International Business Questions

1. Political change is one of the most significant risks that companies face when they take on international marketing. For example, American and British oil companies operating in Iran faced high losses when that country nationalized the oil industry. Such government intervention is intended to achieve domestic political ends, although it can also be used to motivate a foreign country to change its political ways. Nations have come to recognize that they can use political means to further their own economic interests, but these means may well result in loss of assets for companies operating within foreign jurisdictions.

Expropriation is seizure by a government of foreignowned assets. In this way, assets developed by a company based in one country may be expropriated by another country when the assets fall into the jurisdiction of the second country. International law recognizes the rights of countries to undertake this type of action, but require that prompt, adequate and effective compensation be made to the company whose assets are being seized. Such compensation is intended to make up for the fact that the company has invested in the target country, and although companies may well debate the value of compensation which is considered adequate, this part of expropriation is intended to keep the seizure within the bounds of international law (Root, 1994, p. 93).

When seizure of foreign assets occurs without compensation, or when the compensation is obviously inadeq

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enable a manager from one country to supervise employees from other countries while reporting to a supervisor from yet a different country (Massie, 1987, p. 205). These different cultures coming together in the workplace demand a higher tolerance for individual differences, and an understanding of cultural biases that does not yet exist on a widespread scale. In addition, corporations will find that they need to open offices in their target countries in order to adequately support their international marketing effort. This can lead to conflict as national cultures clash, and, when joint ventures are used, corporate cultural clashes can also occur. Such conflicts can be planned for, and addressed through training managers to be aware of the diversity that they are likely to encounter in the international arena. This increased globalization is likely to lead to new ways of doing business; certainly the traditional business strategies that resulted in large multinational organizations that ignore the different environments in which they operate will no longer suffice. Instead, corporations need to consider all of their stakeholders: customers, employees, vendors and shareholders. Each of these constituents has a stake in the

Category: Business - I