international business project

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timer Asked: Feb 1st, 2021

Question Description

hi

i need a help on international business project

first, you have to make a report (check the PROJECT GUIDELINES FOR THE COUNTRY REPORT)

secondly, you have to make the long report (check the GUIDELINES FOR THE INTERNATIONAL EXPANSION)

you must choose a Saudi company for example, Almaraai company, SABIC company...etc)

Also, you have to prepare a presentation about the final report

i attached the slides to help you understand the subjects

so, to sum up every thing prepare1- country report 2- expansion report 3- PowerPoint presentation

Unformatted Attachment Preview

Course: International Business (351BUS) Course instructor: Dr. ALAWIYA ALLUI THE REQUIRED STAGES OF THE COLLECTIVE PROJECT: 1. Choose a Saudi company and assume the latter seeks international expansion. 1.1. General Introduction of the country chosen for the whole project. (1.0 Mark) 1.2. Study the country’s chosen political, economic and legal systems. "here give the principal characteristics of these three types of system". Based on what has been explained in chapter 2 ( 6 Marks) 1.3 Study the political, economic and legal systems of the chosen country using the current data (2019-2020). (3 Marks) Be continued in the next page 1 Country report : 10 Marks VERY Important dates : • Submission of the study country project : the 9th week on Sunday or Tuesday. • Submission of the international expansion project and the whole project: the 13 th week on Tuesday. • Presentations : the 14 th week. 2 Course: International Business (BUS351) Course instructor: Dr. ALAWIYA ALLUI DETAILS OF THE INTERNATIONAL EXAPANSION REPORT: 1. Give a small idea about this company: principal activity, size, employees' number, competitive advantage in the national Market (Porter’s national diamond of national advantage). (3.0 Mark) 2. Describe the type of FDI decision of your company and give its justification (1.0 Mark) 3. Describe the Strategic Position of your company (Low Cost or Differentiation and its justification) and which Global Strategy is relevant for your company and its justification. (2.0 Mark) 4. Describe the synthesis of your company strategy, the structure of your company and its controls? Describe the four marketing mix for your company in the country chosen (2.0 Mark) 5. Describe the staffing policy chosen for your company and its advantages. Finally, give the conclusion and summary of why your company will be successful and earn competitive advantage in the country chosen. 1 Internatio nal Expansion Report: 10 Marks VERY Important dates : • Submission of the study country project : the 9th week on Sunday or Tuesday. • Submission of the international expansion project and the whole project: the 13 th week on Tuesday. • Presentations : the 14 th week. 2 International Business 11e By Charles W.L. Hill Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 1 Globalization Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LEARNING OBJECTIVES After reading this chapter you will be able to: ➢ L01 Understand what is meant by the term globalization. ➢ L02 Recognize the main drivers of globalization. ➢ L03 Describe the changing nature of the global economy. ➢ LQ4 Explain the main arguments in the debate over the impact of globalization. ➢ L05 Understand how the process of globalization is creating opportunities and challenges for business managers. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-3 What Is Globalization? ➢ Globalization - the shift toward a more integrated and interdependent world economy ➢ The world is moving away from self-contained national economies toward an interdependent, integrated global economic system Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-4 What Is The Globalization of Markets? ➢ Historically distinct and separate national markets are merging into one huge global marketplace ➢ Consumer products such as Citigroup credit cards, Coca-Cola soft drinks, Sony PlayStation video games, McDonald's hamburgers, Starbucks coffee, and IKEA furniture are frequently held up as prototypical examples of this trend. ➢ There is the “global market” ➢ falling trade barriers make it easier to sell globally ➢ consumers’ tastes and preferences are converging on some global norm ➢ firms promote the trend by offering the same basic products worldwide Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-5 What Is The Globalization of Markets? ➢ Firms of all sizes benefit and contribute to the globalization of markets ➢ Markets for industrial goods and materials that serve a universal need the world over. ➢ 97% of all U.S. exporters have less than 500 employees ➢ 98% of all small and mid-sized German companies participate in international markets Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-6 What Is The Globalization of Production? ➢ Firms source goods and services from locations around the globe to capitalize on national differences in the cost and quality of factors of production like land, labor, energy, and capital ➢ Consider Boeing's 777, a commercial jet airliner. Eight Japanese suppliers make parts for the fuselage, doors, and wings; a supplier in Singapore makes the doors for the nose landing gear; three suppliers in Italy manufacture wing flaps; and so on ➢ Airbus Video ➢ Companies can ➢ lower their overall cost structure ➢ improve the quality or functionality ➢ of their product offering Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-7 Why Do We Need Global Institutions? ➢Global institutions ➢ help manage, regulate, and police the global marketplace ➢ promote the establishment of multinational treaties to govern the global business system Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-8 Why Do We Need Global Institutions? ➢ Examples include ➢ the General Agreement on Tariffs and Trade (GATT) ➢ the World Trade Organization (WTO) ➢ the International Monetary Fund (IMF) ➢ the World Bank ➢ the United Nations (UN) ➢ the G20 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-9 What Do Global Institutions Do? ➢ The World Trade Organization (like its predecessor GATT) ➢ polices the world trading system ➢ makes sure that nation-states adhere to the rules laid down in trade treaties ➢ promotes lower barriers to trade and investment ➢ There are 164 members of the World Trade Organization (WTO), accounting for 81% of the 202 countries in the world Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-10 What Do Global Institutions Do? ➢ The International Monetary Fund (1944) ➢ maintains order in the international monetary system ➢ lender of last resort for countries in crisis ➢ Argentina, Indonesia, Mexico, Russia, South Korea, Thailand, Turkey, Ireland, and Greece ➢ The World Bank (1944) ➢ promotes economic development via low interest loans for infrastructure projects Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-11 What Do Global Institutions Do? ➢ The United Nations (1945) ➢ maintains international peace and security ➢ develops friendly relations among nations ➢ cooperates in solving international problems and in promoting respect for human rights ➢ is a center for harmonizing the actions of nations Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-12 What Do Global Institutions Do? ➢ The G20 forum through which the major nations tried to launch a coordinated policy response to the 2008-2009 global financial crisis ➢ Established in 1999, the G20 comprises the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank ➢ https://saudigazette.com.sa/article/57 0280 ➢ https://g20.org/en/Pages/home.aspx Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-13 What Is Driving Globalization? ➢ Declining barriers to the free flow of goods, services, and capital ➢ average tariffs are now at just 4% ➢ more favorable environment for FDI ➢ global stock of FDI was $20.4 trillion in 2011 ➢ facilitates global production ➢ Technological change ➢ microprocessors and telecommunications ➢ Internet: information backbone of the global economy ➢ transportation technology Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-14 What Does Globalization Mean For Firms? ➢Lower barriers to trade and investment mean firms can ➢ view the world, rather than a single country, as their market ➢ base production in the optimal location for that activity ➢But, firms may also find their home markets under attack by foreign firms Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-15 Declining Trade And Investment Barriers Average Tariff Rates on Manufactured Products as Percent of Value https://blogsimages.forbes.com/niallmccarthy/files/2018/03/20180323_Tariff_Map_Forbes.jpg Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-16 What Does Globalization Mean For Firms? ➢ Technological change means ➢ lower transportation costs ➢ help create global markets and allow firms to disperse production to economical, geographically separate locations ➢ low cost information processing and communication ➢ firms can create and manage globally dispersed production ➢ low cost global communications networks ➢ help create an electronic global marketplace ➢ global communication networks and global media ➢ create a worldwide culture and a global consumer product market Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-17 The Changing Demographics Of The Global Economy ➢ Four trends are important: 1. The changing world output and world trade picture 2. The changing foreign direct investment picture 3. The changing nature of the multinational enterprise 4. The changing world order Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-18 1. How Has World Output And World Trade Changed? ➢In 1960, the U.S. accounted for almost 40% of world economic activity, but by 2012, the U.S. accounted for just 23% ➢ a similar trend occurred in other developed countries ➢In contrast, the share of world output accounted for by developing nations is rising ➢ expected to account for more than 60% of world economic activity by 2020 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-19 1. How Has World Output And World Trade Changed? The Changing Demographics of World Output and Trade Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-20 2. How Has Foreign Direct Investment Changed Over Time? ➢In the 1960s, U.S. firms accounted for about two-thirds of worldwide FDI flows ➢ Today, the United States accounts for less than one-fifth of worldwide FDI flows ➢ Other developed countries have followed a similar pattern ➢In contrast, the share of FDI accounted for by developing countries has risen ➢ Developing countries, especially China, have also become popular destinations for FDI Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-21 2. How Has Foreign Direct Investment Changed Over Time? Percentage Share of Total FDI Stock 1980-2013 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-22 2. How Has Foreign Direct Investment Changed Over Time? FDI Inflows 1980-2013 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-23 3. THE CHANGING NATURE OF THE MULTINATIONAL ENTERPRISE ➢ Multinational enterprise (MNE) - any business that has productive activities in two or more countries ➢ Since the 1960s ➢ the number of non-U.S. multinationals has risen ➢ the number of minimultinationals has risen Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-24 3. THE CHANGING NATURE OF THE MULTINATIONAL ENTERPRISE Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-25 4.The Changing World Order ➢ Many former Communist nations in Europe and Asia are now committed to democratic politics and free market economies ➢ creates new opportunities for international businesses ➢ but, there are signs of growing unrest and totalitarian tendencies in some countries ➢ China and Latin America are also moving toward greater free market reforms ➢ between 1983 and 2010, FDI in China increased from less than $2 billion to $100 billion annually ➢ but, China also has many new strong companies that could threaten Western firms Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-26 Hisense CEO Zhou Houjian led his company to become one of China’s top-selling electronics manufacturers by using a strategy of rapid innovation and low-cost manufacturing. If you were given the chance to run a leading electronics company, would you use a similar approach to grow your brand? Or would you devote more time to research and development and produce fewer products at a higher price point? Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-24 Debate: How Will The Global Economy Of The 21st Century Look? ➢ The world is moving toward a more global economic system… ➢ But globalization is not inevitable ➢ there are signs of a retreat from liberal economic ideology in Russia ➢ Globalization brings risks ➢ the financial crisis that swept through South East Asia in the late 1990s ➢ the recent financial crisis that started in the U.S. in 2008-2009, and moved around the world Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-28 Is An Interdependent Global Economy A Good Thing? ➢ Supporters believe that increased trade and crossborder investment mean ➢ lower prices for goods and services ➢ greater economic growth ➢ higher consumer income, and more jobs ➢ Critics worry that globalization will cause: ➢ job losses ➢ environmental degradation ➢ the cultural imperialism of global media and MNEs ➢ Anti-globalization protesters now regularly show up at most major meetings of global institutions Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-29 Impact: How Does Globalization Affect Jobs And Income? ➢Critics argue that falling barriers to trade are destroying manufacturing jobs in advanced countries ➢Supporters contend that the benefits of this trend outweigh the costs ➢ countries will specialize in what they do most efficiently and trade for other goods—and all countries will benefit Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-30 How Does Globalization Affect Jobs And Income? Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-31 How Does Globalization Affect Labor Policies And The Environment? ➢ Critics argue that firms avoid the cost of adhering to labor and environmental regulations by moving production to countries where such regulations do not exist, or are not enforced ➢ Supporters claim that tougher environmental and labor standards are associated with economic progress ➢ as countries get richer from free trade, they implement tougher environmental and labor regulations ➢ https://www.arabnews.com/node/1731141/saudi-arabia Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-32 How Does Globalization Affect National Sovereignty? ➢ Is today’s global economy shifting economic power away from national governments toward supranational organizations like the WTO, the EU, and the UN? ➢ Critics argue that unelected bureaucrats have the power to impose policies on the democratically elected governments of nation-states ➢ https://www.arabnews.com/ ➢ Supporters claim that the power of these organizations is limited to what nationstates agree to grant ➢ the power of the organizations lies in their ability to get countries to agree to follow certain actions Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-33 How Is Globalization Affecting The World’s Poor? ➢ Is the gap between rich nations and poor nations getting wider? ➢ Critics believe that if globalization was beneficial there should not be a divergence between rich and poor nations ➢ Supporters claim that the best way for the poor nations to improve their situation is to ➢ https://www.youtube.com/watch?v=3oTLy PPrZE4 ➢ reduce barriers to trade and investment ➢ implement economic policies based on free market economies ➢ receive debt forgiveness for debts incurred under totalitarian regimes Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-34 How Does The Global Marketplace Affect Managers? ➢ Managing an international business differs from managing a domestic business because ➢ countries are different ➢ the range of problems confronted in an international business is wider and the problems more complex than those in a domestic business ➢ firms have to find ways to work within the limits imposed by government intervention in the international trade and investment system ➢ international transactions involve converting money into different currencies Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-35 LEARNING OBJECTIVES After reading this chapter you will be able to: ➢ L01 Understand what is meant by the term globalization. ➢ L02 Recognize the main drivers of globalization. ➢ L03 Describe the changing nature of the global economy. ➢ LQ4 Explain the main arguments in the debate over the impact of globalization. ➢ L05 Understand how the process of globalization is creating opportunities and challenges for business managers. Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-36 International Business 11e By Charles W.L. Hill Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 2 National Differences in Political, Economic, and Legal Systems Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LEARNING OBJECTIVES: After reading this chapter you will be able to: ➢ L01 Understand how the political systems of countries differ. ➢ L02 Understand how the economic systems of countries differ. ➢ L03 Understand how the legal systems of countries differ. ➢ L04 Explain the implications for management practice of national differences in political economy. 2-3 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LO1:What Is A Political Economy? ➢Political economy of a nation - how the political, economic, and legal systems of a country are interdependent ➢ they interact and influence each other ➢ they affect the level of economic well-being in the nation 2-4 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is A Political System? ➢ Political system - the system of government in a nation ➢ Assessed according to two dimensions: ➢ the degree to which the country emphasizes collectivism as opposed to individualism ➢ the degree to which the country is democratic or totalitarian 2-5 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is Collectivism? ➢ Collectivism stresses the primacy of collective goals over individual goals ➢ can be traced to the Greek philosopher, Plato (427-347 BC) ➢ Today, collectivism is equated with socialists (Karl Marx 1818-1883) ➢ advocate state ownership of the basic means of production, distribution, and exchange ➢ manage to benefit society as a whole, rather than individual capitalists 2-6 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. ➢ How Does Modern-Day Socialism Look? In the early 20th century, socialism split into 1. Communism – socialism can only be achieved through violent revolution and totalitarian dictatorship ➢ in retreat worldwide by mid-1990s 2. Social democrats – socialism is achieved through democratic means ➢ retreating as many countries move toward free market economies ➢ state-owned enterprises have been privatized 2-7 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is Individualism? ➢ Individualism refers to philosophy that an individual should have freedom in his own economic and political pursuits ➢ can be traced to Greek philosopher, Aristotle (384-322 BC) ➢ individual diversity and private ownership are desirable ➢ ➢ individual economic and political freedoms are the ground rules on which a society should be based ➢ implies democratic political systems and free market economies 2-8 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is Democracy? ➢ Democracy - a political system in which government is by the people, exercised either directly or through elected representatives: ➢ usually associated with individualism ➢ pure democracy is based on the belief that citizens should be directly involved in decision making ➢ most modern democratic states practice representative democracy where citizens periodically elect individuals to represent them 2-9 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is Totalitarianism? ➢ It’s a form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties 2-10 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is Totalitarianism? ➢ Four major forms of totalitarianism exist today 1. Communist totalitarianism – found in states where the communist party monopolizes power 2. Theocratic totalitarianism - found in states where political power is monopolized by a party, group, or individual that governs according to religious principles 3. Tribal totalitarianism - found in states where a political party that represents the interests of a particular tribe monopolizes power 4. Right-wing totalitarianism - permits some individual economic freedom, but restricts individual political freedom 2-11 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Tribal Totalitarianism 2-12 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is The Link Between Political Ideology and Economic Systems? ➢ Political ideology and economic systems are connected ➢ countries that stress individual goals are likely to have market based economies ➢ in countries where stateownership is common, collective goals are dominant 2-13 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LO2:What Is An Economic System? ➢ There are three types of economic systems: Market, Command and Mixed 1. Market economies - all productive activities are privately owned and production is determined by the interaction of supply and demand. ➢ Government encourages free and fair competition between private producers 2-14 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is An Economic System? 2. Command economies - government plans the goods and services that a country produces, the quantity that is produced, and the prices as which they are sold ➢ all businesses are state-owned, and governments allocate resources for “the good of society” ➢ because there is little incentive to control costs and be efficient, command economies tend to stagnate 2-15 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Command Economies 2-16 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is An Economic System? 3. Mixed economies - certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning ➢ governments tend to own firms that are considered important to national security 2-17 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Mixed Economy 2-18 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LO3:What Is A Legal System? ➢ ➢ Legal system - the rules that regulate behavior along with the processes by which the laws are enforced and through which redress for grievances is obtained ➢ the system in a country is influenced by the prevailing political system Legal systems are important for business because they ➢ define how business transactions are executed ➢ identify the rights and obligations of parties involved in business transactions 2-19 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Are The Different Legal Systems? 2-20 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How Are Contracts Enforced In Different Legal Systems? ➢ Contract - document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved ➢ Contract law is the body of law that governs contract enforcement ➢ under a common law system, contracts tend to be very detailed with all contingencies spelled out ➢ under a civil law system, contracts tend to be much shorter and less specific because many issues are already covered in the civil code 2-21 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Which Country’s Laws Should Apply In A Contract Dispute? ➢ The United Nations Convention on Contracts for the International Sale of Goods (CIGS) ➢ establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between buyers and sellers who have their places of business in different nations ➢ Ratified by the U.S. and about 70 countries ➢ but, many larger trading nations including Japan and the U.K. have not agreed to the provisions of CIGS and opt for arbitration instead 2-22 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. ➢ How Are Property Rights And Corruption Related? Property rights -The legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource 2-23 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How Are Property Rights And Corruption Related? ➢ Property rights can be violated through 1. Private action – theft, piracy, blackmail 2. Public action - legally - ex. excessive taxation or illegally - ex. bribes or blackmailing ➢ high levels of corruption reduce foreign direct investment, the level of international trade, and the economic growth rate in a country 2-24 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How Are Property Rights And Corruption Related? ➢ The Foreign Corrupt Practices Act makes it illegal for U.S. companies to bribe foreign government officials to obtain or maintain business over which that foreign official has authority ➢ facilitating or expediting payments to secure or expedite routine government action are permitted 2-25 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Foreign Corrupt Practices Act 2-26 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Which Countries Are Most Corrupt? Somalia, South Sudan named world’s most corrupt countries January 24, 2020 2-27 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. ➢ ➢ How Can Intellectual Property Be Protected? Intellectual property - property that is the product of intellectual activity Can be protected using 1. Patents – exclusive rights for a defined period to the manufacture, use, or sale of that invention 2. Copyrights – the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit 3. Trademarks – design and names by which merchants or manufacturers designate and differentiate their products 2-28 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How Can Intellectual Property Be Protected? ➢ Protection of intellectual property rights differs from country to country ➢ World Intellectual Property Organization ➢ Paris Convention for the Protection of Industrial Property ➢ To avoid piracy, firms can: ➢ stay away from countries where intellectual property laws are lax ➢ file lawsuits ➢ lobby governments for international property rights agreements and enforcement 2-29 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Intellectual property theft is a major issue in the global software industry. One method that software companies use to avoid the threat of piracy is to develop “open source” software – software that is distributed free of charge and with part or all of the source code available to other programmers. Users may alter or improve the program as they see fit, so long as they share their improvements with the rest of the open source community. What are some potential advantages and disadvantages to developing open source software? As the head of a promising software startup, would you consider developing an open source product? 2-25 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. What Is Product Safety And Liability? ➢ Product safety laws set certain standards to which a product must adhere ➢ Product liability involves holding a firm and its officers responsible when a product causes injury, death, or damage ➢ liability laws tend to be less extensive in less developed nations 2-31 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Why Is Product Safety And Product Liability Important? ➢ Question: ➢ Does the high cost of liability insurance in the U.S. make American companies less competitive? ➢ Question: ➢ Is it ethical to follow host country standards when product safety laws are stricter in a firm’s home country than in a foreign country? ➢ Question: ➢ Is it ethical to follow host country standards when liability laws are more lax in the host country? 2-32 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How Can Managers Determine A Market’s Overall Attractiveness? ➢ The overall attractiveness of a country as a potential market and/or investment site for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country ➢ Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable in politically stable developed and developing nations that have free market systems and no dramatic upsurge in either inflation rates or private sector debt 2-33 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. How Can Managers Determine A Market’s Overall Attractiveness? Country Attractiveness 2-34 Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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