Business and Personal Law

1. Business and Personal Law International Business Potomac Falls High School September 23, 2013

2. Objectives International Business What You'll Learn • How businesses can get involved in international trade • The standard business practices involved in importing and exporting legally. • The cultural, economic, and political factors that should be considered when deciding whether to do business abroad

3. WHY? International Business Why It's Important Doing business in a foreign country can be very different than doing business in the United States. Besides language barriers, there are many other factors that must be considered in international business. Costly and Legal problems may arise without this understanding.

4. Vocabulary International Business Key Terms • customs brokers • freight forwarders • multinationals • mini-nationals • joint ventures • nationalize

5. Background International Business Business Involvement in International Trade • While governments make trade agreements, it is businesses that actually trade with one another. There are three basic means of getting involved in international trade: • importing • exporting • setting up shop abroad

6. IMPORTS International Business Imports • Imports are subject to the requirements of the U.S. Customs service, as well as domestic standards such as those imposed by the Food and Drug Administration. • Businesses often hire customs brokers, licensed specialists who know the laws, procedures, and tariffs required for importation.

7. EXPORTS International Business Exports • Other nations have similar means of controlling and documenting imports. U.S. businesses must follow certain rules when exporting their goods. Most businesses hire international freight forwarders licensed by the U.S. Maritime Commission to handle export details.

8. International Business Setting Up Shop in a Foreign Country • Multinationals are large corporations that have operations in several countries. • Mini-nationals are midsize and smaller companies that have operations in foreign countries. • Joint venturesare partnerships with domestic companies in other countries.

9. International Business All these companies have operations in many countries. How many of these companies do you recognize?

10. International Business Special Considerations in International Business • Businesspeople must keep in mind special considerations when doing business abroad: • cultural factors • economic factors • political and legal factors • technical factors

11. International Business Cultural Factors • Differences in language and culture make international trade more challenging than doing business at home. What is common practice in one country may take on a different meaning elsewhere. • Example: Gift giving is considered part of business etiquette in the Asia, but may seem like an illegal bribe in the U.S.

12. Random Picture of the Day… A lady holding an umbrella in a flood….

13. Doing Business in Other Cultures • Japan • Be prepared to dress up when doing business in Japan, as Japanese business etiquette does not accept the causal American business attire. • Always wait to be directed to your seat for a meeting, as the seating indicates the status of the meeting’s participants and will be determined beforehand. • Always wait for the leader of the meeting to tell you to sit, and remain seated until the leader stands at the end of the meeting. Always give a small gift to your host, and if you receive a gift, do not open it in public.

14. Doing Business in Other Cultures CHINA • It is considered impolite to respond with a negative reply. If the answer is “no,” say “maybe” instead. When your Chinese associates do the same, remember that they are responding in the negative. • Small talk is important, specifically as it relates to travel and China. • Use black and white for printed materials in order to avoid the special meanings behind colors in the Chinese culture. The Chinese believe strongly in the principle of “saving face,” so do not do anything to embarrass your host. • Do bring plenty of business cards, with one side printed in Chinese, as these will be freely distributed. Make sure your card has your title and the distinctions of your business, and print it in gold ink, as Chinese culture values this as the color of prosperity and success.

15. Doing Business in Other Cultures • Spain • While Spanish business etiquette may conjure up images of kisses on the cheek, it is slightly more formal today. Greetings typically occur with a traditional handshake, followed by a local greeting. • The people are outgoing, so business deals almost always happen in a face-to-face environment. Early meetings are focused on building a relationship, so it may take a few meetings for the actual business deal to happen. • All agreements will be made orally first, followed by a written document. • Punctuality is not as important in the Spanish culture, so do not be upset of your host is quite late. Interruptions are common and accepted during business conversations.

16. Economy International Business Economic Factors • Consider the following key economic factors when doing business in another country: • infrastructure • cost and quality of labor • taxes • standard of living

17. Factors International Business Political and Legal Factors • A government's stability is an important factor when considering international business operations. • When a country nationalizes private property, the government takes ownership, and the owners generally get nothing in return. Bolivia, for example, nationalized all of its businesses in the early 1950s.

18. Technology International Business Technological Factors Technology is changing the ways that businesses can get involved in international trade. Companies of all sizes can create Web sites and begin doing business abroad through e-commerce. When studying a country's technology, you need to look at the use of computers, faxes, voice mail, cellular phones, and the Internet.

19. International Business Household Technology As you can see by this graph, not many homes in China have standard telephones. One reason is because China doesn't have adequate infrastructure, which makes the cost of telephone service very high. What type of phone is selling like hotcakes in China because of this? Do you think it would be worthwhile for the Chinese government to install traditional telephone lines throughout China? Households in China Television 89% Radio 57% Telephone 25%

20. International Business Customization vs. Globalization • When marketing products in foreign countries, companies must make product and promotion decisions. • Customization means creating completely new products for specific countries. • Globalization occurs when a company does not change anything about its product or promotion. • ProductAdaptationis changing a product to make it more appropriate for a country's preferences. • PromotionAdaptationinvolves changing the promotion to meet foreign customers' way of thinking.

21. EXIT TICKET Reviewing Key Terms and Concepts • 1. How can a business get involved in international trade? • 2. Why do importers use customs brokers? • 3. What type of business helps exporters? Slide 1 of 2