Company’s investments and other assets in foreign countries may face the risk of expropriation. Governments are therefore concerned about the protection of the interests of their national companies in the foreign countries. The potential risk was more before the worldwide liberalization set in the 1980s. Important protective measures in this respect include the following: Coercion and Pressure Until the Second World War, home countries used military force and coercion to ensure that host governments would give foreign investors prompt, adequate, and effective compensation in cases of expropriation, under a concept known as the international standard of fair dealing. It may be noted that the home countries of the companies involved were developed ones and the host countries were developing nations and these host countries had little to say about this standard. In a two conference held at The Hague in 1930 and at Montevideo in 1933, participating developing countries got Continue reading
International Business
International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.
Issues of International Technology Transfers
International technology transfer is the process by which a technology, expertise, know how or facilities developed by one business organization (MNC in the case of international business) is transferred to another business organization. There are many issues associated with the international technology transfer. The most important international technology transfer issues are; ways of technology acquisition, choice of technology, terms of technology transfer, and creating local capability. Modes of Foreign Technology Acquisition One of the major issues in technology transfer relates to the mode of acquisition. Developing new technology may conjure up visions of scientists and product developers working in R&D laboratories. In reality, new technology comes from many different sources, including suppliers, manufactures, users, other industries, universities, government, and MNCs . While every source needs to be explored, each firm has specific sources for most of the new technologies. For example, because of the limited size of most farming operations, Continue reading
The Relevance of Stakeholder Management in International Business Context
Stakeholders can be defined as an internal and external party to the organization which is having interest in the operations of the organization. Stakeholders can create an impact on the actions, objectives, and policies of the organization. Stakeholders may get affected by the objectives, policies, and actions of the business. Stakeholders may have a direct or indirect interest in the operations of the organization. Stakeholders of an organization can be of different types. These different types of stakeholders include management and employees, customers, investors and suppliers, banks and other financial organizations, government, trade unions and pressure groups. The term stakeholder management can be defined as the process of engaging and enrolling the stakeholders in the operations of the business so as to make them accountable, responsible, consulted and informed. Stakeholder management is concerned regarding the fit between the values or the organization and expectations of the stakeholders for determining the Continue reading
International Trade and Investment
Today, business is acknowledged to be international and there is a general expectation that this will continue for the foreseeable future. International business may be defined simply as business transactions that take place across national borders. This broad definition includes the very small firm that exports (or imports) a small quantity to only one country, as well as the very large global firm with integrated operations and strategic alliances around the world. Within this broad array, distinctions are often made among different types of international firms, and these distinctions are helpful in understanding a firm’s strategy, organization, and functional decisions (for example, its financial, administrative, marketing, human resource, or operations decisions). One distinction that can be helpful is the distinction between multi-domestic operations, with independent subsidiaries which act essentially as domestic firms, and global operations, with integrated subsidiaries which are closely related and interconnected. These may be thought of as Continue reading
Global Geographic Division Structure of MNE’s
With large foreign operations that are not dominated by a single country or area including the headquarters, but well spread out geographically Multinational Enterprises use geographic divisions. Global Geographic (Region/Nation/Area) Division Structure is more common to European MNEs, such as Nestle. Nestle uses this structure because no one region dominates its operations. Merits of Global Geographic Division Structure The structure is useful when maximum economies in production can be gained on a regional rather than a global basis because of market size or the production technologies for the industry. A global geographic structure puts managers closer to the scene of operations than are managers at central headquarters. Regional managers are well positioned to be responsive to local situations such as the needs of regional customers and to fluctuations in resources. Thus regional divisions are often able to find solutions to region-specific problems and to use available resources more effectively than Continue reading
Fixed Exchange Rates, 1945-1973
Fixed Exchange Rates, 1945-1973 The currency arrangement negotiated at Bretton Woods and monitored by the IMF worked fairly well during the post-World War II period of reconstruction and rapid growth in world trade. However, widely diverging national monetary and fiscal policies, differential rates of inflation, and various unexpected external shocks eventually resulted in the system‘s demise. The U.S. dollar was the main reserve currency held by central banks and was the key to the web of exchange rate values. Unfortunately, the United States ran persistent and growing deficits on its balance of payments. A heavy capital outflow of dollars was required to finance these deficits and to meet the growing demand for dollars from investors and businesses. Eventually, the heavy overhang of dollars held abroad resulted in a lack of confidence in the ability of the United States to meet its commitment to convert dollars to gold. On August 15, Continue reading