International Business

Capital and wealth should be vested (erworben) in the state. The collective welfare of the people is seen to overweight the welfare of the individual.

The private property rights are essential and are protected. The government only performs essential functions that serve all citizens. The ideas of capitalism are predominant.

- Full democracies 24

- Flawed democracies 52

- Hybrid regimes 37

- Authoritorian regimes 51

1. Size of government (state involvement into free markets - transfers, subsidies, tax, state-owned company)

2. Legal system and property rights (legal certainty - independent institutions, corruption, protection of property rights)

3. Sound money (money growth, inflation, freedom to own foreign currencies)

4. Freedom to trade internationally (the freer the better - tariffs, regulatory trade barriers, free movement of money/people)

5. Regulation (the lesser the better - credit market, labor market, business regulation)

Continental legal system (civil law) Switzerland

Anglo-American legal system (common law) USA

Religous legal sytem (sharia)

They can also be mixed

Ownership of intellectural property:

Common Law: Determined by prior user

Civil Law: Determined by registration

Enforcing agreements:

Common law: Proof of agreement is sufficient for enforcing contracts

Civil law: Commercial agreements become enforcable only if properly notarized

Specificity of contracts:

Common law: Contracts tend to be very detailed with all possible contingencies (Eventualitäten) spelled out. Usually more costly to draft contract.

Civil law: Contracts tend to be brief as many potential problems are already covered by the civil code

Compliance with contracts:

Common law: Act of god (floods, lightning etc.) are the only justifiable excuses for noncompliance with the provisions of contracts

Civil law: Noncompliance is extended to include unforeseeable human acts such as labour strikes and riots

To comply with two legal systems

- No clear regulation how a contract should be drafted 

- To understand both legal systems might be very complicated and their combination even more complex

- They can even contradict each other - so in one country the company has to break the law

- Government takeover of corporate assets (Confiscation (Konfizierung, Beschlagnahmung), Expropriation (Enteignung), Nationalization)

- Embargoes and Sanctions

- Boycotts against firms or nations

- War & terrorism

- Host-country legal environment (Foreign investment laws, marketing and distribution laws, contract laws etc)

- Home-country legal environment

- Proactive environmental scanning

- strict adherance (Einhaltung) to ethical standards

- alliances with qualified parters

- protection through legal contracts

- Which countries laws applies?

- In which country should the issue be resolved?

- Which technique should be used to resolve the conflict?

- How will the settlement be inforced

- Face to face (Meetings, Communication, Negotiation)

- Company to company (Contracts, alliances, joint ventures, M&A)

- Company to customer (Marketing 4P's, Product Development

- Universal (The human nature, universal values, commonly shared world view)

- Cultural

- Personal (Individual biography and genetic) (having the same cultural roots does not mean that one is identical in his behaviour)

1. The psychic or psychological level, which focuses on the internalized norms, attitudes, values and behaviour of individuals from a particular culture

2. The institutional level, which looks at national (or group) culture embodied in institutions (government, education and economic institutions as well as in business organizations

Stereotype: Categorizing all members of a group as having the same characteristics. Selective and inflexible perception

Generalization: Categorizing many members of a group as having similar characteristics. Flexible perceptions

Universalism - Particularism

Individualism - Communitarianism

Affective (gefühlsbedingt) - neutral

specific - diffuse (weitschweifig)

achievement - ascription

sequential time - synchronous time

inner direction - outer direction

- dealoriented, focus on the task, impersonal, use contracts

- Focus on rules not relationships

- Fairness, treating all the same way

- Want consistency and uniform procedures

- Relationship-oriented, get to know the other party in business interactions

- Focus is more on relationships than on rules

- Focus is on fairness, treating all according to their special needs

Individualism

- Competition

- Self-reliance

- Personal growth and fulfilment

Communitarianism:

- Cooperation

- Social concern

- Public service and societal legacy

Individualist: 

- Achieve alone, personal responsibility 

- Conducting business alone means that this person is respected by his or her company and has its esteem

- Quick decisions

Communitarianist:

- Groups, joint responsibility

- Conducting business when surrounded by helpers means that this person is respected by his or her company and has its esteem

- More time to achieve group consent

General goals of the organization: principles, norms and policy that ensure the ability to survive and evolve

Concerned with the identification, build up management and exploitaton (Ausbeutung) of strategic success potentials, for which ressources must be utilized

Realization of normative and strategic goals and implementation of the corresponding programs

Corporate, business and functions!

- Shareholder value 

-  Portfolio management

- Parenting advantage

- Synergy management

- Core competences

- Competitive strategies

- Competitive advantage

- Customer value at product-market-level

- Functional contribution to competitive advantage

- Increased efficiency

- Cost optimization

1. Strategy Formulation - includes external environmental assessment, internal environmental assessment and goal setting

((PESTEL - Political, Economical, Social, Technological, Environmental, Legal) Porters five forces, SWOT, TOWS)

2. Strategy Implemention - includes functional strategies for the different department like marketing, manufacturing, finance, R&D, Human Ressources

3. Strategy Control - methods of measurement like return on investment, sales growth & market share, new product development, MNE host country relations, management performance

1. Profitabilty (two possible strategies - reduce costs or add value and rise prices)

2. Profit growth (two possible strategies - sell more in existing markets or enter new markets)

- Where am I good or even excellent in? (unique competencies - ressource-based view)

- Where (market industry) can I be successful? (industry attractiveness - market-based view)

Porter's five forces are used to assess a market! 

1. Industry rivalry (who are my competitors? is there a monopol? ???)

2. bargaining power of suppliers (are there many suppliers with less power or one or just a few supplier with much bargaing power)

3. bargaining power of customers (same concept as with suppliers)

4. barriers to entry (is it difficult to enter the market because of a high capital base that is necessary or cutting edge technology)

5. threat of substitutes (are there any substitutes for my product?)

1. competition isn't big only a few competitors or even possibility to build a monopol or at least have the first mover advantage

2. a lot of suppliers who don't have much bargaining power even better if you have much bargaining power because you are a key customer for them

3. a lot of customers who don't have bargaining power

4. no barriers to enter the market for us, not much capital, technology know how needed unless we already have it or can build it up afterwards to build up barriers for new competitors - first mover advantage

5. no substitute to our product