
The number of units of a currency required to buy the same amount of goods and services in a domestic market that $1.00 would buy in the U.S.
Helps to make comparisons possible across economies
CIA Fact Book

10. Finanaical Forces

11. The Financial Force Foreign Currency Flow of $, Transfer pricing China
Fixed vs. floating
Flow of $, Transfer pricing
It is legal in global context

12. Movement of $, Transfer Pricing
Customer
$10
Profit $9
Local business
Say, 30% tax
$6 Net profit
$3 tax $1
Supplier

13. Movement of $, Transfer Pricing
Customer
$10 $9 $8
Local business
Foreign $1
Now profit $1
Say, 30% tax
30 Cents tax!
Supplier

14. The Arbitrage
Brazil
Riel
1:3
1:2
5 dinar
Chile
Peso
Algeria
Dinar
1:5

15. Labor Forces

16. Labor Forces… International Labor Trends Aging of Populations 
Rural to Urban Shift 
Unemployment
Immigrant Labor
Child Labor
Forced Labor
Brain Drain
Guest Workers

17. Labor Forces… 192 million overall unemployed
Middle East and North Africa (13.2%)
Sub-Saharan Africa (9.7%)
Central and Eastern Europe (9.7)
Latin America and Caribbean (7.7)
Developed economies (6.7%)
Southeast Asia and the Pacific (6.1%)
South Asia (4.7%)
East Asia (3.8%)

18. Labor Forces… Immigrant Labor Foreign-born Foreign
Refers to the process of leaving one’s home country to reside in another country
Foreign-born
Population comprises those immigrants whose move is permanent and may include taking citizenship
Foreign
Population who are guest workers

19. Labor Forces… Child Labor Forced Labor
The labor of children below 16 years of age who are forced to work in production and usually receive little or no formal education
Primarily found in developing nations
Existent in developed countries
70% is in agriculture
Forced Labor
Most common in South and East Asia

20. Labor Forces… Brain Drain Reverse Brain Drain
The loss by a country of its most intelligent and best-educated people
When skilled workers migrate from developing countries they do so for professional opportunities and economic reasons
Reverse Brain Drain
The growth of outsourcing and the movement of highly educated, technologically skilled employees and research scientists to other countries

21. Labor Forces Guest Workers
People who go to a foreign country legally to perform certain types of jobs
Guest workers provide the labor host countries need
Guest workers are desirable as long as the economies are growing
When economies slow, fewer workers are needed and problems appear

22. Labor Unions… Organizations of workers European labor
Identified with political parties and socialist ideology
United States labor
Laborers already have many civil rights
Collective bargaining
The process in which a union represents the interests of a bargaining unit (which sometimes includes both union members and nonmembers) in negotiations with management

23. Labor Unions
Japanese unions are enterprise-based rather than industry wide
As a result, unions tend to identify strongly with company interests
However, Japanese workers are reported least satisfied with jobs in developed world

24. Labor Union Membership Trends
Employers have made efforts to keep their businesses union-free.
More woman and teenagers have joined the work force, low loyalty to unions.
The unions have been successful in raising wages, which leads to offshoring.
In the knowledge economy, industrial jobs that have formed the core of union membership are declining.

25. Multinational Labor Activities…
Internationalization of companies creates opportunities for them to escape the reach of unions
In response, unions have begun to
Collect and disseminate information about companies
Consult with unions in other countries
Coordinate with those unions’ policies and tactics
Encourage international companies’ codes of conduct
Multinational unionism is developing

26. Multinational Labor Activities
International Labor Organization (ILO)
Purpose is to promote social justice and internationally recognize human and labor rights worldwide
Trade Union Advisory Committee to the OECD
Consults on trade union issues in global markets

27. UN Global Compact, Business & HR
UN?  Eco dev  political progress  democracy
What is Global Compact? Universal consensus
UN’s voluntary corporate initiative (Dec, 2007)
Human rights
Labor conditions
Environment
Anti-corruption
5000 business participants  committed to UNGC
40% from emerging/developing countries
Improves business performance/QOL
HR issues: Russia? China? India? Africa?

28. Human Rights  Principle 1
Support, respect and protect HR
Commitment to UNGC
Understand sphere of influence supplier, stakeholders
Compliance with local and int’l law
↑ Lawsuits against multinationals for poor HR practices in EM
Promote and raise standards in EM
Address consumer concerns
↑ Worker productivity and retention
Treat employees with dignity and give fair $ for their work
Build good community relations

29. Human Rights  Principle 2
Ensure businesses are not complicit in HR abuses
Accusations of complicity  in a no of contexts
Direct complicity  actively assists in HR abuses
Forced relocation of peoples relating to business activity
Beneficial  HR abuses committed by others/security
Suppression of a peaceful protest against business activities
Use of repressive measures while guarding company facilities
Silent  failure to ↓ systematic HR violations
Discrimination  ethnicity, gender, religion, health, etc.

30. Labor Standards  Principle 3
Uphold freedom of association and right to collective bargaining
Freedom of association
Freely, voluntarily establish and join asso of their own choice
Employers  no discrimination against association members
Collective bargaining
Employer and employees discuss and negotiate their relations
Position vs. interest-based bargaining negotiations
Why is the freedom and collective bargaining important?
Employers and employers understand each other's problems better and find ways to resolve them
Opportunities for constructive, and not confrontational dialogue

31. Labor Standards  Principle 4
Elimination of forced and compulsory labor
Work exacted under the menace of penalty
Who has not offered himself or herself voluntarily
Who is not free to leave work as per established rules
Slavery
Bonded labour or debt bondage  work as slaves to repay debts of their parents
Child labour  Abusive conditions Rugs, Mcdonald’s toys
Physical abduction or kidnapping
Sale of a person into the ownership of another
Physical confinement
Exploitative practices  forced overtime
Lodging of deposits for employment  $, personal documents, passport…
Deception or false promises about terms and types of work

32. Labor Standards  Principle 5
Abolition of child labor
ILO conventions  Minimum Age Convention No. 138
Minimum age for admission to employment or work
Developed countries Developing countries
Light Work 13 Years Light Work 12 Years
Regular Work 15 Years Regular Work 14 Years
Hazardous Work 18 Years Hazardous Work 18 Years
Children have distinct rights
Child labour is damaging to a child’s physical, social, mental, psychological and spiritual development
Deprives them of childhood, dignity; separates from families

33. Labor Standards  Principle 6
Elimination of discrimination in employment and occupation
Treating differently or less favourably because of characteristics that are not related to the job
race, colour, sex, religion, political opinion, national extraction, social origin, age, disability, HIV/AIDS status, trade union membership, and sexual orientation
Recruitment, remuneration, hours of work and rest, paid holidays, maternity protection, security of tenure, job assignments, performance assessment and advancement, training and opportunities, job prospects, social security, occupational safety and health
Isolates employer, missed opportunities, ↓ competitive, bad reputation…

34. Environment  Principle 7
Support precautionary approach to env. Challenges
1992 Rio Declaration If threats of serious or irreversible damage, use cost-effective measures to prevent environmental degradation
What businesses can do?
Prevent environmental damage  treatment costs more later  company image  country image
Invest in sustainable production methods  ↓ resources depletion and env. degradation  ↑ environment performance  ↓ financial risk  important consideration for insurers
Invest in R&D to develop environmentally friendly products  ↑ long-term benefits

35. Environment  Principle 8
Initiate to promote environmental responsibility
1992 Rio Earth Summit  Business and industry should ↑ self regulation through initiatives integrated into business planning, decision-making, openness and dialogue with employees and the public.
To ensure environmental responsibility:
Re-define company vision, policies and strategies 3BL
Work with suppliers to ↑ environmental performance
Adopt voluntary charters to confirm acceptable behaviour /perf.
Measure and communicate progress as business practices, including reporting against global operating standards
Ensure transparency and unbiased dialogue with stakeholders

36. Environment  Principle 9
Encourage development and diffusion of environmentally friendly technologies
That protects the environment, ↓ pollution, uses all resources, recycles wastes and products and handles residual wastes in a more acceptable manner
Establish a corporate or individual company policy
Inform stakeholders -- env perf and benefits of the technology
Focus on R&D to ‘design for sustainability’.
Use Life Cycle Assessment to develop new tech and products
Employ Environmental Technology Assessment tools (EnTA)
Stipulate minimum environmental criteria for suppliers
Seek partners to obtain the “best available technology”

37. Anti-corruption  Principle 10
Work against all forms of corruption
Corruption
the abuse of entrusted power for private gain
Extortion, OECD:
When asking or demand is accompanied by threats that endanger the personal integrity or the life of the person
Bribery, Transparency International:
gift, loan, fee, reward… from a person to do something dishonest, illegal or a breach of trust
Steps to fight corruption
Internal: Anti-corruption policies within organizations
External: Report corruption in the annual Communication
Collective: Join forces with industry peers, stakeholders…

38. Use of the LOGO