International Business Definitionen und Notizen von Heidi Böker 09.08.

2021

Chapter 1
■ International Business: Performance of trade and investment activities by firms across national borders
■ Elements of international business:
o Globalization of markets: ongoing economic integration and growing interdependency of countries
worldwide
o Internationaltrade
o International investment
o International business risks
o Participants: firms, intermediaries, facilitators, governments
o Foreign market entry strategies
* Globalization of markets:
o ongoing economic integration and growing interdependency of countries worldwide
o trade between nations, accompanied by substantial flows of capital, technology, and knowledge
■ Internationalization: the tendency of companies to deepen their international business activities
systematically
■ International trade: exchange of products and services across national borders, typically through exporting
and importing
* Exporting: sale of products or services to customers located abroad from a base in the home country or a
third country Beschaffung
■ Importing or global sourcing: procurement of products or services from suppliers located abroad for
consumption in the home country or a third country
■ International investment: the transfer of assets to another country or the acquisition of assets in that
country
■ International portfolio investment: passive ownership of foreign securities such as stocks and bonds to
generate financial returns
■ Foreign direct investment (FDI): an internationalization strategy in which the firm establishes a physical
presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant,
and equipment
■ Risks in International Business:
o Cross-Cultural Risk: a situation or event in which a cultural misunderstanding puts some human
value at stake
o Country Risk / Political Risk: potentially adverse effects on company operations and profitability
caused by development in the political, legal, and economic environment In a foreign country
o Currency Risk / Financial Risk: risk of adverse fluctuations in exchange rates
o Commercial Risk: firms' potential loss or failure from poorly developed or executed business
zentrales U. strategies, tactics, or procedures begreift
■ Focal firm: the initiator of an international business transaction, which conceives, designs, and produces
offerings intended for consumption by customers worldwide. Focal firms are primarily MNEs and SMEs.
■ Distribution channel intermediary: a specialist firm that provides various logistics and marketing services
Begleiter for focal firms as part of international supply chains, both in the home country and abroad
* Facilitator: a firm or an individual with special expertise in banking, legal advice, customs clearance, or
related support services that assists focal firms in the performance of international business transaction
Spedition
* Freight forwarder: a specialized logistics service provider that arranges international shipping on behalf of
exporting firms
■ Participants in International business: focal firm, distribution channel intermediary, facilitator and freight
forwarder, government
■ Customers in International business: Individual consumers and households, retailers, organizational buyers
* Multinational enterprise (MNE): a large company with substantial resources that performs various business
activities through a network of subsidiaries and affiliates located in multiple countries
■ Small and medium-sized enterprise (SME): a company with 500 or fewer employees (as defined In Canada
and the United States, 250 in EU)
* Born global firm: a young entrepreneurial company that initiates international business activity early in its
evolution, moving rapidly into foreign markets
■ Reasons why Firms internationalize:
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

o Seek opportunities for growth through market diversification

o Earn higher margins and profits
o gain new ideas about products, services, and business methods
o serve key customers better that have relocated abroad
o be closer to supply sources, benefit from global sourcing advantages, or gain flexibility in product
sourcing
o gain access to lower-cost or better-value factors of production
o develop economies of scale in sourcing, production, marketing, and R&D
o confront international competitors more effectively or thwart the growth of competition in the
home market
o invest in a potentially rewarding relationship with a foreign partner
' International Business Definitionen und Notizen von Heidi Böker 09,08,2021

Chapter 2
■ Globalization of markets: ongoing economic integration and growing interdependency of national
economies
* Phases of globalization:
o First phase:
■ 1830 to 1900
* Triggers: growth of railroads, efficient ocean transport, invention of the telegraph and
telephone
* Key Characteristics: rise of manufacturing: cross-border trade of commodities, largely by
trading companies
o Second:
* 1900 to 1930
■ Triggers: rise of electricity and steel production, Europe's colonization
* Key Characteristics: Emergence and dominance of early MNEs (mainly from Europe and
North America) in manufacturing, extractive, and agricultural industries
o Third:
■ 1948 to 1970
■ Triggers: formation of General Agreement on Tariff and Trade (GATT); conclusion of World
War II, Marshall Plan to reconstruct Europe
■ Key Characteristics: Focus by industrializing Western countries to reduce trade barriers,
rise of MNEs from Japan; development of global capital markets, rise of global trade names
o Fourth:
* 1980 to present
■ Triggers: privatization of state enterprise in transition economies; revolution in
information, communication, and transportation technologies; remarkable growth of
emerging markets
* Key characteristics: rapid growth in cross-border trade of products, services, and capital,
rise of internationally active SMEs and services firms, rising prosperity of emerging markets
■ Market Globalization:
o Drivers of market globalization
* Worldwide reduction of barriers to trade and investment
■ Market liberalization and adoption of free markets
■ Industrialization, economic development, and modernization
■ integration of world financial markets
■ Advances in technology
o Dimensions of market globalization
■ Integration and interdependence of national economies
* Rise of regional economic integration blocs
* Growth of global investment and financial flows
■ Convergence of buyer lifestyles and preferences
■ Globalization of production activities
■ Globalization of services
o Firm-level consequences of market globalization: internationalization of the firm's value chain
■ Countless new business opportunities for internationalizing firms
* New risks and intense rivalry from foreign competitors
■ More demanding buyers who source from suppliers worldwide
■ Greater emphasis on proactive internationalization
■ Internationalization of firm's value chain
o Societal consequences of market globalization
■ Contagion: rapid spread of financial or monetary crises from one country to another
■ Loss of national sovereignty
■ Offshoring and the flight of jobs
* Effect on the poor
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

■ Effect on the natural environment

* Effect on national culture
■ Value Chain:
o The sequence of value-adding activities the firm performs in the course of developing, producing,
marketing, and servicing a product
* Stages in the Firm's Value Chain:
o Research & Development
o Procurement (Sourcing)
o Manufacturing
o Marketing
o Distribution
o Sales & Services
■ Contagion: Ansteckung
o The tendency of a financial or monetary crisis in one country to spread rapidly to other countries
due to the ongoing integration of national economies
■ Sovereignty:
o The ability of a nation to govern its own affairs
' International Business Definitionen und Notizen von Heidi Böker 09.08.2021

Chapter 3
■ Culture: vbca
o The values, beliefs, customs, arts, and other products of human thought and work that
characterize the people of a given society
■ Essential Elements of Culture:
o Cross-cultural risk
o Dimensions
o Language
o Religion
o Models and Explanations
o Managerial Implications
■ Culture is Not:
o Not right or wrong
o Not about individual behavior
o Not inherited
■ Socialization:
o The process of learning the rules and behavioral patterns appropriate for living in one's own
society
■ Acculturation:
o The process of adjusting and adapting to a culture other than one's own
■ Values:
o A person's judgements about what is good or bad, etc.
■ Attitudes:
o Similar to opinions but often held unconsciously and are not based on logical facts
■ Manners and Customs:
o Ways of behaving and conducting oneself in public and business situations
■ Culture as an Iceberg:
o Cultural Makeup that is visible: High Culture like Fine Arts, Literature
o Cultural Makeup we are aware of: Folk Culture: Humor, Religion, Cooking
o Cultural Makeup we are unaware of: Deep Culture: Greeting Rituals, Gender Roles
■ Perceptions of Time:
o Monochronic: a rigid orientation to time, in which the individual is focused on schedules,
punctuality, and time as a resource
o Polychronic: a flexible, nonlinear orientation to time, in which the individual takes a long-term
perspective and emphasizes human relationships
o Focused on the past: Europe
o Focused on the present: young countries like Australia, Canada, USA
■ Perceptions of Space:
o Conversational distance
o Employee workspaces
o Interaction between men and women
■ Symbolic Productions:
o Symbols like the red star of the former Soviet Union
o Trademarks, logos, brands
■ Material Productions and Creative Expressions:
o Artifacts, objects, and technological systems that people construct to function within their
environments
■ Education:
o Through lessons and behavior acquired from parents, family, and peers, participation in groups
(social, business, and religions), and formal schooling
■ Social Structure:
o Individuals
o Family
o Reference groups
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

o Social stratification
o Social mobility
* Verbal language:
o Nearly 7,000 active languages, including more than 2,000 in each of Africa and Asia
■ Nonverbal communication:
o Ways of talking
o Sounds
o Closeness
o Body contact
o Posture and stance
o Head movements
o Eye movements
o Facial expressions
o Hand movements
o Appearance
■ Religion
o Christianity: 2 billion adherents
■ Relationship between Protestantism and capitalism
o Islam: 1,5 billion adherents
■ Sharia: encourages free trade and prohibits restraints on market-based exchange such as
monopolies and price fixing, condemns charging interest for money loaned
o Hinduism: 1 billion adherents
* Caste system promotes slower economic growth
■ Business performance can be enhanced by self-control, discipline, and devotion to duty
o Buddhism: 1 billion adherents
■ Supports ethical and responsible behavior in business
■ Focus on spirituality and moderation might restrain entrepreneurial action
o Confucianism
■ Fairness, humanity, and charity towards others,
* loyalty, social harmony, and respect for one's parents and ancestors
■ ren: doing good deeds and being kind to others
o Judaism
* Prohibits dishonest behavior
■ Accumulation of wealth is acceptable
■ Are expected to be generous and charitable
o Supports economic development
■ Cultural metaphor:
o A distinctive tradition or institution strongly associated with a particular society
■ Idiom:
o Expression whose symbolic meaning is different from its literal meaning
* High-context culture:
o A culture that emphasizes nonverbal messages and views communication as a means to promote
smooth harmonious relationships
o China and Japan
o Indirect and polite style that emphasizes mutual respect and care for others, are on guard not to
embarrass or offend others
o Establish social trust first
o Personal relations and goodwill are valued
o Agreements emphasize trust
o Negotiations are slow and ritualistic
■ Low-context culture:
o A culture that relies on elaborate verbal explanations, putting much emphasis on spoken words
o Europeans and North Americans
o tend to value expertise, efficiency and performance
' International Business Definitionen und Notizen von Heidi Böker 09.08.2021

o get down to business first

o expertise and performance are valued
o agreements emphasize specific, legalistic contract
o negotiations are as efficient as possible
■ Hofstede's typology:
o Individualism versus collectivism:
■ Describes whether a person functions primarily as an individual or as a part of a group
o Power distance:
■ Describes how a society deals with the inequalities in power that exist among people
o Uncertainty avoidance:
* The extent to which people can tolerate risk and uncertainty in their lives
o Masculinity versus femineity
* Refers to a society's orientation based on traditional male and female values. Masculine
cultures tend to value competitiveness, assertiveness, ambition, and the accumulation of
wealth. Feminine cultures emphasize nurturing roles, interdependence among people, and
taking care of less fortunate people
o Long-term versus short-term orientation:
■ Refers to the degree wo which people and organizations defer pleasure and gratification
to achieve long-term success
o Indulgence versus restraint
* The extent to which people try to control their desires and impulses
■ Indulgent: Mexico, Sweden, USA
* Restrained: China, Egypt, Russia

■ Deal versus relationship orientation

o Deal-oriented: Australia, northern Europe, North America
o Relationship-oriented: China (guanxi^connections), Japan, Latin America
■ National, Professional, and Corporate Culture
■ Ethnocentric orientation:
o Using our own culture as the standard forjudging other cultures
■ Polycentric orientation
o A host-country mindset In which the manager develops a strong attachment to the country in
which she or he conducts business
■ Geocentric orientation:
o A global mindset by which the manager can understand a business or market without regard to
country boundaries
■ Self-reference criterion:
o The tendency to view other cultures through the lens of our own culture
■ Critical incident analysis
o A method for analyzing awkward situations in the cross-cultural encounters by becoming more
objective and developing empathy for other points of view
■ How to acquire cross-cultural competence:
o Acquire factual knowledge about the other culture and try to speak the language
o Avoid cultural bias
o Develop cross-cultural skills
■ Tolerance for ambiguity
■ Perceptiveness
■ Valuing personal relationships
■ Flexibility and adaptivity
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

Chapter 4
• Ethics:
o Moral principles and values that govern the behavior of people, firms, and governments, regarding
right and wrong
• Corporate social responsibility (CSR):
o A manner of operating a business that meets or exceeds the ethical, legal, commercial, and public
expectations of customers, shareholders, employees, and communities
• Sustainability:
o Meeting humanity's needs without harming future generations
• Corporate governance:
o The system of procedures and processes by which corporations are managed, directed, and
controlled
• Ethical behavior:
o Ethics
o Corporate social responsibility
o Sustainability
o Corporate governance
• Relativism:
o The belief that ethical truths are not absolute but differ from group to group
• Normativism:
o The belief that ethical behavioral standards are universal, and firms and individuals should seek to
uphold them around the world
• Pyramid of ethical behavior:
o Corporate social responsibility
o Ethical behavior
o Complying with laws and regulations
• Corruption:
o Bribery
o Embezzlement
o Fraud
o Extortion and blackmail
o Money laundering
• Intellectual property
o ideas or works that individuals or firms create, including discoveries and inventions, artistic,
musical, and literary works, and words, phrases, symbols, and designs
• Intellectual property rights:
o The legal claim through which the proprietary assets of firms and individuals are protected from
unauthorized use by other parties
o Trademarks, copyrights, patents
• Corporate social responsibility
o Workplace
o Marketplace
o Community
o Environment
• Sustainable Business:
o Economic Interests
o Social Interests
o Environmental Interests
• Code of Ethics:
o A document that describes the values and expectations that guide decision making by all
employees in the firm
• Code of Conduct:
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

o A document that translates the code of ethics into specific rules regarding behaviors and practices
that are prohibited or required
• Ethical Standard Approaches for Corporate Governance
o Utilitarian Approach - which action results in the most good and least harm?
o Rights Approach - which action respects the rights of everyone involved?
o Fairness Approach - which action treats people most fairly?
o Common Good Approach - which action contributes most to the overall quality of life of the
people affected?
o Virtue Approach - which action embodies the character strengths you value?
• Benefits of Corporate Governance:
o Increased employee commitment
o Increased customer loyalty and sales
o Improved reputation and brand image
o Reduced likelihood of government intervention
o Reduced business costs
o improved financial performance
• Ethical Framework:
o Identify the problem
o Examine the Facts
o Create Alternatives
o Implement Course of Action
o Evaluate Results
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

Chapter 5
• Comparative advantage:
o Superior features of a nation that provide unique benefits in global competition. These features
typically are derived from either natural endowments or deliberate national policies.
o Based on natural advantages and acquired advantages
• Competitive advantage:
o Assets or capabilities of a firm that are difficult for competitors to Imitate. They are typically
derived from specific knowledge, competencies, skills, or superior strategies
• Theories of International Trade and Investment
o Classical Theories why nations trade:
■ Mercantilism: The belief that national prosperity is the result of a positive balance of trade,
achieved by maximizing exports and minimizing imports
■ Free trade: relative absence of restrictions to the flow of goods and services between
nations
■ Absolute Advantage Principle: the idea that a country benefits by producing only those
products it can produce using fewer resources
■ Comparative advantage principle: it may be beneficial for two countries to trade with each
other as long as one is relatively more efficient at producing a product needed by the
other
■ Factor proportions theory: each country should export products that intensively use
relatively abundant factors of production and import good that intensively use relatively
scarce factors of production, Leontief Paradox contradicts the theory
■ International product life cycle theory (IPLC): no longer valid today, each product and
manufacturing technologies go through three stages of evolution: introduction, maturity,
and standardization in the advanced economy that first invented the product, other
advanced economies, and developing economies, a product can be invented in one
country and eventually mass-produced in other countries, with the innovating country
losing its initial competitive advantage
■ New trade theory: Paul Krugman observed that trade was growing fastest among
industrialized countries with similar factors of production because a nation specializes in
the production of such goods, productivity increases and unit costs fall, providing
significant benefits to the local economy, even beneficial for countries that produce only a
limited variety of products
■ Porter's determinants of national competitive advantage which give rise to national
competitive advantages:
• demand conditions
• firm strategy, structure and rivalry
• factor conditions
• related and supporting industries
* industrial cluster:
• concentration of companies in the same industry in a given location that interact
with one another, gaining mutual competitive advantage
■ National industrial policy:
• Refers to government's efforts to direct national resources to developing expertise
in specific industries
o Why and how firms internationalize
■ Internationalization process of the firm:
• Domestic focus
• Pre-export stage
• Experimental involvement
• Active Involvement
• Committed Involvement
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

* Born global firms: innovative start-ups that initiate international business soon after their
founding and are part of the emergent field of international entrepreneurship
o How internationalizing firms gain and sustain competitive advantage
■ FDi-based explanations:
• FDI stock: total value of assets that MNEs invest abroad
• Developed and developing countries are major recipients of FDI
• Hong Kong and Singapore receive considerable FDI as important entrepôt ports
• Monopolistic advantage theory:
o suggests that firms that use FDI as an internationalization strategy must
own or control certain resources and capabilities not easily available to
competitors what gives them power over local firms in foreign markets
o returns accessible tin the foreign market should be superior to those
available In the home market
o returns achievable in the foreign market should be superior to those
earned by existing domestic competitors in the foreign market
• Internationalization theory: an explanation of the process by which firms acquire
and retain one or more value-chain activities inside the firm. This minimizes the
disadvantages of dealing with external partners and allows for greater control over
foreign operations
• Dunning's Eclectic Paradigm:
o Three conditions that determine whether a company will Internationalize
through FDI:
■ Ownership-specific advantages
* Location-specific advantages
■ Internationalization advantages
* Non-FDI-based Explanations
• FDI became a popular entry mode with the rise of MNEs In the 1960s and 1970s,
in the 1980s firms began to recognize the importance of collaborative ventures
and other flexible entry strategies
• International collaborative ventures
o Form of cooperation between two or more firms
■ Equity based joint ventures that result in a legal entry
■ Non-equity-based (project-based) strategic alliances in which the
firms' partner collaborate for a finite duration
• Networks and relational assets
o Long-term relationships with other business entities
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

Chapter 6
■ Country risk:
o Exposure to potential loss or adverse effects on company operations and profitability caused by
development in a country's political and/or legal environment
* Risks In International Business
o Cross-cultural Risk
o Commercial Risk
o Currency (Financial) Risk
o Dimensions of Country Risk
■ Harmful or unstable political system
■ Laws and regulations unfavorable to foreign firms
* Inadequate or underdeveloped legal system
■ Bureaucracy and red tape
■ Corruption and other ethical blunders
■ Government intervention, protectionism, and barriers to trade and investment
■ Mismanagement or failure of the national economy
* Political system:
o a set of formal institutions that constitute a government
o legislative bodies, political parties, lobbying groups, and trade unions
o functions:
■ provide protection from external threats
* ensure stability based on laws
■ govern the allocation of valued resources among the members of a society
* define how a society's members interact with each other
■ Constituents:
o People and organizations that support the political system and receive government resources
* Legal system:
o A system for interpreting and enforcing laws through laws, regulations, and rules
o Functions:
■ Ensure order
■ Resolve disputes in civil and commercial activities
■ Tax economic output
■ Provide protections for private property, including intellectual property and other
company assets
■ Sources of Country Risk:
o Political System
o Legal System
■ Major types of political systems
o Totalitarianism
o Socialism
o Democracy
o But:
■ Most democracies also include some elements of socialism
■ Most former totalitarian regimes now embrace a mix of socialism and democracy
■ Totalitarianism:
o State attempts to regulate most aspects of public and private behavior
o Command economies
o Theocratic (religion-based) or secular (non-religion-based)
o Dictatorship
o Cuba, North Korea, several countries in Africa
■ Socialism:
o Fundamental principle: capital and wealth should be vested by the state and used primarily as a
means of production rather than profit
o Based on collectivist ideology
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

o Claims: pay of workers does not represent the full value of their labor, government should control
the basic means of production, distribution, and commercial activity
o Social democratic governments frequently intervene I the private sector and business activities and
corporate income tax rates are relatively high
o Bolivia, China, Egypt, India, Romania, Russia, Venezuela
■ Democracy:
o Often associated with openness
o Two major features:
■ Private property rights of tangibles and intangibles
■ Limited government
■ Virtually all democracies include elements of socialism because of abuses or negative
externalities that occur purely democratic or capitalistic systems
* Most European countries, USA, Australia, Canada, Japan, New Zealand, most Latin
American counties
* Democracy's Link to Economic Freedom and Transparency
o Highest living standard -> most political and economic freedoms
o Lowest living standard -> lowest political and economic freedoms
■ Political freedom:
o Free and fair elections
o The right to form political parties
o Fair electoral laws
o Existence of a parliament or other legislative body
o Freedom from domination by the military, foreign powers, or religious hierarchies
o Self-determination for cultural, ethnic, and religious minorities
■ Economic freedom:
o The extent of government interference in business
o The strictness of the regulatory environment
o The ease with which commercial activity is carried out according to market forces
■ Economic systems:
o Command economy: often in totalitarianism
o Market economy: often in democracy, capitalism
o Mixed economy: often in socialism, exhibits features of both
■ Legal Systems:
o Laws are effective and legitimate when
■ Applied to all citizens equally
■ Issued through formal procedures by recognized government authorities
* Enforced systematically and fairly by police forces and formally organized judicial bodies
o Rule of Law: a legal system in which rules are clear, publicly disclosed, fairly enforced, and widely
respected by individuals, organizations, and the government
o Common Law:
* Also known as case law
■ Basis: tradition, previous cases, and legal precedents set by the nation's courts through
interpretation of statutes, legislation, and past rulings
* More flexible than other legal systems because it is more open to interpretation by courts
■ Primarily judicial in origin and based on court decisions
■ UK, USA, Australia, Canada, Ireland, New Zealand
o Civil Law:
■ Also known as code law
■ Origins back in Roman Law and Napoleonic Code
■ Three codes: commercial, civil and criminal
■ Primarily legislative in origin and based on laws passed by national and local legislatures
■ Much of western Europe and Latin America, Japan, Russia, South Korea
o Religious Law:
■ Strongly influenced by religious beliefs, ethical codes, and moral values
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

■ Evolves very little overtime

■ Dual system: religious and secular courts coexist
■ Single system: no difference between religious and secular life
* Much of the Middle East and North Africa
o Mixed systems:
* Mix of civil law and common law in South Africa and Philippines
■ Mix of civil law and Islamic law in Indonesia and Middle East
■ Socialist law gave away to other legal systems, especially civil law
* Bangladesh, India, Indonesia, Israel, Kenya, Malaysia, Philippines
■ Participants in Political and Legal Systems:
o Government: have the power to enact and enforce laws
o International Organizations: facilitate free and fair trade by providing administrative guidance,
governing frameworks, and occasionally, giving financial support
o Regional Trade Organizations: aim to advance the economic and political interests of their
members
o Special Interest Groups: operate to advance the goals of a particular community
o Competing Firms
■ Types of Country Risk Produced by Political Systems
o Government Takeover of Corporate Assets
* Confiscation: seizure without compensation
■ Expropriation: seizure with compensation
■ Nationalization: seizure of an entire industry with or without compensation
* "Creeping expropriation": subtle form in which governments modify laws and regulations
after foreign MNEs have made substantial local investments in property and plants
o Embargoes and Sanctions:
■ Sanction: type of trade penalty imposed my one or more countries on one or more
countries, often do not achieve desired outcome
* Embargo: official ban on exports to or imports form a particular country to isolate it and
punish its government, generally more serious than sanctions
o Boycotts against Firms and Nations:
* Voluntar/ refusal to engage in commercial dealings with a nation or company
o Terrorism:
■ Threat or actual use of force or violence to attain a political goal through fear, coercion, or
intimidation
o War, Insurrection, and Violence:
■ Indirect effects
■ Minimization of losses from violent acts through purchase of purchase of risk insurance
■ Types of Country Risk Produced by Legal Systems
o Country Risk arising from the Flost-Country Legal Environment:
* Foreign investment laws
■ Controls on operating forms and practices
■ Marketing and distribution laws
■ Laws on income repatriation: common in countries experiencing a shortage of hard
currencies
* Environmental laws
* Contract laws
• Sale of goods or services, especially large sales
• Distribution of the firm's products through foreign distributors
• Licensing and franchising
• FDI, especially in collaboration with foreign entity, to create and operate a foreign
subsidiary
• Joint ventures and other types of cross-border collaborations
* Internet and e-commerce regulations
■ Inadequate or underdeveloped legal systems
International Business Definitionen und Notizen von Heidi Böker 09.08.2021

o Country Risk arising from the Home-Country Legat Environment

* Extraterritoriality: Application of home-country laws to persons or conduct outside
national borders
* The foreign corrupt practices act (FCPA): passed by the U.S. government in 1977
■ Accounting and reporting laws:
■ Transparency in financial reporting
• Transparency: The degree to which companies regularly reveal substantial
information about their financial condition and accounting practices
o Managing Country Risk:
■ Proactive Environmental Scanning
* Strict adherence to ethical Standards
■ Alliances with qualified local partners
* Protection through legal contracts
• Conciliation:
o least adversarial method
o formal process of negotiation through employing a conciliator or
mediation committee
• Arbitration:
o Neutral third party decides in favor of one party or the other
o Saves time and expense
• Litigation:
o Most adversarial approach and occurs when one party files a lawsuit
against another
o Most common in the US, most countries favor arbitration or conciliation