International Business Transactions and Negotiations that Cross National and Cultural Borders

International Business Transactions and Negotiations that Cross National and Cultural Borders

Length: 1994 words (5.7 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

The biggest apprehensions in international business are related to transactions and negotiations crossing national as well as cultural borders. In order to make this mechanisms take place on an international base level, businesses awareness of external uncertainties needs to be tackled and turned into a beneficial dimension.

Reducing risks and getting access to new markets are major goals of international co-operations such as mergers, strategic alliances, contractual forms of co-operation and international joint venture (IJVs).
International Joint Venture


A joint venture is a collaboration agreement between two or more companies, which entails the sharing of profits and losses, skill and managerial expertise and technology to a varying degree. Joint ventures are typically formed between smaller domestic companies and foreign multinational companies and should incur benefits for all parties.

Multinational companies tend to use joint ventures as a mode of entry into a foreign market and capitalize on domestic government relation and local knowledge whereas smaller domestic companies seek out the growth opportunities arising from access to new technology, managerial expertise and access to a global marketplace (Weston and Mitchell et al., 2004).

Apart from the economic benefits derived from a joint venture, many companies also pursue this strategy to reduce risks associated with new business ventures. Joint ventures serve the purpose of achieving a joint goal and are therefore regarded as temporary arrangements (ANDRÄ, BROLL; 2012).
Joint ventures are generally approached from two distinctive points of view: on the one hand the control perspective, which emphasizes the tradeoff between control and the risk of appropriation of...


... middle of paper ...


...nt if they are in need of the partner’s technology, as they need to build trust.
The ownership structure is a tradeoff between control and efficiency, to the one extreme there is high foreign ownership which leads to high knowledge transfer and high control by the foreign party but little efficiency in the long run as the local firms perceived responsibility is low, and on the other extreme is a high ownership percentage by the local company which leads to little knowledge exchange and thus again a poor performance. In order for a joint venture to be successful a balance between the two extremes needs to be found.

In conclusion equal partnership, good planning and communication between the partners and careful selection of potential partners after in depth industry and market analysis and possible synergetic effects characterize the most successful joint ventures.


Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay about Importance of Cultural Differences in International Business

- Our economic development will forever be defined as our ability to succeed internationally. PwC forecasts India’s real annual GDP growth until 2050 at 8.9 percent, Vietnam’s at 8.8 percent, and China’s at 5.9 percent. The list of fast-growing emerging markets goes on and on. The U.S. forecast is a meager 2.4 percent, comparable with most Western economies. The domestic companies that are likely to see incremental growth in the coming decades are those that are not only doing business internationally, but that are developing the strategic skill set to master doing business across cultures....   [tags: Culture, Negotiation, Profit]

Better Essays
1761 words (5 pages)

The World Is Changing At An Incredible Pace Essay

- Culture Impact As the world is changing at an incredible pace (Kotter & Cohen, 2002b), the way leaders approach change varies widely (Black & Gregersen, 2008). No organization is immune from the impact of globalization. Organizations must increasingly cope with diverse cross-cultural employees, customers, suppliers, competitors, and creditors. In its infancy, a business culture reflects the characteristics of the organization’s most dominant personality, the leader (Bohl, 2015). The leader’s vision of what the business culture should be is often a cultural paradigm in their heads, based on their experiences in the culture in which they have grown up in (Schein, 1983)....   [tags: Culture, Cross-cultural communication]

Better Essays
1028 words (2.9 pages)

Essay about Defining CC Framework As It Applies In International Business

- The need for well-built cross-cultural competence [CC] (Lenartowicz and Apud, 2006) in the world of work is intensifying than ever before. Globalization and the shifting demographics in most of world leading nations have caused a significant increase in multicultural workplace. With the economic downturn and the opportunities offered by the ICT, many firms are also venturing into international business (IB). Academic scholars and business writers alike have identified CC as one of key ingredient in IB success....   [tags: Business Management ]

Better Essays
1025 words (2.9 pages)

Globalization Of Business Ethics Essays

- “The more one knows ethics, the more it is used and the more useful it becomes”-Plato, The quote by Plato is a reminder on just how important ethics is and how important it is to educate yourself on proper ethical practices. In the following paper I would like to look at the topic of global business ethics. Recent studies in business ethics have shown both remarkable similarities and differences across cultures with respect to attitudes toward questionable business practices. First I would like to talk about the affect that culture has on ethical behavior....   [tags: Business Ethics]

Better Essays
1849 words (5.3 pages)

The Challenges of Doing Business Overseas Essay example

- The Challenges of Doing Business Overseas Introduction Steve Kafka is an American business man of Czech origin and a franchisor for Chicago Style Pizza. Steve has determined he would like to extend his business into the Czech Republic. Steve will encounter cultural challenges and will have to overcome risks related to starting up a business in a foreign country. By looking at the major differences and incompatibilities between the U.S and the Czech Republic it will be identified what it will take to get the business to a successful start overseas....   [tags: International Business Culture]

Free Essays
1505 words (4.3 pages)

The Iceberg Theory And Cultural Differences Essay

- Culture The following sections explore the cultural differences encountered by all businesses desiring to expand their organizations internationally. For most, international culture is typically associated with visible and/or audible elements such as language, food, music and fashion. The “Iceberg Theory” provides a good visual model to broaden ones understanding of all cultural elements which should be considered. The iceberg (Figure 1) depicts both visible (on the surface) and invisible (below the surface) cultural elements (MacLachian)....   [tags: Culture, Sociology, Globalization, The Culture]

Better Essays
1089 words (3.1 pages)

Business Plan For International Trade Essay

- Nowadays, more and more companies are crossing borders and reaching potential consumers from every corner of the world. It is imperative that companies understand there is no such thing as a one-size fits all approach for international trade. Companies must take it upon themselves to know their company and industry, determine the appropriate market entry strategy, select a target market, develop a business plan, and seek assistance to make the expansion process as smooth as possible. Overview of a Global Strategy Industry Analysis An industry analysis is a critical component to track the company’s success, gauge the competition, an identify risks and opportunities in a new market....   [tags: Management, Strategic management, Target market]

Better Essays
1669 words (4.8 pages)

Essay on Disadvantages of Business Process Outsourcing

- ... Team A is UBS investment banking operations located in UK. It is planed to be offshore outsourced to an external company located in a foreign country. A team of offshore workers came to UK and started to learn tasks sitting beside their onshore partners before they can go back to the home country to begin the actual work. Before the transition period, the outsourcing plan and transition arrangement have been announced in the team meeting. At the beginning of the period, UBS management advised Team A employees in a one-to-one meeting if he or she is a “survivor“ (being reallocated to other teams within UBS, getting interview opportunities in other teams or being laid-off) and that the Tea...   [tags: bank industry, management]

Better Essays
1780 words (5.1 pages)

Essay on International Business and Globalization

- Globalization encourages worldwide business. Globalization is an efficient process by which all the nations of world will commonly try to set regular universal standards & regulations (both created & recommended) which will encourage business around different nations. Business around nations or elements crosswise over different fringes is called universal business. Economic globalization The expression "globalization" is generally utilized as a part of business rings and matters of trade and profit to depict the expanding internationalization of businesses for merchandise and administrations, the budgetary framework, companies and commercial ventures, innovation, and rivalry....   [tags: universal standards, regulations]

Better Essays
1482 words (4.2 pages)

Essay on Global Business

- Essay 1 – CAGE Framework In the text Redefining Global Strategy, Pankaj Ghemawat discusses a method of indentifying the various differences that can exist between two countries, and that must be addressed when considering cross-border operations. This method is called the CAGE Framework. CAGE is an acronym used to describe the cultural, administrative, geographic, and economic distances that can exist between multiple countries. While methods of measuring physical and psychic distance have been already been incorporated over the last three decades, “… the CAGE framework takes a much broader view of distance, and has a much more solid empirical base.” (Ghemawat, 41) By exploring these four...   [tags: global strategy, language, ethnicity]

Better Essays
1448 words (4.1 pages)