Ethical Cultures In Large Business Organizations Essay

Question:

Discuss about the Ethical Cultures in Large Business Organizations.

Answer:

Introduction

Going Global is a small but a unique consultancy firm which has its worldwide presence. The primary business of the company is developing the presence of various businesses in several international markets. The targeted market for this report is the Indian pharmaceuticals market as one of the clients of Going Global wants to expand its business in India. The Indian pharmaceutical market is recognised as the 3rd leading market in volume and 13th biggest market in value terms (India Brand Equity Foundation, 2017). In the field of providing generic drugs, India is recognised as the global market leader. There is a presence of highly budding and practised scientists and engineers who possess the great potential to make the pharmaceutical grow and develop rapidly.

(Source: India Brand Equity Foundation, 2017)

From the period of 2005 to the year 2016, Indian pharmaceutical industry has increased its Compound Annual Growth Rate (CAGR) by 17.46 percent (India Brand Equity Foundation, 2017). It is expect that by the year 2020, Indian pharmaceutical industry will be among the top 3 growing markets across the world.

(Source: India Brand Equity Foundation, 2017)

From revenue perspectives, the supply of generic drugs is the primary revenue source for the Indian pharmaceutical industry. The global pharmaceutical market stands for an overall 20 percent of generic drugs supply by the Indian market only (India Brand Equity Foundation, 2017). Therefore, the German client of Global Consultancy wants to expand its business in India because of such highly potential growth trends.

Essential requirements for successfully doing business in India

There are several things which are required to be considering before entering into any international market. These includes the cultural factors which impact the negotiations at the time of entry, to have an association with the people of India and various ethical standards which are essential to be followed for performing business in India. By considering all the above mentioned factors, the company can achieve successful entry and business operations in India.

Cultural factors affecting negotiations at the start-up phase

(Source: Salacuse, 2004)

At the time of international business negotiation, there are several cultural factors which create problems for the company as the global business is not only the cross-border deal but also the cross-cultural deal. The primary influence of the cultural factor is imposing on the way people behave, communicate and think. Following are the cultural factors in India which impact the negotiation process:

Attitudes and Style

The key approach to negotiation in India is to take use of contingency and distributive bargaining. In India, the people anticipate long-term commitments and agreements from the international business partners so that there can be attained long-term and continuing benefits. The Indians also look forward to win-win solutions and have a competitive approach to negotiation. And if there takes place any dispute at the time of consultation, then it is recommended that the international business partners should resolve the matter by a friendliness approach by showing a sense of willingness to compromise and respect to them. It will indicate that the opposite party has a strong commitment and will help in building a good association among both sides and will assist in achieving positive outcomes of negotiation (Katz, 2008).

Sharing of information

The Indian negotiators have a tendency to first collect several details and information before reaching the stage of bargaining in negotiation. Therefore, it is recommend that for building trust the German client must provide all the information and details quite openly. It is not necessary to reveal everything, but if there is hiding of info, then it is consider as outsmarting the other party.

Pace of negotiation

To have a successful negotiation, it is advisable that one should maintain patience and have control over the emotions. There should be no delay from the company’s side so that the commitment can reflect. As well as there can be some trips, the German client must be ready for undertaking those trips for having a winning negotiation. In India, there is taken use of holistic approach at the time of negotiation which results into jumping forth or back into the topics rather than working in a sequential order. Thus, it is essential that a positive approach should be there while completing the negotiation (Boden, et al., 2012).


Bargaining

Bargaining is one of the essential factors in the process of negotiation as Indian people love doing bargaining. There can be seen a difference of around forty percent in the final agreement made after negotiation and in the initial offers. Therefore, it is suggested to the German client that they must have a good trade before having a final agreement so that, they can achieve high discounts at the time of negotiation.

Decision Making

In India, the decision making process is a deliberate and a slow process. There is rarely any delegation of the authorities, the primary and the key decisions are taken by the senior executives only. Hence it is necessary that all the communication related to the negotiation must be done with the higher authorities only, so that; there is a probability of positive results. At the time of taking decisions, the Indian individuals do not only consider the universal principles but also have significant consideration over specific situations. The individual experiences, as well as the personal feelings, have a great significance; therefore, the decisions taken by the German client must also consider these facts at the time of negotiation (Hofstede, Jonker and Verwaart, 2012).

Building relationships with Indians

The interpersonal affairs are of vital importance in the Indian business practices. In India collectivist culture is given high significance and as a result, people use to work well within teams and groups. To have a successful business or business partnerships in India, it is essential to develop an informal association with the Indian people other than the business relationships. In Indian business practices, there is the establishment of trust and faith by these personal associations rather than the legal agreements. Therefore, instituting robust business relationships can be difficult without developing a personal one (Singla and George, 2013).

For building improved and strong relationships, there must be sharing information rated to family, friends, culture, personal interests, etc. the German client should have informal meetings with the Indian client so that there can spend a good portion of time knowing each other and establishing a real connection. It will help the company in developing a trust-based association as well as achieving long-term sustainability in the overseas market. It will also assist the business in having a good business negotiation. For having an improved communication with the Indian people, the German client must take use of any mediator who can actually communicate and pass on messages in a more understandable language. There are various barriers which develop due to the difference in language. Hence, by having an active communication channel, there will be the development of a robust corporate relationship. As well as the international executives must give an assurance to India people that there will be a long-term alliance between them (Sinkovics, Sinkovics and Yamin, 2014).

Ethical standards when doing business in India

There are several ethical standards which are required to be followed while doing business in India as these standards are the foundation of any fine business association.

Honesty and Integrity

It is necessary that all the communication and actions must be full of goodness. When individuals take sound decisions there builds a relationship of trust among them. Remaining honest and trustworthy is one of the most significant ethical standards for doing any business in India. The relations are more depend upon the foundation of trust instead of contract and agreements. It is required that all the dealing must free from selective omissions, partial truths, overstatements and misrepresentations. It is also essential that the individuals must maintain integrity while doing business in India. The activities undertaken should be morally upright so that people can develop a bond of reliance in performing companies (Cavusgil, et al., 2014).

Law Abiding

There are several laws, rules and regulations in India which every business organisation is required to follow and abide. Any company which does not follow these regulations is considered as ethically unsound. Therefore, it is necessary that all the laws and rules must be obeyed by the German company also for having a sustainable future in India.

Accountability

The ethical executives in India accept as well as acknowledge individual responsibility of the international business executives. For being ethically sound it is essential that one should be responsible so that the decisions taken can also be considered as moral and right. Not only the individual accountability, but the business executives should also be accountable for the community, their organisation as well as for their colleagues (Ardichvili, et al., 2012).

Recommendations

There are few recommendations for the German client who wants to establish the pharmaceutical business in India so that the company can achieve improved results and successful expansion:

  • Before making the negotiations, the company should have an in-depth analysis and research of the Indian market so that a proper insight can be gained. The research will help the company in making better negotiations as per the market demand as well as the Indian culture. As per the Hofstede's cultural theory, the culture of a society impacts the values and behavior of the individuals, therefore, the better understanding of Indian culture and values will support the successful completion of the bargaining process.
  • Another recommendation for the German client is that while building the association with Indian people, there should be laid more emphasis on the various cultural factors. The communications must include a high level of respect as Indians consider as a sense of dignity. Any communication without respect pose negative impact on the individuals, and it results in adverse business outcomes. As per the intercultural communication theory of Hall, it is vital to have efficient cultural communications as it will support in having friendly terms between the individuals (Thomas and Peterson, 2014).
  • It is also recommended that there should be maintained high ethical balance and accountability as the pharmaceutical industry is one of the critical industries for working. Therefore, manufacturing or supply of any medicine and drugs must authenticate and free of any errors or misrepresentation. As a single error may result into complete defilement of the brand image of the company in the eyes of the customers.

Conclusion

The Indian pharmaceutical industry is one of the fastest booming industries across the world. The German client can have an efficacious expansion if an appropriate research is undertaken of the Indian culture. It is concluded that at the time of any international development it is necessary to have an understanding of the ethical considerations, cultural factor, values and principles of the host country. The deeper the understanding of these factors, the better are the results of expansion. In the negotiation phase also, if the company understands the attitudes and styles of Indian people, share information in an open manner, maintains the pace of negotiation, have an effective bargaining and takes a personal approach at the time of decision making then it will help in achieving a successful negotiation agreement. It has also been analysed that Indian culture give much importance to personal associations, therefore by having a friendly relationship, the German company can achieve a potential business operation in India. There are several ethical standards which are obligatory to follow, and if the company works with those ethical standards, then it can achieve much greater customer support and brand recognition. Hence, from the overall analysis, it can be stated that there are potential opportunities in the pharmaceutical industry of India for the international companies to develop and achieve success.

References

Ardichvili, A., Jondle, D., Kowske, B., Cornachione, E., Li, J. and Thakadipuram, T., 2012.Ethical cultures in large business organizations in Brazil, Russia, India, and China. Journal of Business Ethics, 105(4), pp.415-428.

Boden, A., Avram, G., Bannon, L. and Wulf, V., 2012. Knowledge sharing practices and the impact of cultural factors: reflections on two case studies of offshoring in SME. Journal of software: Evolution and Process, 24(2), pp.139-152.

Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business.Pearson Australia.

Hofstede, G.J., Jonker, C.M. and Verwaart, T., 2012.Cultural differentiation of negotiating agents. Group Decision and Negotiation, 21(1), pp.79-98.

India Brand Equity Foundation, 2017.Indian Pharmaceutical Industry.Accessed on: 12th March, 2017. Accessed from:

Katz, L., 2008. Negotiating International Business – India, Pp.7. Accessed on: 12th March, 2017. Accessed from:

Salacuse, J.W., 2004. Negotiating: The Top Ten Ways that Culture Can Affect Your Negotiation.Accessed on: 12th March, 2017. Accessed from:

Singla, C. and George, R., 2013. Internationalization and performance: A contextual analysis of Indian firms. Journal of Business Research, 66(12), pp.2500-2506.

Sinkovics, N., Sinkovics, R.R. and Yamin, M., 2014. The role of social value creation in business model formulation at the bottom of the pyramid–implications for MNEs?. International Business Review, 23(4), pp.692-707.

Thomas, D.C. and Peterson, M.F., 2014. Cross-cultural management: Essential concepts. Sage Publications.

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