What does Quasimoto Enterprises need to know about Chinese bargaining behaviors to strike the best possible deal with this company?

What does Quasimoto Enterprises need to know about Chinese bargaining behaviors to strike the best possible deal with this company?

Your abilities in international management have been recognized, and your consulting assistance has been requested. The company Quasimoto Enterprises has been approached by a reputed Chinese firm that wants exclusive production and selling rights for one of its new high-tech products. The company has been looking for a strategic partner for the production of this product to reduce costs. Hence, Quasimoto Enterprises is very interested in exploring the possibility of developing relationships with this Chinese firm. This deal is very critical to growth of Quasimoto in the international market. Both parties are anxious and preparing for their first meeting in a month’s time to move this deal forward. This is the first time Quasimoto is doing business with China, and this is also the case with the Chinese firm.

The bold question below is my part of the project That i need you to complete. It has to be 5 double space written pages plus reference page Disregard the other two question and, its not my responsibility. I just added it to the email for you to have a full understanding of the what assignment is.

What does Quasimoto Enterprises need to know about Chinese bargaining behaviors to strike the best possible deal with this company? What should the Chinese firm know about American bargaining behaviors to strike the best possible deal with your company?

In your small group, develop a strategic plan for the negotiation and conflict resolution for Quasimoto’s executive team for its first meeting with the Chinese. Also, develop a negotiation and conflict resolution plan for the Chinese firm for its first meeting with the Americans. Please note that because this is an important business deal for both companies, both of your plans should include the bargaining behaviors of both countries. Are there any similarities between their bargaining behaviors? Can they have a win-win deal?

APA format is mandatory (in text and in the reference section).

There are two main types of databases accessible in the library, through “FIND ARTICLES & BOOKS.” Keep in mind that the most popular databases are: ABI Inform Global, Academic Search Premier, and Business Source Premier. As a student, you must steer away from inferior Web sites with anonymous writers, articles found on consultant Web sites, materials on sites like QuickMBA.com, MarketingProfs.com, etc. Dictionaries and Encyclopedias most often repeat the information from your text. Acceptable Internet resources include among others government sites (especially for statistics). You are not permitted to use any open-source Web site in this course.

Present your findings as a 5 -7 pages Word document formatted in APA style.

Submitting your assignment in APA format means, at a minimum, you will need the following:

  1. TITLE PAGE. Remember the Running head: AND TITLE IN ALL CAPITALS
  2. ABSTRACT. A summary of your paper…not an introduction. Begin writing in third person voice.
  3. BODY. The body of your paper begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The type face should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics except as required for APA level headings and references. The deliverable length of the body of your paper for this assignment is 5 – 7 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
  4. REFERENCE PAGE. References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hang indention, italics, and upper and lower case usage as appropriate for the type of resource used. Remember, the Reference Page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.

Learning Material for course and chapter

Question 1: What does it take to be an expatriate manager in a multinational corporation (MNC)?

Answer 1:

It is important for the expatriate manager to have a clear perception that he or she is actually going to live and work in a country that has a completely different culture and a completely different language. This situation may also include new risks and strains that a different way of living can naturally bring. Many people do not like change because so much of it is unknown, and the unknown feels dangerous. This uncertainty avoidance coined by Hofstede is relevant to certain cultures but is also a trait that is present at the individual level (Hofstede, 2001). A mindset that addresses the new experience positively will make the assignment more enjoyable for the future expatriate manager and any who accompany him or her.

It is critical to accept others’ culture and to accept the mental agreement that one’s own culture is not necessarily the best. An open mind believes that one culture deserves the same amount of respect as the next culture. It takes mental training to minimize feelings of ethnocentrism, that is, the feeling that other cultures are inferior or should have the same priorities or attributes of another. Ethnocentrism’s fallacy should be especially apparent in light of the rich history and civilization of many countries that extend hundreds or thousands of years beyond that of others. A U.S. citizen should also consider how the American way of life is viewed in the host country and the perceptions that host country nationals may have of the U.S. from sources such as movies or current events.

The following are some practical considerations and ideas for new expatriate managers with families or significant others:

Many couples are conducting successful careers and the spouses may not be willing to be uprooted unless there is a strong financial or intellectual incentive that compensates for the hardship.

· Some MNCs located in the same host country have developed exchange programs where they employ the spouses of their respective executives.

· The exposure to other cultures and ways of thinking and the intellectual development that comes with learning a second language can be a great advantage for children.

· A common agreement in families to face the challenges of the assignment together enhances the expatriate’s adjustment and performance.

Question 2: How can an expatriate manager prepare for a foreign assignment?

Answer 2:

It is critical to learn the language and culture of the future country of assignment. Foreign assignments are usually made public 6 months ahead of the actual move. This may not be enough time to learn the new language fluently, but it is enough time to learn the basics including greetings, shopping, money, transportation, directions, and the proper pronunciation of the names of places to which the manager will need to go.

It may also be helpful for the new manager that is relocating to take some lessons in geography to learn more about the location, neighboring countries, population, resources, and gross national product (GNP) of the country of assignment. For basic data, a good place to start is the CIA country report. For more details, the local embassy will be happy to provide the relevant literature usually free of charge and in English.

Learning how the country’s people see themselves as a nation and in what they take pride, including cultural qualities, production, resources, and historical significance can also be beneficial. The expatriate manager should try not to judge the behavior or customs that are different from any in which he or she has been previously exposed. Being accepting of the people and culture of the host country is equally important. The manager is a guest in the country of assignment. Being adventurous with eating the food, viewing movies reflective of the culture, and asking questions to understand how people think and why will assist in making this transition more comfortable. The longer the preparation, the better the adjustment will be. If the new expatriate manager brings family or significant others with him or her, helping them adjust will also help the manager make his or her own adjustments and assignments easier.

Question 3: Should a mentor help prepare the new expatriate manager for the assignment?

Answer 3:

The answer is definitely yes. The person the manager chooses to help him or her prepare should preferably be his or her predecessor in the job. The new manager is expected to have read all the reports coming from the future country of assignment, but this is never enough. Mentorship is the number one tool in knowledge transfer and, in particular, in the transfer of tacit knowledge. Tacit knowledge is not conveyed in writing, and there is much one can pick up from a predecessor that can never be read in a manual.

The expression tacit knowledge was invented by the Hungarian philosopher Michael Polanyi. Tacit knowledge is the opposite of explicit knowledge, the type of knowledge that appears in documents and reports (Smith, 2003).Tacit knowledge is what Polyani described as when, “We know more than we can tell and we can know nothing without relying upon those things which we may not be able to tell” (Lord & Ranft, 2000). It is the way a person acts and communicates to the other party through, for example, a specific look, a tone of voice, or a form of posture that cannot be translated in written language. Transmission of tacit knowledge is still very much practiced even in Western cultures.

A Delphi survey of 400 executives performed by Biren asked where corporate knowledge resides. The answer was that 42% of executives believed that knowledge is in employees’ brains, 26% in paper documentation, 12% in common electronic databases, and 20% in electronic documents (Biren, 2000). According to this survey, the best source of knowledge on the new expatriate manager’s future assignment is surely his or her predecessor in the job.

Question 4: How can the expatriate manager prevent making cultural mistakes when entering into business negotiations?

Answer 4:

The key is for the new manager to learn about the culture of the people with whom he or she is going to do business. Hofstede’s study on cultural dimensions is a good start, especially taking into account the measures in different societies.

Power distance index (PDI) is the relative distance between those who hold the power to those who do not in a society. The rank is 40 for the U.S., 58 for Iran, 68 for France, 77 for India, 80 for China, and 93 for Russia. The higher the number, the higher position in the company or society the decision makers are likely to hold (Hofstede, 2001).

Uncertainty avoidance index (UAI) is the level of tolerance of the unknown or lack of structure a country can sustain. The lower the index is, the higher the level of tolerance. The United States has a rank of 46 for uncertainty avoidance while the world average is 64. Therefore, the United States has a high level of tolerance for new ideas, thoughts, and beliefs (Hofstede, 2001).

Masculinity index (MAS) describes gender differentiations in roles of the sexes in a society. In a highly masculine society, men are normally the main income providers and women stay home and raise the children. The American society has a MAS rank of 62 compared to a world average of 50 meaning it is more masculine than the world average (Hofstede, 2001).

Individualism (IND) versus collectivism is another measure used to compare cultures. In an individualist society, the person cares primarily about his or her self and those close to him or her as opposed to collectivistic societies in which the large family and even the tribe is a cause of concern. The American society has an IND rank of 91 as compared to the world average of 50. It is largely individualistic (Hofstede, 2001).

Long-term orientation (LTO) indicates the degree to which the country values long-term commitments and respect of tradition. Such a country will be slower to accept change. The U.S. has an LTO rank of 29 as compared to the world average of 45 (Hofstede, 2001).

How do these indices assist in an international negotiation? If individual countries were researched, for example, the United States and India (both English speaking countries), one would find some of the following data (Geert Hofstede Cultural Dimensions, n.d.):

· Power distance is close to 80 in India as opposed to 40 in the United States. Decisions are committed at the highest echelon in India. It is near impossible to get a decision from a lower level as employees will not have permission to commit their company.

· Individualism is the highest in the world in the United States. In India, individualism is ranked close to the world average. The American executive would care more about the personal benefits that a successful transaction for the company will bring that individual; the Indian executive will care more about the company.

· The MAS index is more or less the same for both nations.

· The UAI index is more or less the same for both nations.

· The LTO is 60 for India and 29 for the United States. India has a great respect for tradition. America is a young nation and does not have a history of tradition. It embraces innovation.

These indices could impact negotiation for an American executive if he or she may want to inquire if his or her counterpart has the authority to negotiate. He or she should also display a measure of respect for Indian history and tradition not to offend the partner in business and ruin the transaction.

Question 5: How does knowledge of the other party’s culture affect negotiation?

Answer 5:

Imagine that the new expatriate manager has business with a seasoned Indian negotiator. The negotiator imagines the manager as being an American— results-oriented and more interested in concluding than in bargaining. The negotiator expects the manager to be in a hurry to conclude as fast as possible.

It could also be that the negotiator knows that the manager is aware of his knowledge of U.S. culture. The negotiator could counteract the manager’s inherent tendency of speeding things up by deliberately trying to slow the negotiation. The negotiator may want to overcome what the manager considers a weakness by deliberately speeding up negotiations. The manager can possibly experience a cultural role reversal.

Game theory and the study of strategy can also assist the negotiator. Negotiation is in large part the strategy and tactics of accomplishing the ultimate goal of reaching the deal at the best possible price. The more the expatriate manager knows about the person with whom he or she sits at the table, the better.

Question 6: What should an expatriate manager keep in mind to not offend the person with whom he or she is in negotiation?

Answer 6:

The world of business has adopted Western rules as far as how business people dress, show up on time to meetings, and meet.

The cultural dimensions of Hofstede are important to keep in mind to not offend anyone. In socializing, the host country will let the country members display behaviors typical to the culture and reflective of the country’s power distance. The host country executives will expect the Americans to be more familiar than the French, the Indians, and the Chinese for example. The higher the long-term orientation (LTO) index, the longer the decision-making process. Any show of frustration or impatience on the expatriate manager’s part will be to his or her own disadvantage.

Special rules may also apply to eating and drinking with the host county executives. If the manager’s counterpart is Indian, he or she may not eat beef or may be a vegetarian altogether. If the counterpart is Jewish and orthodox, he or she might expect a kosher meal. If the counterpart is Muslim, he or she will not drink alcohol in the presence of those who are not Muslim.

It is important for the expatriate manager to show appreciation and respect for the aspects of the culture that the host country shares with him or her whether it be the food or wine of that country, the history, or the sites. Disinterest or lack of appreciation will not assist in negotiation.

Remembering that the counterpart will most likely always appear impeccably groomed and dressed and have the same expectations of his or her partner is also important. Any sloppiness or informality of dress or appearance could be considered very offensive.

Question 7: Is counseling needed when situations include legal issues?

Answer 7:

The answer is yes. Even if the expatriate manager has legal training from his or her home country, things are never exactly the same in the country of negotiation. The manager may have submitted the contracts he or she needed to sign for the home office counsel where his or her parent company is, but this is not enough. The expatriate manager must have legal counsel in the country of negotiation even if the country has an advanced legal system such as his or her own home country. There might be small but critical differences in law even in such areas as who witnesses and authenticates a legal signature.

In some countries, the protection of the laws is merely nominal, and local courts will always favor the expatriate manager’s opponents; therefore, it is best for him or her to partner with locals when on business in those countries.


Biren, D. (2000). Building a corporate focus on knowledge. Fontainbleau, France: INSEAD.

Geert Hofstede cultural dimensions. (n.d.). Retrieved July 31, 2006, from ITIM International Web site: http://www.geert-hofstede.com/hofstede_dimensions.php?culture1=95&culture2=47

Hofstede, G. (2001). Culture Consequences (2nd ed). Thousand Oaks, CA: Sage Publications.

Lord, M. D. & Ranft, A. L. (2000). Organizational learning about new international markets: Exploring the internal transfer of local market knowledge. Journal of International Business Studies, 31(4), 573–589.

Smith, M. K. (n.d.). Michael Polanyi and tacit knowledge. The encyclopedia of informal education. Retrieved July 31, 2006, from http://www.infed.org/thinkers/polanyi.htm

Importance of Ethical and Social Responsibilities in International Business

The English word ethics comes from the Greek word ethos, meaning character. Ethics is not so much obedience to rules as it is the concern for one’s personal or organizational character. Definitions of ethical behavior vary from generation to generation and from culture to culture, but in general, it includes the qualities of honesty, integrity, fairness, and loyalty. Some of the ethical influences come in the form of laws, rules, and regulations enforced by the government. Ethics are the norms that each country or culture defines and institutionalizes to prevent individuals from pursuing self-interest at the expense of others.

When it comes to international business, social responsibility and ethical operations are not simple tasks. Operating in countries whose laws, coupled with their cultural and social values, are different from those of the home country can be very challenging for the international manager. With the increasing expansion of American business around the world, it is necessary to establish responsible behavior that fits across borders and cultures. More and more of the world’s multinational corporations are establishing guidelines that provide some basis for evaluating their foreign operations. Another movement underway is to have organizations like the United Nations encode a charter of responsibility based on global ethics.

Potential Ethical Issues in International Business

Business customs and practices around the world are so different that it is difficult to make a valid generalization about them. The only safe generalizations are that any person working in another country must be sensitive to the local business environment and must be willing to adapt when necessary. One must also realize that no matter how long one resides in another country, the outsider is not a native; in many countries, that person may always be treated as an outsider.

More and more of the world’s international corporations are establishing guidelines that provide some basis for evaluating their foreign operations. Over 1,000 companies have joined Business for Social Responsibility (BSR), an alliance of companies based in Washington D.C. that work to develop, support, advocate, and disseminate socially responsible business strategies and practices.

Global Sullivan Principles

The main Global Sullivan Principles “are to support social, economic, and political justice” by the organizations in the countries where they conduct their business. This includes supporting human rights, encouraging equal opportunity for all employees at all levels of the organization, and providing dignity and equality for workers and others in the communities where they operate their business. Another objective is to provide equal opportunities to all employees to train and advance at all levels of the organization and to be considered for positions in management. The Global Sullivan Principles also promote greater understanding and tolerance among people, thereby improving the quality of life (The Global Sullivan Principles, n.d.).

Importance of Complying with the Laws of each Country

Multinational corporations operate in an increasingly complex global marketplace regulated by many laws impacting almost every facet of the business. The laws can vary from country to country. More and more courts and agencies are not just finding corporations responsible for improper or illegal business conduct; they are holding employees personally accountable for actions they took which may have contributed to the violation. A business can only be law abiding if all of its employees and representatives act with integrity and respect for the law.


The global Sullivan principles. (N.D.). Retrieved August 27, 2009, from The Sullivan Foundation Web Site: http://www.thesullivanfoundation.org/gsp/default.asp

Activity 1: Short Paragraph

Question 1: As an upper-level manager for a large produce distributor, Gorilla’s Choice Banana Co., you face many crucial issues when working with partners overseas. You are in the process of evaluating a new team in Guyana. What are some of the criteria you would use in evaluating the effectiveness of this group? Please respond with a paragraph answer.

The model answer to question 1 is that several criteria can be used in evaluating how effective a team has been. For example, you may want to discern whether or not the members are working cooperatively and collaboratively. The purpose should be well defined as well as a common procedure for communicating. A common language should be agreed upon and used in all processes, and members should be sensitive to the impact of their culture on their behavior. When standards such as these are observed and evaluated, the manager can develop a clear concept of the team’s level of efficacy

Activity 2: Fill in the Blank

The manager from the Guyana subsidiary has recently relocated to your location. As part of this new arrangement, he has asked you to explain how to expand his understanding of his new functions and responsibilities. “Everything I know about the United States is general,” he complains, “so how can I approach a negotiation with such a limited knowledge?”

Fill in the blank with one of these three words: Solutions, Prepare, and Knowledge.

You respond:

As a manager, I always ensure that I do three things:

Question 2. First, I gain specific blank of the parties in the upcoming meeting.

The answer to question 2 is I gain specific knowledge of the parties in the upcoming meeting.

Question 3. I blank accordingly to adjust to and control the situation.

The answer to question 3 is I prepare accordingly to adjust to and control the situation.

Question 4. I am innovative in my ideas and blank.

The correct answer for Question 4 is I am innovative in my ideas and solutions.

Activity 3: Yes or no answer.

The manager from the Guyana subsidiary has recently relocated to your location. As part of this new arrangement, he has asked you to explain how to expand his understanding of his new functions and responsibilities. “Everything I know about the United States is general,” he complains, “so how can I approach a negotiation with such a limited knowledge? I know that consulting my own code of ethics is one resource, but my understanding is that there are many other sources to which I should go first. What are they?”

Question 5: Which should be consulted first, the International Codes of Conduct for MNEs or the laws in both the host and home countries?

The correct answer to question 5 is first, the laws in both the host and home countries should be consulted, then the International Codes of Conduct for MNEs.

Question 6: Which should be consulted next in order, the company’s code of ethics documentation or a higher-level manager or executive?

The correct answer to question 6 is next, consult the company’s code of ethics documentation and then consult a higher-level manager or executive.


Deresky, H. (2006). International management: Managing across borders and cultures. Upper Saddle River, NJ: Pearson.

End of Activity

Scenario: You have been hired as a junior analyst at Planet Power Inc., a multinational corporation and energy industry leader. Your new boss wants to gauge your positions on a number of international business ethics practices and standards. He has given you a pamphlet of case studies documenting ethical issues that Planet Power Inc. has had to address in recent years. Read each case study and answer the questions that are provided.

Case Study 1: Planetary Photovoltaic

Based in Nogales, Mexico, Planetary Photovoltaic, one of our most lucrative subsidiaries, makes the solar energy panels that the firm sells to cities and municipalities looking to “go green” by reducing their nonrenewable energy consumption. The manufacturing plant where these products are produced and assembled has been cited numerous times in the last year for compliance failures. In particular, the company has been under fire after a series of discriminatory hiring practice allegations that claim management has conspired to limit the amount of female employees working in its assembly plant. Management has responded by providing statistics proving that they have met federally-established antidiscrimination requirements, although these minimums do fall below the standards set within Planet Power Inc.’s own corporate policy. In response to questions from headquarters, management in Nogales cited a local custom that maintains a separation of work duties between men and women as a reason for the disparity in their hiring numbers. Additionally, recent reports citing faulty and dangerous products manufactured in Nogales has the corporate office worried. Four instances of customer injury linked to improper wiring have already been documented, and corporate has instructed the legal department that personal injury lawsuits filed against Planetary Photovoltaic are likely.

Question 1: What ethical issues are evident in the situation in Nogales?

Model Answer: The disparity between the hiring of men and women at the Nogales plant should be of great ethical concern to Planet Power Inc. Discriminatory practices are not only illegal in many countries, they can do significant damage to a corporation’s image and reputation among consumers and business partners—the final consequence being reduced profits. Furthermore, discrimination lawsuits, whether unfounded or not, usually do harm to a company by bringing with them the negative publicity that commonly accompanies such cases.

Arguably, there is no greater negative impact to a company than faulty and dangerous products. What’s even worse, however, is any type of public disclosure that a company knew about its substandard or hazardous products and did nothing to correct the problem. Very simply, this type of problem should never even be allowed to become an issue involving ethics—defective products must be removed from the market and repairs or replacements be made available to customers through recalls. A quick and definitive response to this type of issue prevents a company’s ethical integrity from ever being called into question.

Question 2: Given Planet Power Inc.’s reputation as an industry leader and respected corporate citizen, what actions would you take to remedy the problems there?

Model Answer: While enforcing corporate policy over those of the host country’s legal requirements could result in reduced profits, ensuring against claims of discriminatory practices is of great ethical importance to any company. Steps should be taken to ensure corporate policy is implemented in the hiring practices at the Nogales plant. Furthermore, product recalls should be issued on all products suspected of defective wiring and be replaced.

Question 3: Holding the opinion that a host country would do better by adopting the ethical standards and practices of one’s home country is referred to as which of the following?

a) Ethical Imperialism

b) Ethical Relativism

The correct answer to Question 3 is: b) Ethical Imperialism

Case Study 2: Bengali E & P

Planet Power Inc. owns a subsidiary exploration and production operation that is drilling for natural gas reserves outside of Barisal, Bangladesh. Profits stemming from this subsidiary, Bengali E & P, have been extraordinary; however, local opposition to the drilling has recently caught the attention of international environmental watchdog groups. Claims have been made that the work of Bengali E & P has caused significant and ongoing damage to the local environment. Poorer air quality, soil erosion, and increased carcinogens in the water table are just a few of the allegations these groups contend are the direct result of the company’s drilling operations.

Concurrent with these environmental accusations are demands for increased wages for the local workforce. Living standards, particularly in this area of Bangladesh, are very poor. The general belief among workers is that while Bengali E & P does provide them the means to eke out a living, the minimal pay they receive for the often dangerous work is clear evidence of their exploitation. Given the record profits, this issue could become a significant public relations problem for Planet Power Inc. and jeopardize not only its relations with the Bangladeshi government but its other operations at work in the South Asia region.

Question 4: What are the possible ramifications for Bengali E & P and Planet Power Inc. if the issues brought forth by the international environmental watchdog groups are not addressed? What effects on business, if any, might result if these concerns are professionally handled?

Model Answer: Should Planet Power Inc. and Bengali E & P choose to not address the environmental issues at hand in Barisal, a number of unfavorable things could occur. The environmental watchdog groups could put pressure on the Bangladeshi government to void or rescind the contracts allowing Planet Power Inc. to continue its drilling operations through Bengali E & P. Strict national legislation could be passed, making it difficult for firms like Bengali E & P to realize such windfall profits through the revocation of tax breaks or simply increased taxation. Furthermore, international attention to the issue could certainly tarnish the corporation’s reputation, which would also have a negative impact on profitability should consumers and business partners choose to terminate relationships because of the issue.

On the other hand, properly and transparently addressing the issue would do much to bolster the corporation’s image as an honest, ethical, and environmentally conscious enterprise. What’s more, good conduct in the face of a potentially disastrous business situation would reveal to other nations the degree to which Planet Power Inc. values its international relationships and its ability to work with governments and agencies to solve problems for mutual benefit. However, undertaking any action to remedy the problems at hand would likely cost the corporation millions of dollars as well as prevent such high profits from being attained in the future.

Question 5: How would you deal with the problematic situations occurring in Bangladesh?

Model Answer: Studies should be conducted to confirm or disprove the claims of environmental damage being done through the gas drilling. If confirmed, steps should be taken immediately to remedy the situation—even if this results in a negative impact to the bottom line.

While the low wages paid to workers might be a substantial driver of the company’s profitability, a corporation must also look at employee job satisfaction and standard of living to accurately gauge its prospects for future success. An unhappy or underpaid workforce could cost the company much more than the advantage it receives from paying low wages: low employee productivity, theft, tardiness, and absenteeism all have negative impacts on a business. The question of whether or not to increase the salaries of those working for Bengali E & P is a very serious one and should be thoroughly examined before a decision is made.

Question 6: Which of the following ethical policy perspectives assumes a high level of community/corporation interaction and cooperation, whereby the corporation proactively seeks to positively serve its surrounding community?

a) Corporate Social Responsibility

b) Corporate Compliance

c) Corporate Responsibility

The correct answer to Question 6 is: a) Corporate Social Responsibility

Case Study 3: Peninsula Oil

One of Planet Power Inc.’s largest international partners is Peninsula Oil, a large, family-operated petroleum refining company in Saudi Arabia. Operating control of Peninsula Oil has recently been passed from father to son, and reports from expatriated employees assigned to negotiate new contracts with Peninsula have not been positive. In particular, a senior member of Planet Power Inc.’s legal team reported being approached by a representative who offered him a large sum of money and assurances that Planet Power Inc. would receive favorable new contracts should it broker a side deal that would ensure that the cousins of Peninsula’s ownership be placed in lucrative management positions within Planet Power Inc.’s U.S.-based operations. The account of this action was denied as a simple misunderstanding when brought before Peninsula Oil’s governing officers, and since then, relations have been strained and contract negotiations have met with considerably more objections and delays than in any other past dealings.

Question 7: Should Planet Power Inc. consider the recent circumstances in Saudi Arabia as posing an ethical dilemma? Why or why not?

Model Answer: Yes, the situation in Saudi Arabia should be of concern to Planet Power Inc. As Peninsula Oil has been one of the corporation’s largest and most lucrative business partners, this relationship should be of utmost concern to Planetary management. The alleged bribes offered to Planet Power Inc.’s legal consul constitute a serious infraction; however, because bribery and institutional nepotism are common business practices in this part of the world, the firm must handle this situation with extreme care. Any suggestion of offense could destroy a relationship that has taken decades to cultivate. Still, in light of the accusations, Planet Power Inc. will also have to determine how it will make clear its own ethical position to Peninsula without jeopardizing this relationship further. Very simply, bribery and nepotism are not tolerated within Planet Power Inc. and the firm expects the same high standards of those with whom it does business. As this situation clearly exemplifies, there often runs a fine line dividing doing what is ethically right and doing what is financially prudent.

Question 8: Given Planet Power Inc.’s reputable, worldwide image and its longstanding relationship with Peninsula Oil, how would you handle this situation in Saudi Arabia?

Model Answer: While there is no definitively correct or incorrect answer, your decision must include consideration of what this relationship truly means to your firm. Ask yourself the following questions:

  • What harm might come should the company accept the deal and install the business partner’s cousins as employees?
  • What would abandoning this relationship mean to my company?
  • Do any substitute business options exist for the company should this relationship be terminated?

You must also consider the cost to your firm’s reputation and standing with other partners and consumers should any type of disclosure reveal your firm’s engagement or acceptance of unethical or illegal business practices.

Challenges in the Subsidiary

A home-country manager is sent by the home office to a subsidiary to manage the subsidiary. Home-country managers of foreign subsidiaries face several challenges. The foreign subsidiary business is usually conducted in a language different from that of the home office, and it is governed by laws of the host country. It operates in a cultural environment that is not the host-country cultural environment, and it is not the corporate cultural environment, but rather, a blend of both.

Language and Cultural Challenges

The first challenge a new manager faces is the language barrier. Not speaking the language of the host country might impair the manager’s capacity to do his or her job effectively. Using a translator always reduces the efficiency of communication because of the “lost in translation” phenomenon. Conversely, speaking the language of the host country opens barriers and is a demonstration of respect for the host-country culture.

Another important challenge is the cultural one. Home-country managers should be trained in cross-cultural management for the culture of the country of assignment (Black & Gregersen, 1998). Open-mindedness and knowledge of other cultures, particularly of the host-country culture, is a must.

Dual Allegiance

When trying to implement the rules established by the home office in his or her subsidiary, the manager may face a strong resistance sometimes voiced as, “This is not how things are done here.” It will be the manager’s obligation to find out if indeed he or she is going against a local custom or if the staff is just testing him or her. In due time, both parties will get accustomed to each other, a common ground operational solution will be found, and a subsidiary subculture will be developed with a blend of local and “imported” corporate culture. Eventually, it will be the home-country branch manager who will become the advocate of the branch before head office while still keeping his or her mind on the goals of the home office. Home-country managers must always face the challenge of dual allegiance to both the home office and to the subsidiary.

Law and Ethics

There will be cases in which the home office will request the application of legal solutions with which it is familiar. When these solutions are not applicable in the country of the subsidiary, there will be need for local legal counsel. For example, in France, management cannot fire an employee without going before a special tribunal.

In the United States, it is absolutely prohibited to give gifts to officials. In other countries, this is not considered bribery but an efficient way to speed up business. The American executive must struggle between compliance with the home-office laws and rules and the local mentality always keeping within the laws and guidelines of the Foreign Corrupt Practices Act.

International Teams

International corporations will have international composed executives from several nationalities. This where corporate culture can become predominant among absence leading culture. As far virtual teams concerned (that is, group people in different countries communicating via Internet and working together on a project), research indicates fact members are familiar with each other not something that will impair work of team long as the assignment is short-term (Fiol & O’Connor, 2005).

International executives will be required to display the same critical thinking skills they are expected to use when operating in their home-office environment in addition to the extra dimension of good operability in the foreign culture in which they are performing.

Negotiation and Conflict Resolution

Negotiation and conflict resolution in an international environment will require the executive to examine the power distance of the country with which he or she is doing business as opposed to his or her own country. The greater the difference in the power of distance indices between the two countries, the closer to the top of the hierarchy the decision makers will be (Hofstede, 2001).


Black, J. S., & Gregersen, H. B. (1998). So you’re going overseas. San Diego, CA: Global Business Publishers.

Fiol, C. M., & O’Connor, E. J. (2005). Identification in face-to-face, hybrid and pure virtual teams: Untangling the contradictions. Organization Science, 16(1), 19–32.

Hofstede, G. (1997). Cultures and organizations: Software of the mind. New York: McGraw-Hill.

Conflict and Culture

Human behavior is greatly influenced by underlying beliefs, values, and assumptions. These beliefs, values, and assumptions are, to a great extent, a by-product of culture. Ting-Toomey and Chung (2005) define culture “…as a learned meaning system that consists of patterns of traditions, beliefs, values, norms, meanings, and symbols that are passed on from one generation to the next and are shared to varying degrees by interacting members of a community” (p. 28). Most of the time, people are not conscious of how culture influences their values, beliefs, assumptions, and behaviors because culture is so all-encompassing.

Acculturation, Assimilation, and Ethnocentrism

An important distinction that impacts conflict must be made between acculturation and assimilation. Acculturation occurs when the attitudes and behaviors of people from one culture are modified as a result of contact with a different culture, and it is often used to imply a mutual sharing wherein elements of both cultures mingle and merge. This tends to be a more equitable exchange in contrast to assimilation whereby one culture, often a minority group, is absorbed into the dominant cultural body.

Both acculturation and assimilation can produce ethnocentrism, which is the view that one’s own group is the center of everything by which all others are comparatively rated, often in an inferior way. This can create a sense of superiority, as well as a sense that one’s own assumptions are universal. As might be imagined, these assumptions can greatly affect how conflict plays out if parties in conflict come from different cultures. If assimilation is encouraged in a workplace setting, the dominant culture may be more likely to feel superior and increase the likelihood of conflict; however, even when cultural diversity is encouraged, ethnocentrism will occur. The parties may not understand that they are acting from different assumptions and, therefore, jump to conclusions about why the other party is behaving in a way they believe is inferior.

Communication Style Differences

Through empirical research, different cultures have been found to have different communication styles, which have been labeled high-context and low-context (Hall, 1976). It is important, however, to remember that these style differences are generalizations and there will always be individuals within a culture that do not fit these generalizations.

· High-context cultures favor an indirect verbal style; prefer ambiguous, cautious, and nonconfrontational ways of working through communication issues; rely on nonverbal behaviors and subtleties; and are very listener-oriented. High-context cultures tend to place a higher value on harmony, tactfulness, and saving face. Someone from a high-context culture will likely ease into a conversation and will wait to be invited to speak or request permission. Individuals will first connect on a relational level and only after that has occurred, introduce substantive issues. High-context cultures include much of the Middle East, Asia, Africa, and South America.

· Low-context cultures prefer communication that is direct and frank. An open confrontation of issues is ideal and a speaker-orientation is valued. Directness and self-assertion are preferred in low-context cultures; therefore, an individual will likely verbally assert him- or herself into a conversation and will promptly acknowledge content issues. This group includes the United States, Canada, and much of Western Europe.

In the United States and other countries with histories of mass immigrations, cultural values and beliefs that have been passed down may remain intact for many generations. This may take a conflict manager by surprise when two “native born” workers begin to demonstrate vastly different cultural communication styles. High-context versus low-context cultures can also differ among genders as in the United States where women are socialized to communicate more in a high-context style and men in a low-context style.

One communication style is not better or worse than another, but they are different; however, parties in conflict, due to ethnocentrism, may judge the other party’s style to be inferior and even offensive. Parties with these different communication styles may also have problems communicating with each other, therefore, making interventions such as mediation more challenging.

The Role of the Conflict Manager

LeBaron (2003a; 2003b) believes cultural fluency must be a core competency for conflict managers. A culturally fluent conflict manager will be able to recognize communication style differences and help coach parties to a more similar communication style or utilize skills in reframing, reflecting, paraphrasing, and summarizing to translate what is being communicated for each party. When a conflict manager sees ethnocentrism, he or she can ask one party questions about how the other party may see the situation and/or gently make different attributions for behavior. This gentle prodding may help one or both parties see that the different assumptions and beliefs of the parties are playing a role in the behaviors that are manifesting and creating conflict.


Hall, E. T. (1976). Beyond culture. Garden City, NY: Doubleday.

LeBaron, B. (2003a). Communication tools for understanding cultural differences. Retrieved March 27, 2008, from Beyond Intractability Web site: http://www.beyondintractability.org/essay/communication_tools/

LeBaron, B. (2003b). Culture and conflict. Retrieved March 27, 2008, from Beyond Intractability Web site: http://www.beyondintractability.org/essay/culture_conflict/

Ting-Toomey, S., & Chung, L. (2005). Understanding intercultural communication. Los Angeles: Roxbury.

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