Complete detail of Second Module International Business Dynamics contents, Globalization – Supporting Institutions in International Conflict Resolution

1. Aspects Of
Globalization And
International Business
MODULE 2

2. Globalization
 Globalization is a process of interaction and integration among the people,
companies, and governments of different nations, a process driven
by international trade and investment and aided by information
technology. This process has effects on the environment, on culture, on
political systems, on economic development and prosperity, and
on human physical well-beingin societies around the world

3. Stages in Globalization

4. Domestic Company
 Features:
 Their focus remains with domestic market.
 Their productions facilities remain based in home country.Their analysis is
focused on the national market.
 They do not think globally and avoid taking risk in going global.
 Their top management may have traditional kind of business
management competency and less global expertise.
 They perceive that there is risk in expanding into global market and thus
they try to play safe and satisfied with whatever gains they are getting in
domestic market.

5. International Company
 Features:
 Focus on going beyond,domestic
 Their management remains ethnocentric with a vision to expand
internationally.They extend their domestic products,domestic prices and
other business practices to foreign countries.
 They keep their marketing mix constant and extend their operations to
new countries.
 Their management style remains centralized for their home nation and
extended top down to the overseas market country.

6. Multinational Company
 Features:
 i. Companies when they spread their wings to more nations become
multinational companies.
 ii. Sooner or later they realize that they have to change their marketing
mix according to the foreign market.
 iii. This can also be termed as multi domestic,in which different strategies
are adopted for different market.
 iv. The management of such companies remains decentralized and even
production may be in the host country.
 v. Performance evaluation is done at different host countries.

7. 4. Global
 Features:
 i. Such companies have a global marketing strategy.
 ii. They either produce in home country or in a single country and focus
marketing globally.
 iii. They adapt to the market conditions according to the foreign market.
 iv. Their performance evaluation is done worldwide

8. 5. Transactional Company
 Feature:
 i. Transnational companies have a geocentric approach,which means they
think globally and act locally.
 ii. Transnational companies collect information worldwide and scan it for
use beyond geographical boundaries.
 iii. The vision of such to grow more in a global way.
 iv. The R&D,management,product development are shared worldwide.
 v. Their human resources procurement and development remains globally

9. THE FORCES BEHIND GLOBALIZATION
 Increase in and Expansion of Technology
 Liberalization of Cross-Border Trade and Resource Movements
 Development of Services That Support International Business
 Growing Consumer Pressures
 Increased Global Competition
 Changing Political Situations
 Expanded Cross-National Cooperation

10. CRITICISMS OF GLOBALIZATION
 Threats to National Sovereignty
 Economic Growth
 Growing Income Inequality

11. Benefits of International Business
 A. To Expand Sales Companies may increase the potential market for their
sales by pursuing international consumer and industrial markets.
 B. Acquire Resources Foreign-sourced goods, services, components,
capital, technology, and information can make a firm more competitive
both at home and abroad.
 C. Minimize Risk Firms seek foreign markets in order to minimize cyclical
effects on sales and profits.

12. MODES OF INTERNATIONAL BUSINESS
 Merchandise Exports and Imports
 Tourism and Transportation
 Performance of Services.
 Use of Assets
 Investments
 Direct Investment
 Portfolio Investment

13. WHY INTERNATIONAL BUSINESS DIFFERS
FROM DOMESTIC BUSINESS
 Physical and Societal Factors
 Political Policies
 Legal Policies
 Behavioral Factors
 Economic Forces
 Geographical Influences
 The Competitive Environment

14. Modes of International Business

15. Direct Exports
 Direct exports represent the most basic mode of exporting made by a (holding) company,
capitalizing on economies of scale in production concentrated in the home country and
affording better control over distribution. Direct export works the best if the volumes are
small. Large volumes of export may trigger protectionism. The main characteristic of direct
exports entry model is that there are no intermediaries.
 Passive exports represent the treating and filling overseas orders like domestic orders.
 Advantages
 Control over selection of foreign markets and choice of foreign representative companies
 Good information feedback from target market, developing better relationships with the
buyers
 Better protection of trademarks, patents, goodwill, and other intangible property
 Potentially greater sales, and therefore greater profit, than with indirect exporting.

16.  Disadvantages
 Higher start-up costs and higher risks as opposed to indirect exporting
 Requires higher investments of time, resources and personnel and also
organizational changes
 Greater information requirements
 Longer time-to-market as opposed to indirect exporting

17. Indirect exports
 Indirect export is the process of exporting through domestically based export
intermediaries. The exporter has no control over its products in the foreign market.
 Advantages
 Fast market access
 Concentration of resources towards production
 Little or no financial commitment as the clients' exports usually covers most expenses
associated with international sales.
 Low risk exists for companies who consider their domestic market to be more
important and for companies that are still developing their R&D, marketing, and sales
strategies.
 Export management is outsourced, alleviating pressure from management team
 No direct handle of export processes.

18.  Indirect exports
 Indirect export is the process of exporting through domestically based export
intermediaries. The exporter has no control over its products in the foreign
market.
 Advantages
 Fast market access
 Concentration of resources towards production
 Little or no financial commitment as the clients' exports usually covers most
expenses associated with international sales.
 Low risk exists for companies who consider their domestic market to be more
important and for companies that are still developing their R&D, marketing,
and sales strategies.
 Export management is outsourced, alleviating pressure from management
team
 No direct handle of export processes.

19.  Disadvantages
 Little or no control over distribution, sales, marketing, etc. as opposed to
direct exporting
 Wrong choice of distributor, and by effect, market, may lead to
market feedback affecting the international success of the company
 Potentially lower sales as compared to direct exporting (although low
volume can be a key aspect of successfully exporting directly). Export
partners that incorrectly select a specific distributor/market may hinder a
firm's functional ability.

20. 1. Licensing:
 Under a licensing agreement, a company (the licensor) grants rights
intangible property to another company (the licensee) for a specified
period; in exchange, the licensee ordinarily pays a royalty to the
licensor. The rights may be exclusive (monopoly within a given
territory) or nonexclusive.

21. Advantages of Licensing:
 1) Licensing offers a small business many advantages, such as rapid entry into foreign
markets and virtually no capital requirements to establish manufacturing operations.
 2) Returns are usually realized more quickly than for manufacturing ventures.
 3) Licensing mode carries relatively low investment on the part of licensor.
 4) Licensor can investigate the foreign market without much effort on his part.
 5) Licensee gets the benefits with less investment on research & development.
 6) Licensee escapes himself from the risk of product failure. For example, Nintendo
game designers have the relatively safety of knowing millions of game system units.
 7) Compared to export entry, the most evident advantage of licensing is the
circumvention of import restrictions and transportation costs in penetrating foreign
markets
 8) International licensing is most commonly combined with other entry modes.

22. Disadvantages of Licensing:
 1) The most critical disadvantage of licensing as an entry mode is the licensor’s lack of
control over the licensee’s marketing program.
 2) Another disadvantage is the lower absolute size of returns from licensing compared to
returns from export or investment.
 3) The licensee may become a competitor if too much knowledge and know-how is
transferred. Care should be taken to protect trademarks and intellectual property.
 4) Licensing agreements reduce the market opportunities for both the licensor and
licensee. Pepsi-cola cannot enter Netherlands and Heineken cannot sell Coca-cola.
 5) Risk of losing control of important intellectual property or dissipating it to competitors.
 6) There is scope for misunderstanding between the parties despite the effectiveness of
the agreement. The best example is Oleg Casing and Jovan.
 7) There is a problem of leakage of the trade secrets of the licensor.
 8) Quality control may be difficult to achieve.

23.  2. Franchising:
 Franchising is a means of marketing goods and services in which the
grants the legal right to use branding, trademarks and products and the
method of operation is transferred to third party – the franchisee – in return
for a franchise fee. The franchiser provides assistance, training and help with
sourcing components and exercises significant control over the franchisee’s
method of operation.
 1) Product Franchise:
 Here, a franchisor is a distributor who supplies goods to a retailer with the
understanding that the retailer will have the exclusive right to sell goods in a
particular area of the market. This market is usually, but not always, defined in
geographic terms. Gas stations, car dealerships, and some clothing
are examples of this category.
 2) Manufacturing Franchise:
 Here, the franchisor provides the particular specifications or a specific
which the franchisee uses in producing the product. Soft drinks are a good
example of the manufacturing franchise.

24.  3) Business-Format Franchise:
 In a business-format franchise arrangement the franchisor provides franchisees with a
comprehensive, often extensive, operating system. Each franchisee must comply with the
requirements of the system or risk losing the franchise.
 i) Manufacturer-Retailer Franchise:
 In this form, the manufacturer gives the franchisee the right to sell its product through a
retail outlet. Examples of this form include gasoline stations, most automobile
and many businesses found in shopping malls.
 ii) Wholesaler-Retailer Franchise:
 Here, the wholesaler gives the retailer the right to carry products distributed by the
wholesaler. For example, Radio Shack (which also manufactures some of its products),
Agway Stores, Health Mart, and other franchised drug stores.’
 iii) Service Sponsor Retailer Franchise:
 It operates when a service firm licenses individual retailers to let them offer specific
packages to consumers. For example, VLCC, India’s leading chain of health beauty, and
fitness centres, is managed and operated by its parent company.

25. Contract Manufacture:
 A firm which markets and sells products into international markets might
arrange for a local manufacturer to produce the product for them under
contract. Examples include Nike and Gap, both of whom use contract
clothing and shoe manufacturers in lower labour-cost countries. The
advantage of arranging contract manufacture is that it allows the firm to
concentrate upon its sales and marketing activities and, because
investment is kept to a minimum, it makes withdrawal relatively easy and
less costly if the product proves to be unsuccessful.

26. Advantages of Contract Manufacturing:
 1) The company does not have to commit resources for setting up
production facilities.
 2) It frees the company from the risks of investing in foreign countries.
 3) If idle production capacity is readily available in the foreign country, it
enables the marketer to get started immediately.
 4) In many cases, the cost of the product obtained by contract
manufacturing is lower than if it were manufactured by the international
firm.
 5) Contract manufacturing also has the advantage that it is a less risky way
to start with. If the business does not pick up sufficiently, dropping it is easy;
but if the company had established its own production facilities, the exit
would be difficult.
 6) Moreover, contact manufacturing may enable the international firm to
enlist national support.

27. Disadvantages of Contract Manufacturing:
 1) In some cases, there will be the loss of potential profits from
manufacturing.
 2) Less control over the manufacturing process.
 3) Contract manufacturing also has the risk of developing potential
competitors.
 4) It would not be suitable in cases of high-tech products and cases
whicli involve technical secrets, etc.

28. Turnkey Projects:
 Turnkey projects or contracts are common in international business in the
supply, erection and commissioning of plants, as in the case of oil
refineries, steel mills, cement and fertilizer plants, etc.; construction
projects as well as franchising agreements.

29. Advantages of Turnkey Contracts
 The benefits arising from turnkey contracts include:
 1) The opportunity at sell both components and other intangible assets,
 2) Host government patronage which ensures that payments are made
promptly and may also lead to mutually beneficial relationship in other
areas, and
 3) For the host nation, the opportunity to build industrial complexes and
train local personnel

30. Disadvantages of Turnkey Contracts
 1) Lack of client control and participation.
 2) Higher overall cost than traditional approach.
 3) Limited flexibility to incorporate change.
 4) A firm that enters into a turnkey project with a foreign enterprise may
inadvertently create a competitor.

31. Management Contracts:
 The companies with low level technology and managerial expertise may
seek the assistance of a foreign company. Then the foreign company may
agree to provide technical assistance and managerial expertise. This
agreement between these two companies is called the management
contract.

32. Advantages of Management
Contracts:
 1) Foreign company earns additional income without any additional
investment, risks and obligations. 1
 2) This arrangement and additional income allows the company to enhance
its image in the investors and mobilize the funds for expansion.
 3) Management contract helps the companies to enter other business areas
in the host country.
 4) The companies can act as dealer for the business of the host country‘s
business in the home country.
 5) The expropriation or nationalization of a subsidiary where the parent
company’s commercial expertise is still required;
 6) The development of a consultancy or technical aid contract into a” total
management contract.
 7) Fees for management services may be easier to transfer, and subject to
less tax, than royalties or dividends.

33. Disadvantages of Management Contracts:
 1) Sometimes the companies allow the companies in the host country
even to use their trade marks and brand name. The host country’s
companies spoil the brand name, if they do not keep up the quality of
product service.
 2) The host country’s companies may leak the secrets of technology.
 3) Increase in potential competition as capacity is increased by new
facilities.

34. The Foreign Manufacturing Strategies with
Direct Investment!
 According to the International Monetary Fund’s Balance of Payments Manual, “FDI is an investment that
is made to acquire a lasting interest in an enterprise operating in an economy other than that of the
investor, the investor’s purpose being to have an effective voice in the management of the enterprise”.
 Foreign direct investments (FDI) in wholly owned manufacturing subsidiaries are considered by global
firms for many reasons. It is done for acquiring raw materials, operate at lower manufacturing cost, for
avoiding tariff barriers and satisfy local content requirements, and for penetrating the local market.
 Foreign manufacturing strategies with direct investment include:
 1. Joint Ventures,
 2. Strategic Alliances,
 3. Merger,
 4. Acquisition,
 5. Wholly-Owned Subsidiary,
 6. Assembly Operations

35.  1. Joint Ventures:
 A joint venture is any kind of cooperative arrangement between two or
more independent companies which leads to the establishment of a third
entity organisationally separate from the “parent” companies.

36. Characteristics of Joint Venture:
 1) Critical Driving Forces:
 There should be compelling forces which push the alliance together. Without these forces, there is no
true reason for the alliance.
 2) Strategic Synergy:
 There should be complementary strengths – strategic synergy – in the potential partner. To be
successful, the two or more participants must have greater strength when combined than they would
independently. Mathematically stated; “1 + 1 > 3” must be the rule; if not, walk away.
 3) Great Chemistry:
 There should be co-operative efficiencies with the other company. There should be a co-operative
spirit. There must be a high level of trust so that executives can work through difficulties that will arise.
Don’t “sell” your company’s “beauty”, it must be desired by the prospective partner, not sold.
 4) Win-Win:
 All members of the Alliance must see that the structure, operations, risks and rewards are fairly
apportioned among the members. Fair apportionment prevents internal dissension that can corrode
and eventually destroy the venture.

37.  5) Operational Integration:
 Beyond a good strategic fit, the there must be careful co-ordination at the
operational level where actual implementation of plans and projects occurs.
 6) Growth Opportunity:
 There should be an excellent opportunity to place the company in a leadership
position – to sell a new product or service, to secure access to technology or raw
material. The partner should be uniquely positioned with the “know-how” and
reputation to take advantage of that opportunity.
 7) Sharp Focus:
 There is a strong correlation between success of a venture arid clear overall
purpose – specific, concrete objectives, goals, timetables, lines of responsibility
measurable results.
 8) Commitment and Support:
 Unless top and middle management are highly committed to the success of the
venture, there is little chance of success

38. Reasons for Joint Ventures:
 1) Cost Savings:
 2) Risk Sharing:
 3) Access to Technology:
 4) Expansion of Customer Base:
 5) Entry into Emerging Economies:
 6) Entry into New Technical Markets:
 7) Pressures of Global Competition:
 8) Leveraged Joint Venture:
 9) Creeping Sale or Acquisition:
 10) Catalyst for Change:

39. Advantages of Joint Ventures:
 Joint ventures provide large capital funds. Joint ventures are suitable for major
projects.
 Joint ventures spread the risk between or among partners.
 Different parties to the joint venture bring different kinds of skills like technical skills,
technology, human skills, expertise, marketing skills or marketing networks.
 Joint ventures make large projects and turn key projects feasible and possible.
 Joint ventures provide synergy due to combined efforts of varied parties
 They have more direct participation in the local market and thus gain a better
understanding of how it works
 Companies entering joint ventures are able to exert greater control over the
operation of the joint venture.

40. Disadvantages of Joint Ventures:
 Joint ventures are also potential for conflicts. They result in disputes between or
among parties due to varied interests.
 The partners delay the decision-making once the dispute arises. Then the
operations become unresponsive and inefficient.
 Decision-making is normally slowed down in joint ventures due to the involvement
of a number of parties.
 Scope for collapse of a joint venture is more due to entry of competitors, changes
in the business environment in the two countries, changes in the partners’ strengths
etc.

41. Strategic Alliances:
 Through a strategic alliance, two companies will decide to share resources to
accomplish a specific, mutually beneficial project. This type of agreement is less
involved and less binding than a joint venture, where the two businesses pool
resources in the creation of a separate business entity. Each of the two companies
will maintain their autonomy in a strategic alliance while gaining a new opportunity.

42. Types of Strategic Alliances:
 Technology-based Alliances:
 Many alliances are focused on technology and the sharing of research and development expertise and findings. The most
commonly cited reasons for entering these technology-based alliances are access to markets, exploitation of complementary
technology, and a need to reduce the time it takes to bring an innovation to market.
 Production-based Alliances:
 A large number of production-based alliances have been formed, particularly in the automobile industry. These alliances fall into
two groups:
 i) There is the search for efficiency through component linkages that may include engines or other key components of a car.
 ii) Companies have begun to share entire car models, either by developing them together or by producing them jointly.
 Distribution-based Alliances:
 Alliances with a special emphasis on distribution are becoming increasingly common.
 General Mills, a U.S.-based company marketing breakfast cereals, had long been number two in the United States, with some 27
per cent market share, compared to Kellogg’s 40 to 45 per cent share. With no effective position outside the United States, the
company entered into a global alliance with Nestle of Switzerland.

43. Advantages of Strategic Alliances
 Spread and Reduce Costs
 Specialize in Competencies
 Avoid or Counter Competition
 Gain Location-Specific Assets
 Overcome Governmental Constraints
 Diversify Geographically
 Minimize Exposure in Risky Environments

44. Disadvantages of Strategic Alliances:
 Adverse Selection
 Moral Hazard
 Hold Up
 Access to Information
 Distribution of Earnings
 Potential Loss of Autonomy
 Changing Circumstances

45. Merger
Reasons of Merger
 Economies of Scale
 Operating Economies
 Synergy
 Growth
 Diversification
 Utilization of Tax Shield
 Increase in Value
 Elimination of Competition
 Better Financial Planning
 Economic Necessity

46. Types of Merger
 Horizontal Mergers:
 Horizontal mergers take place when there is a combination of two or more organisations in the same
business, or of organisations engaged in certain aspects of the production or marketing processes. For
example, a company making footwear combines with another footwear company, or a retailer of
pharmaceuticals combines with another retailer in the same business.
 Vertical Mergers:
 Vertical mergers take place when there is a combination of two or more organisations, not necessarily in
the same business, which create complementary, either in terms of supply of materials (inputs) or
marketing of goods and services (outputs). For example, a footwear company combines with a leather
tannery or with a chain of shoe retail stores.
 Concentric Mergers:
 Concentric mergers take place when there is a combination of two or more organisations related to each
other either in terms of customer functions, customer groups, or the alternative technologies used. Thus,
a footwear company combining with hosiery firm making socks or another specialty footwear company,
or with a leather goods company making purses, handbags, and so on.

47. Types of Merger
 Conglomerate Mergers:
 Conglomerate mergers take place when there is a combination of two or more organisations unrelated
to each other, either in terms of customer functions, customer groups, or alternative technologies used.
For example, footwear company combining with pharmaceutical firm.
 Reverse Mergers:
 Reverse merger, also known as a back door listing, or a reverse merger, is a financial transaction that
results in a privately-held company becoming a publicly-held company without going the traditional
route of filing a prospectus and undertaking an initial public offering (IPO).
 Rather, it is accomplished by the shareholders of the private company selling all of their shares in the
private company to the public company in exchange for shares of the public company.
 While the transaction is technically a takeover of the private company by the public company, it is called
a reverse takeover because the public company involved is typically a “shell” (also known as a “blank
check company”, “capital pool company” or “cash shell company”) and it typically issues such a large
number of shares to acquire the private company that the former shareholders of the private company
end up controlling the public company.

48. Advantages of Merger:
 Economies of Scale:
 This occurs when a larger firm with increased output can reduce average costs.
Different economies of scale include
 Technical Economies:
 If the firm has significant fixed costs then the new larger firm would have lower
average costs.
 Bulk Buying:
 Discount for buying large quantities of raw materials.
 Financial:
 Better rate of interest for large company.

49. Advantages of Merger:
 Organisational:
 One head office rather than two is more efficient.
 A vertical merger would have less potential economies of scale than a horizontal merger,
e.g., a vertical merger could not benefit form technical economies of scale.
 International Competition:
 Mergers can help firms deal with the threat of multinationals and compete on an
international scale.
 Mergers May Allow Greater Investment in R&D:
 This is because the new firm will have more profit. This can lead to a better quality of
goods for consumers.
 Greater Efficiency:
 Redundancies can be merited if they can be employed more efficiently.

50. Disadvantages of Merger:
 Integration Difficulties:
 Inadequate Evaluation of Target:
 Large Debt Burden:
 Inability to Achieve Synergy:
 Too much Diversification

51. Acquisition:
 Acquisitions is acquiring or purchasing an existing venture. It is one of the easy
means of expanding a business by entering new markets OT new’ product areas.
 An acquisition strategy is based upon the assumption that companies for potential
acquisition will be available, but if the choice of companies is limited, the decision
may be taken on the basis of expediency rather than suitability.

52. Reasons for Acquisition:
 Increased Market Power
 Overcoming Entry Barriers
 Cost of New Product Development and Increased Speed to Market
 Adequate and Easy Terms Working Capital
 Access to Resourceful Management
 Increased Diversification
 Reshaping the Firm’s Competitive Scope
 Learning and Developing New Capabilities

53. Types of Acquisition:
 Friendly Acquisition:
 Both the companies approve of the acquisition under friendly terms. There is no forceful acquisition and
the entire process is cordial.
 Reverse Acquisition
 One way for a company to become publicly traded, by acquiring a public company and then installing its
own management team and renaming the acquired company.
 Back Flip Acquisition:
 A very rare case of acquisition in which, the purchasing company becomes a subsidiary of the purchased
company.
 Hostile Acquisition:
 Here, as the name suggests, the entire process is done by force. The smaller company is either driven to
such a condition that it has no option but to say yes to the acquisition to save its skin or the bigger
company just buys-off all its share, their by establishing majority and hence initiating the acquisition.

54. The advantages of acquisition are as
follows:
 Assets Acquisition:
 Gain Experience and Assets:
 Excite the Shareholders:
 Combining Organisation Cultures:
 Reducing Costs and Overheads:
 Accessing Funds or Valuable Assets for New Development:

55. Disadvantages of Acquisition:
 Cost
 Employee Retention
 Productivity
 Letter of Intent
 Value
 Duplication
 Wholly-Owned Subsidiary

56. Wholly-Owned Manufacturing
Subsidiary
 A wholly owned subsidiary is a company whose common stock is 100% owned
by another company, the parent company. Whereas a company can become a
wholly owned subsidiary through an acquisition by the parent company or
having been spun off from the parent company, a regular subsidiary is 51 to 99%
owned by the parent company.

57. Advantages of Wholly-Owned
Manufacturing Subsidiary
 No risk of losing technical competence to a competitor thus gaining a
competitive edge.
 It provides tight control over operations.
 It provides the ability to realize learning curve and location economies.
 Protection of technology can be well executed.
 It provides ability to engage in global strategic coordination,
 It provides ability to realize location and experience economies

58. Disadvantages of Wholly-Owned
Manufacturing Subsidiary
 Company bears full cost and risk,
 An effective supervision and direction is needed which increases rigidity.
 It faces several hurdles in the forms of regulations and taxations in foreign
countries.
 Heavier pre-decision information gathering and research evaluation.
 Political risk.

59. Assembly Operation:
 A foreign owned operation might be set up simply to assemble components which
have been manufactured in the domestic market. It has the advantage of reducing the
effect of tariff barriers, which are normally lower on components than on finished
goods. It is also advantageous if the product is large and transport costs are high, e.g.,
in the case of cars.
 There are other benefits, as retaining component manufacture in the domestic plant
allows development and production skills and investment to be concentrated, thus
maintaining the benefit from economies of scale. By contrast, the assembly plant can
be made a relatively simple activity requiring low levels of local management,
engineering skills and development support.

60. Integrated Local Manufacturing:
 Establishing a fully integrated local production unit is the greatest commitment a
company can make for a foreign market.
 Building a plant involves a substantial capital outlay. Companies do so only where
demand appears ensured. International companies can have any number of
reasons for establishing factories in foreign countries.

61. Types of Organizational Structure
 Product Division Structure
 Functional Division Structure
 Geographic Division Structure
 Matrix Division structure
 International Divisions Structure
 Mixed Structure

62. Product Division Structure

64. Geographic Division Structure

65. Matrix Division structure

67. Mixed/Hybrid Structure
 A hybrid organization is an organization that mixes elements, value systems and
action logics (e.g. social impact and profit generation) of various sectors of society,
i.e. the public sector, the private sector and the voluntary sector. A more general
notion of hybridity can be found in Hybrid institutions and governance
 This structure is a form of departmentalization, which combines both functional and
divisional structure. Particularly large organizations adopt this structure to gain the
advantages of both functional and divisional structures.

68. Conflict Management IB
 The conflict in international organizations also challenges competitive strategies,
disseminating the failure in group interaction, synergy and productivity. ... In this
study, it is aimed to draw a theoretical framework of the global leadership and its
role in conflict resolution in international business

69. Sources of Conflict Management
Host Country Factors
 Size and Equity
 Information disclosure
 Visibility
 Regulation and Competition
 Employment
 Technology
 Balance of Pay,ment
 Taxation

70. Sources of Conflict Management
Home Country Factors
 National Security
 Dumping
 Export and Import Control
 Balance of Payment
 Local Industry

71. Types of Conflict
 Interpersonal conflict
 Intrapersonal conflict
 Intra group conflict
 Intergroup conflict

72. Conflict Management Styles

73. Conflict Resolution
 Adjudication
 Adjudication is a judicial process in which the neutral third party makes a decision to
resolve the dispute.
 It can be regarded as a quick (and useful) form of arbitration.
 Arbitration
 Arbitration is a judicial process in which the disputing parties arrange for a neutral
third party to decide the dispute for them.
 It is conducted under the provisions of the Arbitration Act 1996 and amendments.
 The arbitration process can range from informal to formal, and the parties have
some choice about the process.

74. Conflict Resolution
 Meditation
 Mediation is becoming the most common method of alternative dispute resolution. This involves
appointing a neutral, independent trained mediator.
 Mediation is entirely voluntary and conducted on a “without prejudice” basis.
 This simply means that the parties cannot refer to matters discussed during the mediation in any future
Court litigation.
 The Court encourages parties to engage in mediation and a failure to engage in settlement discussions
without a justifiable reason can lead to costs consequences even if the offending party is ultimately
successful at trial
 Negotiation
 In negotiation the people negotiate their own agreement without objective third party
assistance. Individually, people may of course engage extra resources to help strengthen their cases in
the process, eg a trained representative, legal advisor or a trained negotiator.

75. Supporting Institutions in International
Conflict Resolution
 United Nations
 European Union
 World Trade Organization
 World Bank