Other Considerations Before Trading Internationally

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Unit 3 ­ International Business
Unit 3.3.4 ­ Other Considerations Before Trading Internationally
Roseanne Theyara
Corporate Social Responsibility:
Corporate Social Responsibility ­ How companies manage the business process to
produce an overall positive impact on society.
Supporters of CSR would argue that businesses have much to gain and that they
benefit in multiple ways by operating with a wider outlook than their own
immediate, short term profits.
Others simply say it is the `right thing to do'.
Critics argue that CSR conflicts with the fundamental economic role of the business,
which is to make a profit.
Whatever the reasons, it is certainly true that many local communities have
benefited from CSR.
Stakeholders:
Stakeholders ­ Are all those people who have a `stake' in a particular business.
Stakeholder groups include:
o Customers.
o Employees.
o Suppliers.
o Shareholders.
o Local communities which are affected.
The Shareholder Approach:
The traditional perception of business is that shareholders' interests are
paramount. After all, they own the business.
Everything that managers do should be directed towards the best interests of the
shareholders.
If shareholders want short-run profit maximisation at the expense of long-term
growth, then it is the responsibility of business managers to deliver.
Managers are employed to manage, on behalf of the shareholders.
The needs, desires and aspirations of other interest groups should not take priority
over shareholder interests.
The Stakeholder Approach:
Stakeholder groups have their own objectives, which may or may not be compatible
with those of the business as a whole, or with those of other stakeholder groups.
Business decision takers have to balance these competing objectives.
The stakeholder approach involves recognising that managers have a responsibility
to take account of the interests of all the stakeholder groups that are affected.
The benefits might include:
o Improved motivation of staff.
o Closer relationships with suppliers, leading to better quality service.
o A reduction in the disruption of commercial activities by pressure groups.
o Improved public relations, resulting in more favourable media coverage.

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Unit 3 ­ International Business
Unit 3.3.4 ­ Other Considerations Before Trading Internationally
Roseanne Theyara
o There is hope that by improving the reputation of the business, co-operative
measures will actually lead to increased sales and sales revenue.
Stakeholders Vs Shareholders:
Many businesses have adopted the stakeholder approach. Some have encountered
resistance from shareholders worried about the impact of this on profits, share
prices and dividends.
In reality is may be impossible to satisfy the demands of all stakeholders.…read more

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Unit 3 ­ International Business
Unit 3.3.4 ­ Other Considerations Before Trading Internationally
Roseanne Theyara
It can cut costs in places where wage costs are high.
Production uses extensive equipment and machinery.
Likely to be highly automated and produced on a large scale.
Can increase productivity by:
o Investment.
o New machinery.
Where to Sell:
Often businesses will take advantage of the lack of education that people have in
certain regions.…read more

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Unit 3 ­ International Business
Unit 3.3.4 ­ Other Considerations Before Trading Internationally
Roseanne Theyara
They may also find that the people with whom they want to do business have
unfamiliar habits and conventions.
If they are to communicate effectively with potential partners, they will have to
respect local patterns of behaviour.…read more

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Unit 3 ­ International Business
Unit 3.3.4 ­ Other Considerations Before Trading Internationally
Roseanne Theyara
Tariffs are levied in order to curb imports.
Tariffs can be used in a range of circumstances:
o They can be used to protect specific industries from foreign competition.
E.g. ­ Many countries want to protect their agriculture sectors.
o Tariffs raise tax revenue: If demand for the relevant import is inelastic,
people will continue to buy it even though the price is higher and the
government will receive taxes.…read more

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