TP022231 BUSINESS ANALYSIS LIYANA BT ARAZMI

INTRODUCTION

A business is an organized effort to sell products and services on a regular basis by

using different methods, businesses have power through their ability to spend vast amounts of
money. As organizations affect many people, they have obligations to their employees,
consumers, community and the world. They have a responsibility to conduct business in a
way that is not harmful and which positively benefits as many people as possible and
themselves. Any decisions made by businesses need to be made with an informed awareness
of the specific situation and then act according to some sort of system of principals.

The objective of this essay is to establish the differences in business practices between
developed countries and developing countries. Business practices are a methods, procedures
or rules that an organization used as their guidelines in order to reach their business
objectives. Before we jump into the differences between the two types of countries, we need
to have better understanding regarding these two terms. According to World Bank, developed
countries are industrially advanced countries. It is highly income countries, in which most
people have a high standard of living. Sometimes developed countries also have been defined
as countries with a large stock of physical capital, in which most people undertake highly
specialized activities. Examples of developed countries are Japan, United States, Canada, and
Germany.
The definition for developing countries will be vice versa with the developed
countries terms. Developing countries are a nation with low level income countries. It is less
industrialised development countries. Examples of developed countries are Malaysia, China,
India and Russia. Both of the terms gave us different definition, hence their business practices
in developing country also are likely to differ from business practices in developed country as
their definition stated. When you start a business whether it’s a developing or developed
country, there are many factors which you should carefully exam before a business venture is
attempted, and these factors differ from developed and developing countries, some important
factors are; Corporate Social Responsibility (CSR), Bribery, and Outsourcing.

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CORPORATE SOCIAL RESPONSIBILITY (CSR) PRACTICE

First, Corporate Social Responsibility (CSR) in developing country is varying with

developed country. Ramon Mullerat (2009) indicates that Corporate Social Responsibility
(CSR) describes a company’s obligation to manage its activities to protect the interests of all
its stakeholders. The CSR activities in the developing countries tend to have the following
patterns which is business makes a contribution on how to improving the governance, social,
and ethical condition but still consider sensitive issues of each country like religious,
historical and cultural contexts. However, things are likely to be different for CSR in
developed countries whereas their thought of using CSR in their business is for bonding the
long term implications of their actions, both in a social and environmental context.
Developed countries companies believe that the CSR may be driven them to become as a
multinational corporations in order to attract more foreign customer base and investors.
CSR in developed country like United Kingdom, their CSR movements grow in a
large part by a visionary leader such as Shell, and Starbucks. Many businesses in developed
countries are eager to display their CSR principles and processes in order to convey a positive
image of their identity and to gain legitimacy along with support among stakeholders. For
example, case happen in Shell UK. Peter A. Heslin & Jenna D. Ochoa (2002) identify that
Shell wanted to dispose of the Brent Spar, an off-shore oil storage tank, by sinking it into the
deep waters of the North Sea off the coast of Scotland. Research identified that the deep-sea
disposal method as the most environmentally sound option. Shell failed to include
environmental advocacy groups in the decision making process and Greenpeace build up a
campaign to stop Shell’s from continue dispose the tank. Due to that, Shell UK suffered of
falling share prices and public boycotts. Shell lost money, customers, and shareholders. This
shows that how CSR practice is important towards the environmental issue because one
mistake can lead multinational company to fall in the developed countries.

In the other way, CSR in developing country such as Bangladesh face different treat
from CSR. As we all know, CSR in developing countries are more lenient. They still consider
many sensitive issues such as cultural and historical context. Many companies ensure that
their product is made without using the child labour. However, Levi Strauss had found this
creative CSR solution in order to overcome this legal and public relations problem. Peter A.
Heslin & Jenna D. Ochoa (2002) states that based on analysis of labour market in Bangladesh
that most of these children are sole breadwinners, Levi Strauss developed an innovative

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solution. All children who are under 15 went back to school, while the company continued to
pay their wages. Upon completion of their schooling, a job awaited them at the factory,
provided that the applicant could provide their school completion certificate. In order to
support the Levi Strauss’s example, the Bangladesh Garment Manufacturers and Exporters
Association and other trade groups have given $1 million to support underage workers’
education. Levi Strauss in Bangladesh action indicates that they still consider the cultural
value in helping the poor to survive in that country.

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BRIBERY PRACTICE

Secondly, it is about Bribery. OECD - Organisation for Economic Co-operation and

Development (2009) stated that bribery is a specific form of corruption that can be defined as
the voluntary giving of something of value to influence performance of official duty either by
doing something improper of failing to do something they should do within the authority of
their position. Corruption causes by poorly designed economic policies, underdeveloped civil
society, and low levels of education and weak accountability of public institutions. Bribery
incur in most of the business due to bribes help them in lowering the cost of doing the
business, in clearing the market, and providing an incentive bonuses. Both of the developing
country and developed country have a tendency in having bribery practice in their country but
slightly in a different ways. However, corruptions are common among developing country
which is typically have been categorized by ineffective in rules and regulations, the majority
of the population are in lower level of income and poverty is common.
For developing country, bribery can be happen when there are changes in the politic
and economy system. Bribery appears in developing country whose economies are in
evolution, largely due to lack of experience with the coexistence of a private and public
sector. The privatisation or transfer of public ventures or public assets to the aggressive
private sector is also suggested as the introduction of competition to an inexperienced sector
that can also encourage bribery as their public assets are transferred to private ownership.
People in developing country tend to bribe others who have this ability or power to help them
in order to transfer their public business to private ownership.
Otherwise, bribe also happen in a large country which is developed country such as
United Kingdom and United States. Bribery environment in large country are slightly
different compare with the developing country. This is because, bribery in developed country
had happened when developing country require support from the large country. This means
developing country bribe develop country to get aid or support from them. For example, large
business and rich individuals give aid in financing an election and sometimes develop a
symbiotic connection with those who have the power. In the absence of big native
businessmen and businesswomen, the endeavour is to create them by granting special
favours, licenses, and concessions in a manner that allow these business people to make huge
sums of money – a good deal of which is then kicked back into political finance. This is the
new frontier in corruption and the financing of democracy.

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OUTSOURCING PRACTICE

The other business practice that many of organizations can apply for their business is
outsourcing. Maurice F. Greaver (1999) identified that outsourcing is the act of transferring
some of an organization’s recurring internal activities and decision right to outside providers,
as set forth in a contract. The main reason for a company outsource some of their production
processes is the wage difference between countries. For example, wages paid in India or
China is usually only in a minimum wages for the same profession in the United States. We
can take as example the difference in wages for telephone operators in the United States (an
average of 12, 72 $ per hour) and telephone operators in India (an average of less than 1 $ per
hour). (Source: Bardhann and Kroll, 2003).
There are few factors why outsourcing is needed in every business. For examples,
many of businesses need outsourcing manpower and skill advantage, technical and cost
advantage for their business. Developing country and developed country really needed each
other for outsourcing practice. It is like a win-win situation. Developing country such as
United States tend to do outsource from the developed country such as Mexico in order to get
minimum paid but they will get the same product or quality that can be done by their own
workers whereas developing country such as China and Indonesia will keep outsource
product or workers to the developed country. This means that, developing country will be the
major destination for outsourcing due to the low-cost labour and high-technology in
manufacturing.
For instance, in United States many of jobs were off shored to Mexico after the
introduction of the North American Free Trade Agreement (NAFTA) in 1993. This is
because manufacturers in the United States were usually had been paid $15 to $25 an hour as
well as they can also get health care and retirement benefit, however things are slightly
different if they offshore jobs to Mexico. NAFTA allowed them to hire Mexican workers to
do the same jobs for a dollar for an hour without benefits. Things turn to different way when
the introduction of US acceptance of the General Agreement on Trade and. Since a worker in
Mexico would do for a dollar an hour what a worker in the United States did for $25 an hour,
companies dismissed millions of their workers and sent their jobs to Mexico. However, they
find out that Mexican labour at $1 an hour was a lot more expensive than labour in China,
where production workers work for of a fifth or a quarter of the Mexican wage. So Mexico
began to lost jobs because of that.

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As a fast developing country, China has long been recognized as a popular place to
outsource. Low-cost labour and high-technology manufacturing have made China the leading
destination for outsourcing. For example, China have a ready supply skilled labour to take on
outsourced jobs because of the produces about 351,000 engineers with full engineering
degrees compared with the United States which only produce around 137,000 engineers.
Other than that, larger accounting and consulting firms such as Bearing Point, Infosys are
well-positioned to benefit from China’s highly educated, lower cost workforce.

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CONCLUSION

The main reasons why business practice has been used in developed countries will be
slightly differ from business methods used in developing countries. Developed countries like
United States and Japan have well developed and stable economy and good infrastructure,
while developing countries like China and India have vulnerable economy and in developing
countries their infrastructure is not well developed, this directly influences all types of
businesses.
Business practices that mentioned in this essay such as Corporate Social
Responsibility (CSR), Bribery, and Outsourcing are important in order for every business to
keep succeed on their track. We need to have better understanding in each of the terms as the
nature of the globalization keeps changing. Every firm in developing country and developed
country will not be missed in practice one or more of these practices in doing their
businesses.

Word Count: 2189

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APPENDIXES

GDP for each country

Country Subject Descriptor Unit Income 2009
Afghanistan GDP per capita U.S. dollars 486.111
Argentina GDP per capita U.S. dollars 7,725.66
Australia GDP per capita U.S. dollars 45,586.53
Bangladesh GDP per capita U.S. dollars 573.79
Brazil GDP per capita U.S. dollars 8,220.36
Brunei Darussalam GDP per capita U.S. dollars 26,325.48
Canada GDP per capita U.S. dollars 39,668.62
China GDP per capita U.S. dollars 3,677.86
France GDP per capita U.S. dollars 42,747.22
Germany GDP per capita U.S. dollars 40,874.64
Hong Kong SAR GDP per capita U.S. dollars 29,825.55
Hungary GDP per capita U.S. dollars 12,926.50
India GDP per capita U.S. dollars 1,030.79
Indonesia GDP per capita U.S. dollars 2,329.45
Japan GDP per capita U.S. dollars 39,731.04
Korea GDP per capita U.S. dollars 17,074.33
Malaysia GDP per capita U.S. dollars 6,896.74
Maldives GDP per capita U.S. dollars 3,932.08
Mexico GDP per capita U.S. dollars 8,134.75
Myanmar GDP per capita U.S. dollars 459.365
Nepal GDP per capita U.S. dollars 451.941
New Zealand GDP per capita U.S. dollars 27,259.12
Philippines GDP per capita U.S. dollars 1,745.60
Russia GDP per capita U.S. dollars 8,693.80
Singapore GDP per capita U.S. dollars 37,293.42
Thailand GDP per capita U.S. dollars 3,939.63
United Kingdom GDP per capita U.S. dollars 35,334.32
United States GDP per capita U.S. dollars 46,380.91

International Monetary Fund, World Economic Outlook Database, April 2010

Available from:

[Link]
pr.x=12&pr.y=11&sy=2009&ey=2009&scsm=1&ssd=1&sort=country&ds=.&br=1&c=512%2C941
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37%2C193%2C962%2C122%2C674%2C912%2C676%2C313%2C548%2C419%2C556%2C513%2
C678%2C316%2C181%2C913%2C682%2C124%2C684%2C339%2C273%2C638%2C921%2C514
%2C948%2C218%2C943%2C963%2C686%2C616%2C688%2C223%2C518%2C516%2C728%2C9
18%2C558%2C748%2C138%2C618%2C196%2C522%2C278%2C622%2C692%2C156%2C694%2
C624%2C142%2C626%2C449%2C628%2C564%2C228%2C283%2C924%2C853%2C233%2C288
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68%2C423%2C922%2C935%2C714%2C128%2C862%2C611%2C716%2C321%2C456%2C243%2
C722%2C248%2C942%2C469%2C718%2C253%2C724%2C642%2C576%2C643%2C936%2C939

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48%2C362%2C915%2C364%2C134%2C732%2C652%2C366%2C174%2C734%2C328%2C144%2
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%2C474%2C443%2C754%2C917%2C698%2C544&s=NGDPDPC&grp=0&a=#download

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Minimum wages by country

Gross
annual wage % of 2008 GDP
Country Minimum wage Effective
(International per capita
dollars)

2,000 Afghani per month for

Afghanistan government and private 858 113 N/A
sector workers

1,240 Argentine pesos a

Argentina 8,212 57 2008-12-01
month, nationally

$570.00 Australian dollars

Australia per week; set federally by the 19,029 51 2010-06-04
Fair Work Australia

1,800 taka a month; set

nationally every five years by
the National Minimum Wage
Board in a tripartite forum for
Bangladesh 844 61 2007
all economic sectors not
covered by industry- specific
wages, using a skill-level
range

Brazil R$ 510.00 reais per month 3,600 35 2010-01-01

set by each province and

territory; ranges from C$8.00
Canada to C$10.25 per hour (see List 16,234 41 2001-11-01
of minimum wages in
Canada)

People’s none, nationally; set locally

Republic of according to standards laid — — —
China out by the central government

Republic of NT$17,280 a month; NT$104

11,930 39 2007-07-01
China (Taiwan) per hour

€8.82 per hour; €1,337.70 per

month for 151.67 hours
France 17,563 51 2009-06-26
worked (or 7 hours every
weekday of the month)

Germany none, except for construction — — —

workers, electrical workers,

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janitors, roofers, painters, and

letter carriers; set by
collective bargaining
agreements in other sectors of
the economy and enforceable
by law

HK$3,580 per month for

foreign domestic workers; bill
Hong Kong 7,859 18 N/A
for city-wide minimum wage
introduced

73,500 Hungarian forint per

Hungary 6,477 33 2010-01-01
month

N/A; varies according to the

state and to the sector of
India industry; state governments N/A N/A N/A
set a separate minimum wage
for agricultural workers

established by provincial and

district authorities, which
vary by province, district, and
Indonesia sector; as high as 1,100,000 1,100 28 N/A
rupiah per month in Papua; as
low as 500,000 rupiah per
month in East Java

ranges from 618 Japanese yen

Japan to 739 yen per hour; set on a 11,027 32 N/A
prefectural and industry basis

South 4,110 South Korean won per

11,207 41 2010
Korea hour; reviewed annually

none, nationally; 350

Malaysian ringgit per month
Malaysia for plantation workers; raised 4,357 31 N/A
to 700 ringgit by productivity
incentives and bonuses

2,600 Maldivian rufiyaa per

Maldives month in the government 3,308 67 N/A
sector

Mexico daily minimum wages set 1,810 12 2010-01-01

annually by law and
determined by zone; 57.46

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Mexican pesos in Zona A

(Baja California, Federal
District, State of Mexico, and
large cities), 55.84 pesos in
Zone B (Sonora, Nuevo León,
Tamaulipas, Veracruz, and
Jalisco), and 54.47 pesos in
Zone C (all other states)

15,000 Myanma kyat a month

for salaried public employees;
500 kyat per day for day
Myanmar 410 35 N/A
laborers, supplemented by
various subsidies and
allowances

4,600 Nepalese rupees a

month for unskilled labor
(3,050 rupees as a basic
salary, and 1,550 rupees as an
Nepal 2,124 186 2008-09-17
allowance); 4,650 NRS for
semi-skilled labor; 4,760
NRS for skilled labor; 4,950
NRS for highly skilled labor

NZ$12.75 per hour for

workers 18 years old or older,
and NZ$10.20 per hour for
New those aged 16 or 17 or in
17,066 63 2010-04-01
Zealand training; there is no statutory
minimum wage for
employees who are under 16
years old

ranges from P187 a day for

agricultural workers in the
Southern Tagalog Region to
P382 a day for
Philippines 2,078 59 2008
nonagricultural workers in the
National Capital Region; set
by tripartite regional wage
boards

4,330 Russian rubles per

month; essentially an
Russia 2,819 18 2008
accounting reference for
calculating transfer payments

Thailand ranges from 148 Thai baht to 2,308 28 N/A

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203 baht per day, depending

on the cost of living in
various provinces; set by
provincial tripartite wage
committees that sometimes
include only employer
representatives

£5.80 per hour (aged 22 and

older), £4.83 per hour (aged
United
18–21) or £3.57 per hour 22,375 61 2009-10-01
Kingdom
(under 18 and finished
compulsory education)

the federal minimum wage is

US$7.25 per hour; states may
also set a minimum, in which
United
case the higher of the two is 15,080 32 2009-07-24
States
controlling (see Minimum
wage in the United States,
List of U.S. minimum wages)

This article is from [Link]. Available from:

[Link]

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 Maurice F. Greaver, (1999) Strategic outsourcing: a structured approach to
outsourcing decisions and initiatives, AMACOM Div American Mgmt Assn.
 Ramon Mullerat, (2009) International Corporate Social Responsibility: The Role of
Corporations in the Economic Order of the 21st Century page 14, Kluwer Law
International.
 OECD - Organisation for Economic Co-operation and Development (2009) OECD
Bribery Awareness Handbook for Tax Examiners 2009 page 16, OECD Publishing.
 Business dictionary (online) available from: (accessed date: 2nd June 2010)
[Link]

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 Corruption: Myths and Realities in a Developing Country Context (online) available

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[Link]
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[Link]
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