International Business Isbn-9780273766957 - Points-counterpoints

Executive MBA 2014-2015
International Business (ISBN-13: 9780273766957)
Hicham QAISSI - hicham.qaissi@gmail.com
Chapter 1. Point-counterpoint - Is Offshoring Good Strategy?
The manufacturers offshore because they have best conditions abroad, such as tax benefits,
credits, licenses facilities that they don't have in their source countries. The local governments
are upset about the manufacturers' leak, but they take apparently no actions to stop it, despite
there are many actions to do, such as changing/easing off the laws and licences bestowal and so
on to dissuade manufacturers going abroad setting up their plants...
I've read an interesting article about a promise of the U.S. government to make offshoring less
attractive for U.S. companies:
http://articles.chicagotribune.com/2012-01-29/business/ct-biz-0129-outside-opinion-
outsourcing-20120129_1_outsourcing-tax-rates-minimum-tax
I have some opposed opinions from many researchers on some related points :
- About heavy industry, offshoring it could be a profitable option and may not damage the
manufacturer's quality image, I can mention the case of Mercedes Benz, offshoring an important
amount of replacement parts for modern cars in China.
- About offshoring services, since the culture's wise, services need a closer contact. The best
example is outsourcing client services of national (Spain) Telecommunication companies, setting
up their client services in other countries with cheapest work force. I have to say, that is only
since the culture's point of view...
Without a doubt, the counterpoints or drawbacks most to be taken into account of offshoring
are the following:
- Offshore in countries under dictator regime or communist.
- Offshoring in countries with no respect to the environment.
Most final consumers, often buy domestic products without looking where they have been
made... I think it has to be taken into account depending on which country the product is
offshored in.
I'm really caught between two stools, I find it difficult to choose between offshoring or not..., I
have gathered some offshoring cons:
- Low quality and brand damaging (not systematically!!).
- Environmental degradation when offshoring in countries with no respect to the environment,
companies there are often cutting back costs by simply dumping their toxic chemicals.
- Impossibility to access the local market. For instance, China allows the entrance of capitals and
inverters, but hampers the distribution of the products made by outsourcing companies, even if
they are made in China.
- Empowering political impairments, especially in countries under dictatorship atmosphere.
- Political climate changes, changes in government policies can increase the expense leading in
many cases to give up the set up plant.
- In many cases, supporting "slavery" labour and child labour with little kids spending more than
12 hours a day in labour "concentration camps" depriving them from fair education and
childhood...
- Become vulnerable to energy costs rises in case of offshoring in Asia. Inditex is outsourcing in
North Africa (Tangier), smart gimmick...

- Losing control of the manufacturers' intellectual property and risk of exposing confidential
data. The outsourcing company they work with will know some of the manufacturers’
confidential information.
Likewise, making the long story short, the offshoring is not the best of both worlds; it has its pros
and cons.

Chapter 2. Point-counterpoint - Does International Business Lead to Cultural Imperialism?
First, let us shed light on what is cultural imperialism. Cultural imperialism is the fact of
promoting a more powerful culture over another less powerful, less known or desirable culture,
creating and maintaining an unequal relationship between both.
Since countries involve themselves in international business, the exchanges are not only limited
to goods or services, but there is an intrinsic cultural exchange too. Today, manufacturers are
focusing more than before on understanding their customers culture. They design their
marketing strategies and advertising campaigns with an extreme carefulness. For instance, a
simple message or commercial statement may be suitable for origin country but may be deemed
negative or offensive in the host country. The following figure (Figure 2.5. Page 26 of the 2nd
chapter) would be so impressive to the last statement:
One of the categorical proof and embodiment that business would never led to cultural
imperialism are the adhering politics of McDonalds in Islamic countries, McDonalds has adapted
its habits to Islamic culture and for instance, in the fasting month, they offer typical eaten food
in this month accompanied with burgers and Coca Cola. That have had a huge acceptance, and
local people have not felt evaded culturally. This could a liable evidence that cultures evolve,
what is occurring is the development of hybrid cultures, diversifying culture in two or more
directions, but always under the shelter, hedge and safeguard of the mother culture, and this
fact does not mean cultural imperialism.
Nowadays, from a commercial viewpoint, the borders are being easing to be crossed. Moreover,
firms’ managers have to design smart strategies when introducing their products in foreign
countries with a sensitive culture to avoid the reject of their products. Likewise, the acceptance
of their commodities depends not only on the conditions within the foreign culture but also on
the implemented policies of the company in each country to be conquered. Thus, for instance,
to introduce a new product in Saudi Arabia and United Arab Emirates, the more likely, the
company have to adopt different policies in both country, having into account the both of them
are neighbours and with extremely similar cultures.
After this heavy and humdrum sermon, my answer to the question "Does international business
lead to cultural imperialism" is a convincing and rotund "ABSOLUTELY NOT".

Chapter 3. Point-counterpoint: Should Political Risk Management Be an Active Strategy?
Well, to invest in a foreign country or not is a sensitive and subtle issue, and before deciding to
take the first step or not, it extremely needful to know how risky it is. Nevertheless, investors
often disregard the most capital first step in the process of international investing. This first
phase is no more than determining the riskiness of the investment climate in the country under
consideration. In commercial terms, country risks refers to the political, legal, cultural and
economic risks that are unique to the specific target country.
Surely, there are specialized experts in economy, sociology and politics and even in international
laws developing reports about the following issues:
• Tax politics and their future forecast.
• Legal environment and their future forecasts.
• Political environment and their future forecasts.
• Forecasts of cultural behaviour toward specific products.
Being sincere, there is an investment trend in countries with weak freedom but with a notable
political steadiness. Some firms prefer to invest even in countries under a dictatorship regime.
For many, it is not worth to invest in developed countries, because of the labour’s high cost and
the not suitable tax policies. There are few countries with a democratic political system where
international firms can find affordable workforce and competitive tax conditions.

Consequently, nowadays, for strong firms with a sizeable capital to be invested, carrying out a
passive political risk management is an evidence of lack of proficiency and prowess that all
managers should have as a basic skill in international business. Even though, there are countries
with unlikely future political changes, but with more chances to undergo legal ones. Perhaps in
this case, we can soften our active political risk management to adapt it to the risk rate.
BTW, I have found a pair of interesting book about this subject, they are a bit more technical
than necessary (maybe, a bit boring) but they have significant analysis inside (I have read only
some chapters).
Book : Climate change Policy and Global Trade (link).

Chapter 4. Point-counterpoint - Is growth good in International Companies?
There are different opinions about the growth’s approach. Detractors are altogether against
economic growth arguing that it is impossible to achieve infinite growth in the planet with finite
resources. On the other hand, supporters argue that we grow infinitely because of the continue
renewability of resources and growth is beneficial, profitable and essential in eradicating
poverty and enhancing the human being's life quality.
Perhaps, I would be retrograde and have no ripeness if I say that growth is bad or economic
growth is unsustainable. Even so, I would be irresponsible by upholding growth at any price and
any circumstance. I wwill develop my point of view giving some brushworks about the
drawbacks and the avails of growth and reflecting on the both stances:
Uncontrolled growth drawbacks:
• Environment costs. I can mention dozens of countries longing and yearning for growth
under any environmental circumstances.
• Inflation. Demand increases too quickly that we get a positive output gap and firms push
up prices.
• Boom Economic Cycles. If economic growth were unsustainable then high inflationary
growth would be followed by a recession.
• Possible Reduced Inequality. Economic growth have often-increased inequality because
growth can benefit a small section of society more than others.
Growth benefits:
• Higher incomes: consumers enjoy more goods and service, and hence, better standard
of living.
• Incitement to invest more: growth encourages investors to be less cautious and
thoughtful on investing their capitals.
• Improving the public services by boosting tax revenues.
• Low unemployment.
• Lower of loose government borrowing.
• Business and fiscal dividends. The Government finances are at the mercy of growth.
What is clear, the current long-lived economic recession make us reflect deeply about the extent
of growth our society and economy are able to bear without damaging ourselves. In short,
growth is something good, what we have to do is only moderate it pursuant to our necessities.
If growth is balanced and sustainable then it can occur without harmful effects. There is a
difference between abundance and growth. If the growth surpass abundance, here we have a
real problem. A phrase that I found online and resume how growth should be is “Sufficiency is
a more realistic goal that perpetual growth”, it is without a doubt, a phrase that makes us reflex
deeply about uncontrolled growth.

Summing up my point of view, the growth could be good only if it is controlled, adapting,
adjusting and aligning it to the necessary economic growth forecast. I have made a simple figure
that can help understanding the concept of The Tempered Growth Control.

Chapter 5. Point-counterpoint - Are Top Managers Responsible When Corruption Is Afoot
All companies are exposed to corruption regardless its activity sector and many of them, years
ago have begun to develop some practices and strategies to reduce corruption, chiefly, in
sensitive sectors like defence, construction or even public services. Although, some others are
just waking up to the risk and some others connive or even practice corruption seeking markets
and opportunities in unfamiliar markets.
Corruption is a cancer for the economy growth, it chokes the growth and undercuts the
business’s existence and bring about a loss of trust among customers as well as businesses.
Actors with some power inside corporation abuse their mightiness and sway to personal gain,
and that causes a huge detriment to the own company and society as a whole.
Well, after this boring introduction, let us go through the question under study; are Top
Managers Responsible When Corruption Is Afoot?
Let us begin the debate with a reflexion, if the top managers responsible when corruption is
afoot, that means the offender isn’t guilty or blameable? Does the top manager have to be
blamed for acts committed by others?
The easiest answer to the entire question is “Depends”, I am sorry but I have no choice: It’s
depends on cases and circumstances.
Individuals who are employees of a company are responsible for their own standard of conduct.
I can go further, employees must report all suspicious behaviour or fraudulent act to a
corresponding officer (some MNEs have their own best practice/misconduct codes
department).
On the other hand, we all know that the companies’ policies and goals are established by their
COEs in collaboration with a teamwork or associates executive and those goals are daily
monitored. The COEs meet frequently with their officers to make sure the company is going on
and managed in accordance with their own principles.
However, what explained in the paragraph above is not easy to apply and has its counterpoint.
The COEs delegate some of the job to others officers, who in turn delegate several
responsibilities like the authority to oversee other executives who manage departments and
implement the company’s guidelines on a day-to-day basis. This is the evidence that top
managers should be questioned of the corruption committed by others in their company but
not responsible for.
Others say that the top managers are responsible of corruption when is practiced within their
own company and it is because they are the responsible for the company ethics to be followed
and strictly implemented by their employees.
The Stockholm School of Economics developed some best-practice guidelines against corruption
in companies. The guideline consists of applying the following rules:
• Make anti-corruption a strong part of company culture.
• Raise awareness.

• Train your employees.
• Update and inform.
• Increase control.
• Reinforce zero-tolerance policies.
• Specify gift policies.
• Be transparent.
• Assess risk.
• Engage constructively.
• Follow the leaders.
United Nations, European Union and OECD have developed their own Anti-Corruption Ethics
and Compliance Programme for Business.

Chapter 6. Point-counterpoint - Should Nations Use Strategic Trade Policies?
Well, this time, I think this unit's point-counterpoint has a straightforward response since we
are talking about a whole country's interest.
The work & duty of all governments is to protect the interests of their own nations and enhance
its economy.
Without Strategic Trade Policies, the countries' trade is unprotected and vulnerable, having into
account the allowed fierce rivalry by globalisation.
First thing to do, we should distinct between import trade policies and export ones. To compete
globally, a nation must have industries that are competitive towards the global market, on the
other hand, a country can (have I said can? not should or must?) protect its scant or poor
industry from foreign imports to allow it to wax, develop and reduce costs and implant itself as
the first choice internally. I have to say that protect an industry from foreign import does not
mean to ban those imports, but by directing their efforts on enhancing the internal production
to make it the first choice and, why not, help it to become an export one.
One of the most important points in the political governments' agenda is target the strongest
and weakens industries.
A government strategic trade policies could be established through (measures):
- Sanction: apply on internal industries satisfying the internal demand and longing to export. The
opposite way is to grant taxes benefits.
- Restriction: in both ways, for imports and exports depending on the interests of the country.
Even though, I think it is not altogether a democratic measure.
- Quotas: To be reconsidered periodically depending on trade’s forecasts.
- Enhancement: Taking necessary measures to help and protect the weakest industry and help
the strongest ones to find more market worldwide.
- Subsidies: Especially for weakens industries.
By the way, when I say weaken industries, I mean those industries, even having national natural
resources and raw material are not able to supply the host markets and make the difference.

Chapter 7. Point-counterpoint - Should Governments Impose Trade Sanctions?
Since I am not a good knower of what economic sanctions causes on both sanctioning and
sanctioned foreign firms and countries, I will base my intervention on real cases.
According to the tens of cases and experiences among countries, economic and trade sanction
rarely work. For instance, the U.S. often uses its economic puissance and dominion (perhaps,
not only economic but almost all sort of power…) to bias and influence other countries by
restricting and tying down their trade. However, these actions cost the U.S. economy $12 billion
yearly.
At first, the question that comes to mind: Why impose sanctions. Sanctions are put in place for
a many reasons. For example, all UN and EU sanctions contain information about their reasons
and detail what their aim is. The main purpose of trade sanctions is to change the behaviour of
the target country’s regime, firms, groups, or individuals in a political or economic way. The last
objective of a sanction varies according to each situation.
There are many sorts of sanctions, the most frequently applied ones are:
• Embargoes on exporting or supplying arms and associated technical assistance, training
and financing.
• A ban on exporting equipment that might be used for internal repression.
• Financial sanctions on individuals in government, government bodies and associated
companies, or terrorist groups and individuals associated with them.
• Travel bans on named individuals. Those individuals could be firm’s sanctioned
executives.
• Bans on imports of raw materials or goods from the sanctions target.
• Import licencing banning certain goods.
• Ban specific goods or goods manufactured by a sanctioned foreign firm.
• Denying import licences for foreign appliers.
• Etc.
Let us cite some real cases of countries that have suffered the U.S. trade sanctions and their
results:
Cuba: Sanctions begun in 1963 and were made to garble Fidel Castro’s Communist regime. Cuba
then has strived economically over the years until today, and after the 51 years, the regime
hasn’t been torn down and stayed in power. The U.S. realised 51 years later that economic
sanctions has not worked, and, the President Obama has called for “a new chapter” in U.S.-Cuba
relationship announcing the end of sanctions.
Myanmar (Burma): U.S. sanctioned economically Myanmar after a military crackdown in 1988.
The sanctions were hardened in 2007 after protesters repression. After 26 years of sanctions,

nothing has changed and the Secretary of State Hillary Clinton announced recently that U.S. is
looking for other ways to bias Burma’s government.
Iran: In 1979, Iranian radicals seized 66 U.S. hostages and U.S. imposed economic sanctions that
were hardened because of Iran’s nuclear program. Iran’s capacity to export oil has been harmed.
I can affirm that, without a doubt, economic and trade sanctions rarely work.

Chapter 8. Point-counterpoint - Is CAFTA-DR a good idea?
CAFTA-DR has as many detractors as supporters. No one can demonstrate with great certainly
weather CAFTA-DE is harmful or profitable and to who. Time surely will tell. All signatories seek
ways to take advantages of the agreement. It is deferent to remember that, there is no enduring
friendship, nor enduring hostility, but there is always enduring interests, though.
Making the long story short, in my intervention for this unit, I limit myself to mention the
agreement's benefits and drawbacks and liabilities.
CAFTA-DR’s avails:
• Reciprocal tariff treatment from both sides.
• Growth in Central American countries apparel industry and advantages for exporters in
the U.S. whose products are used in their manufacturing. Fifty six percent of the apparel
exports from the Central American region are produced from textiles imported in the
United States.
• The agreement boost the competitiveness among the members.
• The agreement helps the members to export freely their remaining after manufacturing
the local needs.
• Raising rates of economic growth especially in the poorer members.
CAFTA-DR's drawbacks:
• Maybe, the benefits certain CAFTA-DR countries gain will come at the expense of other
participating countries.
• Critics suggest that CAFTA-DR will create job shifts that will lead to thousands of job
losses in the manufacturing and the agricultural sector.
• Lack of worker-protection clauses in the agreement.
• The agreement increase some barriers to free trade. I mention the case of Guatemala;
the agreement makes it harder to obtain access to affordable lifesaving medicines
because of stringent intellectual property clauses included in the agreement.
• CAFTA-DR is a bad move for labour and workers’ right. It will likely provoke the loss of
manufacturing jobs in the United States and agricultural jobs in Central America. Maybe,
it will trigger an imbalance in the members’ economies natural functioning.
• This kind of agreements often-hinder wages growth, which had been 9 percent over the
last 30 years compared to the 80 percent in productivity. This fact disservice the
developing Central American Nations, where wages have grown only 12 percent since
1980, compared to 80 percent during the period between 1960 and 1979.
• No clauses in the agreement protect the workers or ban the child labour.

• The agreement do not please all parties equally. It benefits members more than
another’s.
• Free traders are disappointed because it exempts two domestic industries that are
protected from overseas competition - sugar and textiles - and delays the elimination of
some trade barriers by a decade or more.
Consequently, the CAFTA-DR agreement has its own benefits and drawbacks, so it is not the best
of both worlds. I am really caught between two stools; I am cautious and cannot affirm weather
CAFTA-DR is good or bad…

Chapter 9. Point-counterpoint - Is it OK to speculate on currency?
To break the ice, let us define what speculation is. The speculation is a practice of engaging in
financial transactions in a risky way with the yearning to profit from fluctuations in the market
value of a tradable asset such as financial instrument. While it is often confused with gambling,
the key difference is that speculation is generally tantamount to taking a calculated risk and is
not dependent on pure chance, whereas gambling depends on very random outcomes or
chance.
Currency speculation exists whenever someone buys a foreign currency, not because he needs
to pay for an import or is investing in a foreign business, but because he hopes to sell the
currency at a higher rate in the future (in technical language the currency "appreciates"). This is
nothing more than the old rule of buying low and selling high—only with foreign money.
As mentioned in the book, the currency speculation is not for the faint of heart. The abrupt
political shifts outside the speculators’ forecasts and control and can turn losses to profits and
vice versa within days or even hours.
Currency speculators have their own strategies; they always have under surveillance weak
currencies that continue devaluating and only buy it when they think it reaches its floor and it is
ready for a possible soon rise. Nonetheless, they always have the riddle of WHEN it will rise and
with WHICH RATE. Even the most skilled brokers and stock exchange experts are not able to
forecast the financial shifts with exactitude. Many speculators pay little attention to the
fundamental value of a security and instead focus purely on price movements.
Speculating with currency or financial transactions is not necessarily bad or imply speculators
are doing something illegal or doing a fraud. If the brokers invest their or others’ money in
foreign exchange to make profit for themselves or their clients, why speculate with money
would be bad? It is the same.
Nobody tells trading in shares is illegal when it is also a sort of speculation. As long as markets
are transparent and free and information is available, traders are ought to be able to earn (or
loose…) their own money on their own skilfulness on the future’s forecasts. The simplest
question that comes to mind is: if we can buy and sell basic need assets and is legal, why not
make a profit doing the same with money?

Chapter 10. Point-counterpoint - Should Africa Develop a Common Currency?
Like a bottom line, my standpoint differs from many I have seen online, and here you have my
development:
The African common currency (the “Afro”, though many prefer call it the “Afriq”) would benefit
Africa by hastening economic integration in a continent that desperately needs to increase
market size to achieve more trade and growth.
Currently, Africa has already three economic cooperation and two of them are pure currency
cooperation: Economic and Monetary Community for Central Africa (EAEMC) and West African
Economic and Monetary Union (WAEMU).
The African Unions is doing its best to establish some building blocks for monetary unions in five
existing regional economic communities. These regional unions would be an intermediate stage,
leading ultimately to their merger, creating a single African central bank and currency, and why
not, a common African currency.
It was in 2003 when the Association of African Central Bank (AACB) Governors proposed the
plan for the single currency to be materialized by 2021. The idea was initially proposed by the
Libyan leader Muammar Gaddafi, who envisages a unified Africa with single currency, single
military force and single passport, plans that I see too improbable.
Personally, I see it doubtful to be achievable by 2021, and here you have my reasons:
• Africa still has many areas with strong political conflicts.
• Until now, many African regions suffer from war, diseases and poverty.

• Africa has still a marginalised presence in the global economy.
• There is a hard fight among the main countries to take over the leader role (Egypt,
Morocco and South Africa, among others).
• A common currency will be followed (logically) by a free citizens' circulation, but Africa
still suffers from diseases such as VIH, a fact that impedes this action.
• The ethnic and religious divisions are still troubling the continent.
• There are still African countries ruled under an extremely dictatorship system like
Equatorial Guinea.
• Even Africa is one of the richest continents, it is the worst managed.
• The presence of local capital and domestic consumption is very low.
• Broadly, many African countries are often economically strongly dependent on rich
world.
• It is unimaginable that the African countries will be able to transfer taxes revenues from
one country to another.
• It is difficult to transfer goods among African countries because of transportation and
mingy infrastructures.
Summarising, the single African currency will perhaps unite the African countries both
economically and politically. Having a unique currency would presents a one voice of Africa- an
Africa speaking with the voice of 900 million people, and thus presenting a greater force and a
formidable line of defence. Creating a single Central Bank with a unique currency for all Africa
would be a powerful hope for a new flourishing and prosperous new Africa. However, will be
easy? No at all even though it is not impossible. I have my doubts about this fact will be
attainable the next two generations and the blame for this consideration is the current political
landscape. Finally, is there any chance for the common African currency? Probably not, but I will
comfort myself if the selective expansion of existing monetary unions could be used to induce
countries to improve their policies.

Chapter 11. Point-counterpoint - Value Chains: Real or Virtual?
The discussion about whether or not the Value chains is real or virtual is a very controversial
one.
Nobody have doubts about the importance and primordially of value chain as a powerful tool
that helps managers evaluate their feebleness and mightiness, detect tracks and tricks to
enhance costs and blue-pencil mistakes and ineffective processes and broadly: mapping the
steps and sequence of “primary activities”.
I am absolutely against the idea of attenuating cardinally the meaning and traditional concept
of the value chain. The very small company needs a value chain analysis, is not it?
The concept of the value chain was primarily targeted toward manufacturing firms, in which the
value activities are mostly concerned with the physical flow of material like the acquirement of
raw material, manufacturing products, distributing and marketing products, etc. In the so
present digital age, the majority of forms are planning to conduct their business electronically
and the value chain analysis take every time more virtual shape by the use of the IT tools.
Nevertheless, due to the globalisation, the steady grown in the countries’ economy as well as
the people's living standards and the takedown of economic and cultural boundaries, times have
changed and operations need to be settled every time in less time. On the other hand, in e-
commerce, more and more activities become information based and performing them
electronically becomes indispensable rather than conducting this function physically.
Today’s organizations are dealing with digital information provision and this has created another
approach to customers, suppliers and business partners. Thus, nowadays, we could not carry
out the mapping and analysis of “primary activities” without harnessing new benefits that bring
the new virtual world leaded by the internet.

Chapter 12. Point-counterpoint - Should companies operate in and send employees to violent
areas?
Setting up a business abroad has always been risky, and not just financially, the risk could be
diseases (for example, in Congo, today, malaria is a far bigger risk for expatriates than murder),
kidnapping, violent crime, terrorism and even psychological risk due to the culture differences
and population behaviour or racism.
In a first step, let us reveal who are those who accept the challenge and put their lives at risk:
• Those who simply want high compensations.
• Those who are naïve and unaware of the risk.
• Those who are called the “thrill seekers”, who simply find it challenging.
• Those who are misled by their companies or simply not told the full truth
I am against the practice of sending workers to dangerous areas, I think It is not ethical neither
moral at all, but regrettably legal. Nevertheless, I agree with the fact that where there is risk,
there are usually rewards and risk-taking wins markets.
The only way I can accept the practice of sending workers to dangerous zones it is under the
following conditions:
• Tell them the truth and make clear that is a mission in a risky country and their lives
would be in danger (because for most employee, health and safety issues are generally
about avoiding minor injuries and malfunctions).
• Insure their security.
• Give them a countervailing salary or a danger bonus corresponding to the risk it takes
to travel to those areas. For instance, the typical salary for a KBR (Kellogg Brown & Root)
truck driver in Iraq is around $80,000 a year.
• Grant them greedy insurance policies.
• Guarantee the freedom to leave when things get rough.
• Guarantee their repatriation at the slightest sign of danger.
• Contracts no more than 2 years.
• Guarantee them come back home X times per year.
• Guarantee them a lifetime job once they are back.
Here you have the world’s most dangerous countries (with
statistics): http://www.garfors.com/2013/01/the-worlds-most-dangerous-countries.html
Anecdotally, and to finish my standpoint, the 10 safest countries and their homicides per
100,000 people are:

1. Palau: No homicides
2. Monaco: No homicides
3. Iceland: 0.3 per 100,000
4. Singapore: 0.3 per 100,000
5. Japan: 0.4 per 100,000
6. Brunei 0.5 per 100,000
7. Bahrain 0.6 per 100,000
8. Norway 0.6 per 100,000
9. Austria 0.6 per 100,000
10. Slovenia 0.7 per 100,000

Chapter 13. Point-counterpoint - A dirty dilemma: Exporting hazardous waste?
E-waste could be composed of mobile phones, game consoles, screens, and computers and, by
and large: electronic devices. We are all aware of the growth of this issue in both seriousness
and quantity especially when the information era is in its plain effervescence.
Exporting e-waste to recycling centres throughout the world seem be a growing problem. Our
consciousness must be open-eyed and on permanent alert about whether recycling centres are
doing their job or not.
First world countries do not accept recycle e-waste on their own lands and they consider it
promoting landfills (The U.S. generates approximately the 60 percent of worldwide e-waste)…
Moreover, United Nations and wealthier countries’ governments are aware about the danger
that suppose speculator recyclers, because about 80 percent of the collected e-waste nippy find
its way to a developing country like China, Vietnam or Pakistan. On the other hand, developing
nations have no choice and are seeking recycling e-waste opportunities from wealthier countries
like oxygen canisters to keep alive their economies.
I cannot pass up this opportunity without call upon and highlight the importance that the
manufacturers should go on and take responsibility for the hazardous materials used to build
their devices and take over the task of recycle the gadgets they have manufactured once. I know
that many giant manufacturers begun to move in this direction, inspect their material, and
sponsor campaigns on defence of the environment, even though I have my doubts about the
outcome...
Let us shed light on the main pros and cons of e-waste:
Pros:
• The reuse of important elements in electronics increasing their lifetime.
• E-recycling is emerging as a profitable industry for both developing and developed
countries.
• Metals can be melted down into fine riches and be reused.
Cons:
• Concerns about where the e-waste is processed and who by.
• Even though The Basel Convention and U.N. are doing their best, there are no safety
laws.
A pair of questions come to mind and I want to throw both of them on air:
• Will come a day when all countries would be responsible by law of their own e-waste
and recycle it inland their frontiers?
• Will come a day when manufacturers would be responsible of recycling their own e-
waste (the devices made by them)? I stand ready to pay an extra on the real price of the
gadget under the condition that the manufacturer be accountable to its recycling...a
kind of recycling canon.

Here you have an interesting map that shows where the e-waste ends up:

Chapter 14. Point-counterpoint - Should Governments Limit Foreign Control of Key Industries?
First, in order to warm my standpoint up, let us define what's a "Key Industry":
• An industry whose output is essential to the successful operation of many other
industries. A good example is the manufacturing of machinery tools.
• An industry that is peppy, essential and vital (sometimes, the survival) to the economy
in a country. A good example is the oil and gas industry in many Arab Gulf countries and,
in the US, the financial services industry is a key industry because it supports many
American jobs.
It should be stressed that companies in a key industry are often major employers in an area and
usually have a great deal of political power.
The key industries are broadly divided into three ranks: Primary, secondary and tertiary. These
ranks or categories are further arranged into numerous sectors to form units of production, and
when these sectors are considered in a specific way, we could say that it can be referred to a
country sector. Furthermore, the primary sector involves Production activities that transform
natural resource into usable products; the secondary sector involves manufacturing and
construction and the tertiary sector involves services that supplement the production and sale
of goods such as transportation, distribution and retail sales.
Another point of interest is to remember the policies (tariffs and non-tariffs ones) the countries
use to introduce barriers and protect their industries:
• Custom Tariffs:
o Specific tariffs.
o Ad valorem tariffs.
o Compound tariffs.
• Non-tariffs barriers:
o Quotas.
o Exchange control.
o Administrative barriers.
o Boycotts
o Subsidies.
o VER (Voluntary Export Restraint).
o Etc.
Arriving here, the two questions that arise is why do firms aim to take over key industries in the
host country and why do governments control their own key industries? It is a fruitful study the
topic of the power balance between the MNE and the host country in the concept of strategic

position. It is obvious that host country interests are fuelled and spurred by the MNE’s relative
ability and capacity to: 1) offer employment and tax revenues, 2) share in foreign trade or
replacement of imports, and 3) contribute to domestic economic growth.
A choking limitation would not serve the economic growth’s interests and the other end would
not do or would have another negative effects. In other words, letting foreign companies camp
with absolute freedom with no legislative neither economic control would make the host
country loses its sovereignty and national icons. On the other hand, limiting the expansion of
foreign countries would have the opposite impact slow down (in many cases, palsy) the goals of
growth described previously.
Here you have a pair of interesting link that show the key industries by country:
https://www.cia.gov/library/publications/the-world-factbook/fields/2090.html
http://iepd.iipnetwork.org/country_stats/characteristics

Chapter 15. Point-counterpoint - The superior organizations: Hierarchy or Hyperarchy
Without a doubt, the hierarchy structure has shown along the last two centuries that it is an
efficient structure and MNEs can achieve their international expansion plans applying it (Firms
like DuPont, Total, Standard Oil and General Motors have developed through hierarchy formats).
I cannot pass up this opportunity without remember Harold GENEEN quote: “Hierarchy
structure makes people as predictable and controllable as the capital resources that they‘re
responsible for”.
The neoclassical managing structure format, the Hyperarchy (term that does not exist in the
dictionary, by the way. Even though, It’s understood as the opposite of Hierarchy) structure or
ODM (Open Decision-Making) structure is a relatively young structure that represents the self-
organizing community structure and it could be defined like the constellation of Business Units,
departments and managers and even employees that interact on the basis of networks held by
technology, social relationship, experience interchanging and legal ties. Hyperarchy embraces
self-organizing which promotes intrinsic motivation of workers and multiple path flow of
information. In Hyperarchy structure, like real online social networks, actors are connected in a
direct or indirect relationship. The typical example is the LinkedIn professional network relations
among job applicants and business managers. Another helpful example is the open-source
software community in which the software source-code is open and whoever want to interact
to solve bugs or develop new releases is welcomed and encourage by the whole community,
and of course, these facts make the network infinitely large.
Hierarchy structure advantages:
• Efficiency in arranging roles, relationship and responsibilities.
• Clear managing control panel: Authorities allocation, responsibilities assignment and
procedures execution.
• Unsurpassable policies clearness.
Hierarchy structure drawbacks:
• Decision making slowness.
• Growth slowness.
• Wastage of front-end manager’s experience.
• Decisions less adjusted to the battlefield features.
• Unjustifiable cautiousness in decision-making.
• Slowness in relationship and unnecessary work’s complexity.
• It leashes the intrinsic employees’ motivation.
• Slows information flow
Hyperarchy advantages:

• Easiness of information flow.
• Abundance of information processing.
• Makes the whole MNE a globally integrated company.
• Make employees feel more participating in the whole company managing.
• Encourages innovation.
Hyperarchy structure drawbacks:
• Leeds to chaos and disorder if roles are not well allocated.
• Sometimes, decisions are not aligned to the whole company strategy.
The following graphical illustrates the both of them:
Along the last years, experienced CEO on Hierarchy and Hyperarchy gives many opinions
towards the superiority of an organization and we are witnessing a significant shift in the
governance model of MNEs. Nowadays, Hyperarchy is a cutting edge in business managing
structure and is still in a beta version and, time will tell whether the outstanding endeavours on
Hyperarchy are worth or not…
Making the long story short, even Hyperarchy does not solve MNE’s immediate problem, the
experience got managers thinking about the democratic process and how this process, once
affected by technology could enhance intricacies managing in branches and even in the
headquarters.
Personally, I prefer the hybrid Google strategy in managing structure: Foreshadowing
organisations that respect the past but engages the future…

Chapter 16. Point-counterpoint - Should developed countries prevent their companies’
marketing in developing countries?
Many experts suggest that governments should regulate their companies’ Marketing in
developing countries for several reasons. One of them because they promote their products in
less mature markets that their home countries have banned. Again, I am a bit caught between
two stools, but I do not coincide altogether with this statement. Nevertheless, we should have
into account which products are promoted abroad and which less, cause’ in many cases those
products could not be promoted internally because of their dangerousness (or hidden gloomy
motives) but widely accepted in developing countries: bear in mind that in many countries, the
lack of reliable information because of the political unconcern, consciousness and simply the
neediness and agnosticism prevent people from making good and ready-witted decisions and,
of course, we have the duty to prevent other countries from the presumptive danger of our
products.
In developed countries, MNE pay too attention to customers’ needs and they create products
quite suitable to the need of wealthier customers who, of course, can afford them. Nevertheless,
they do not do the same with developing countries customers. I will not miss the opportunity to
mention the example of developed countries that export the used batteries to developing
countries that have weakest pollution laws and the increasing promotions of tobacco companies
in developing countries when is banned in developed countries. Nonetheless, is accepted as
“irrefutable truth” by the overwhelming majority that conditions between developed and
developing countries are disparate that pitifully they have disparate regulations and laws. One
of the statements that jumped out at my view is the following: “If developed countries don’t
regulate to protect consumers in developing countries, who will do?”… Unbelievable but
regrettably true, developing countries are in God’s hand…
However, not only governments should react against unethical marketing campaigns of
developed countries’ MNE in less developed ones. The case of Nestlé would serve as example:
a boycott was launched in the U.S. on 1997 against the Swiss-based Nestlé Corporation. The
boycott promulgated in the U.S. and expanded into other developed countries in the early 1980.
It was prompted by concern about Nestlé’s belligerent and bold marketing of breast milk
substitutes, singularly in less developed economically countries. The boycott was cancelled and
the organizers encourage the practice of new-born nutrition.

It would be interesting that developed countries’ government work programs up to educate
their MNE’s managers in international marketing ethics: Marketing ethics is an area of applied
ethics, which deals with the moral principles behind the operation, and regulation of marketing.
In this vein, obviously, governments in developed countries could not intervene MNE marketing
policies, but they should be vigilant against any unethical marketing policy to, if not afflict their
MNE, give them a warning. I can go further and say that developing countries leaders should
ban unethical MNE’s marketing practices, but it could be restriction of freedom of expression…

Chapter 17. Point-counterpoint - Should companies outsource innovation?
At one time or another, most of us have wondered what innovation is. Innovation has many
definitions and there is not enough ink to include them all in a paper, but let us shed light on it
in a general manner: Innovation is the process of translation an idea or invention into a service
or good that creates more value for the customer. In general, innovation is an act of introducing
something new or doing something in a different way. One idea, to be called innovation, it must
satisfy a specific need and, might be replicable to an economical cost. Innovation usually jumbles
meditated application and blend of information and imagination in deriving greater value from
resources. There is a growing trend towards cataloguing and bewildering imitators with
innovations. Imitators take les risks because they usually draw out with a real innovator product
or service and take more gaudy approach, and sometimes enhance it. The most vivid example
that comes to mind is Compaq with its cheaper PC’s cloning IBMs ones, and Dell with the still-
cheaper clones against Compaq.
Is an act of survival that companies use innovation to face competition and, great firms put
under international competition have no other outcome than innovation. Nowadays, innovation
is considered the real engine of economic growth in the global economy. Multinational
companies, by implementing innovation as their culture, they may obtain products and services
with enhanced quality features, implement new production processes and newer and better
management methods.
Only few years ago, outsourcing has had a negative connotation in developed countries, but
things change (and fortunately, thoughts and minds too). Products and goods complexity
increases and every time it is not easy for companies to do everything inward. Few international
business experts suggest that companies should not innovate abroad and, my question is: if
companies are using suppliers for components and subsystems, shouldn’t use them for
innovation? If anyone might heed me, there is no denying that innovation makes sense when
(and only under the following circumstances):
• Sourced innovation is not a key innovation to the company nor is it a factor key success
(likely, great and wealthy companies take over their own innovations).
• Innovation supplier has specific equipment that are unachievable by the company.
• Outsourcing innovation is more expensive that doing it in-house.
• Outsourcing less important tasks that are complementary to home-innovated mother
tasks.
• International companies should never set aside their own country essence importance
of the innovation authorship.
Here you have a list that I have just rescued from Forbes web site about the most interesting
companies (under my own significant action) about the world most innovative companies (most
known ones):

*The Innovation Premium is a measure of how much investors have bid up the stock price of a
company above the value of its existing business based on expectations of future innovative
results

Chapter 18. Point-counterpoint - Should U.S. companies be allowed to close the GAAP?
Honestly, before reading the 18th
chapter, I’ve never heard about the different guidelines for
financial accounting and committees and financial organizations: GAAP (Generally Accepted
Accounting Principles), IFRS (International Financial Reporting Standards), IASB (International
Accounting Standards Board), FASB (Financial Accounting Standards Board), IASC (International
Accounting Standard Committee), IAS (International Accounting Standards), IOSCO
(International Organization of Securities Commissions). So, since I feel dizzy with so many new
acronyms, as a first step, let’s make things clearer:
GAAP (Generally Accepted Accounting Principles): Are a collection of commonly used
accounting and financial rules and standards for financial reporting. In addition, GAAP rules
contain many concepts and detailed definitions as international trade rules. Its end goal is to
make sure that financial reporting clear and could be understood by others. It should be pointed
out that there is no universal GAAP and the specifications vary from one geographic location to
another. In U.S., the SEC (Securities and Exchange Commission) mandates that financial
reporting adhere to GAAP specifications and requirements.
IFRS (International Financial Reporting Standards): Are a set of financial and accounting
standards developed and set up by an independent non-for-profit organization called IASB
(explained later). Its goal is to provide a common framework for how public companies prepare
and process their financial statements. IFRS do not set rules for industry-specific reporting, but
provides general guidance for the confection of financial reporting. IFRS is usually confused with
IAS (International Accounting Standards), which are older standards that IFRS has come to
replace.
IASC (International Accounting Standard Committee): Is a unique international agency forum
to coordinate, policy, development and decision-making involving the key United Nations
partners. It was created in 1973 by the accounting bodies of 140 countries that develop and
promoted the use of IAS (International Accounting Standards). It was succeeded by the
International Accounting Standards Board (IASB).
IASB (International Accounting Standards Board): Is the independent standard-setting body of
the IFRS Foundation. Its aim is to develop a single set of high quality, understandable,
enforceable and globally accepted financial reporting standards based upon clearly articulated
principles.
FASB (Financial Accounting Standards Board): Is a private, non-profit organization whose
primary purpose is to establish and improve generally accepted accounting principles (GAAP) in
the U.S. in the public’s interest.
IOSCO (International Organization of Securities Commissions): Is an association of
organisations that regulate the world’s securities and futures markets. IOSCO’s importance has
reached the point that has members from over 100 different countries, who regulate more than
95 percent of the world's securities markets

Having clarified acronyms, let us discuss whether U.S. companies should be allowed to close the
GAAP or not. The response may be clear once comparing the U.S. GAAP and IFRS accounting
systems.
If a company is investing abroad (especially in emerging countries), they financial managers
should handle with main accounting systems: GAAP and IFRS. GAAP is principally used in the
United States and the SEC (Security and Exchange Security) make efforts to switch it to IFRS by
the beginning of 2016. Both accounting systems have few differences between them that may
conduct to confusions and result alterations in financial reports. IFRS were established in 2001
and adopted by the European Union by 2004. The European Union’s hope is that all the world’s
businesses move to these standards to help investors and financiers all over the world to
understand the European financial solution.
Overall, both GAAP and IFRS philosophies are quite similar, even though, there are some
differences:
Balance sheet:
• IFRS: Obligates to separate current and noncurrent assets and liabilities.
• GAAP: Only recommend this separation.
Minor interests:
• IFRS: Included in equity separately.
• GAAP: Included in liabilities as a separate line item.
Documents included in financial statement:
• IFRS:
o Income statement.
o Balance sheet.
o Cash flow statement.
o Equity's changes.
• GAAP:
o Income statement.
o Balance sheet.
o Cash flow statement.
o Equity's changes.
o Statement of comprehensive.
Deferred taxes:
• IFRS: Shown as separate line items in the balance sheet.

• GAAP: Included with assets and liabilities.
Bank overdrafts:
• IFRS: Could be included in cash flow.
• GAAP: Charged as a financing activity.
Few of these differences likely cause major changes in any company’s financial reporting and
results; it may happen that a company with great results under GAAP will not look terrible under
IFRS. Hinge on these differences, undoubtedly, the response to the question under study is
obvious…
Here you have a map with countries already adopting IFRS and those are pursuing adopting it:

Chapter 19. Point-counterpoint - Should Offshore Financial Centres and aggressive tax
practices be eliminated
Tax heavens or Offshore Financial Centres (used to soften the tone…) generally exist to protect
offshore profits and keep them at secret from governments. OFC are a tax-avoiding loophole
that sends money overseas where there is no or little tax. This trend has become the go to move
of some of the top corporations worldwide.
Tax havens and OFCs are closely related, although not every jurisdiction would fall into both
categories.
I list below the benefits, drawbacks and myths about tax heavens and OFC:
Benefits:
• They offer a range of taxation levels from which to choose.
• Strong privacy legislation.
• Allow for the creation of offshore entities.
• Complex and detailed legislation protecting their investors’ assets.
• There is no obligation to have a yearly financial report.
• Possibility to create companies at distance.
• Full freedom of capital movement.
• They usually be countries enjoying political stability.
• There are no restrictions on investors’ nationalities.
Drawbacks:
• Sometimes, because an offshore jurisdiction has zero tax, it is not necessarily the best
tax haven to suit the investor’s needs.
• People worry about the inaccessibility of their money as it is located in a faraway
offshore country (even though, things are changing with technology).
• Generally, government and governmental agencies do not accept tenders from these
types of offshore entities.
Myths:
• Offshore tax heavens are just for criminals: Even the tax heavens are the desired
destination of laundered money and money of illicit origin, the majority of individuals
and businesses that use these locations are completely legitimate. It is even that a
recent study into the proceeds of criminality stated that the majority of illegal funds are
actually held in banks and financial centres in non-tax heavens countries.
• Offshore tax heavens are all exotic islands: Some tax heavens are located in nice and
warm countries but many are not. Isle of Man (self-governing British Crown dependency

located in the Irish Sea) and Delaware in the United States are considered as tax heavens
and could serve as an example.
• Tax heavens have all zero tax: There are varying levels of taxation in different offshore
financial centres and some tax havens have zero tax, others have a lower rate of tax and
a minority have a ‘standard’ rate of taxation.
Solutions to Tax heavens
The way out to this unsolvable situation is adopting the “territorial or federal tax system”. The
territorial tax system prevent multinational companies from shifting their money to tax heavens.
The territorial tax system would persuade the multinational companies from shifting their
outside profit to offshore tax heavens, because they will pay income taxes only to the countries
where they have earned profit. What countries will gain from this policy? Nothing, but at least
the multinational companies fortunes will keep in national banks.
It comes to my mind the following question: Is there anything wrong with not collecting large
amounts of taxes? OFC and tax heavens do not collect taxes because of the simple reason that
they do not have large economic burdens like military budgets, civil service budgets, etc.
Furthermore, those countries are not obliged to collect higher taxes only because the high-tax
countries are at disadvantage in attracting huge fortunes. Because, ultimately, it is a matter
pertaining to national sovereignty.
Therefore, since tax heavens and OFC will never be eliminated, the only thing I would prefer is
to be a bit more transparent against money of illegal origin and collaborate more with
international fraud agencies. Governments, in turn, should soften their crushing income taxes
(even, as I’ve explained before, it would be better to eliminate taxes for outside benefits with
the federal tax system), in such a way, persuade international companies to be obsessed with
repatriate their funds to OFC and tax heavens.
Here you have a map of all (supposedly) tax heavens countries:

Chapter 20. Point-counterpoint - Is learning a foreign language still useful?
The point to brainstorm in this unit is an open question and give room to scroll up whatever we
want. However, let us focus on the international business world.
The last decades, the world has been becoming more and more interconnected, new
technologies make the world smaller, and boundaries vanish. For those reasons, it is essential
for business managers to learn to deal and communicate with people from different
backgrounds. Nowadays, countries are dependent on importing goods and services from
overseas locations instead of staying with domestic products. Being able to communicate fluidly
with other suppliers, customers and partners undoubtedly will help international business to
achieve their global goals and grow to its ceiling potential and open doors to more foreign
markets. Today, evidences and figures suggest that as many as three out of four multinational
companies manage networks of twenty or more overseas countries. Coordinate such a burden
and managing such culturally, geographically and linguistically diverse scope is unmanning.
Once managers take the decision to learn foreign language for the purpose of business, the
election of which language to learn should the best fit. There are certain languages that are
crucial and more beneficial for managers than others and the election will depend on the vision
and the target markets to the business. Moreover, the question that arises here is: are the most
spoken languages the most important for business? In all probability not always. Many suggest
that the Chinese today is the most important language, I do not think so and the evidence is
when international traders make business in the very China, they do it in English (the own
Chinese business men learn and speak English, Spanish make business with French in English,
Russians trade in Japan communicating in English, etc.). For sure, someday, the Chinese
language’s worldwide dominance will arrive, but not anytime soon and I am afraid that I will not
see it. Indeed, even in powerhouse China, more people are currently studying English than in
any other country. An incredible 100,000 native English speakers are currently teaching there
and I think this figure is really too few having into account China’s dwellers. English will maintain
and grow its dominance, moving from “a marker of the elite” in past years to “a basic skill”
needed for the entire workforce. Indeed, the British Council reports that by 2020, two billion
people will be studying English worldwide. Nevertheless, – for better or worse – for sure, English
may be the most essential language for global business success now. Notwithstanding, the
hegemony of English should not be an excuse for monolingual native speakers to slack off.
Let us cite some reasons why should we learn a foreign language:
• Study or live overseas.
• For sure, become open-minded.
• Discover new cultures.
• Enhance the employability.
• Improve decision-making skills.

• Be more confident.
• Deal with new markets.
There are roughly 6.500 spoken languages in the world today. However, about 2.000 of those
languages have fewer than 1.000 speakers. The most popular language in the world is Mandarin
Chinese (1.200 million People in the world speak that language). I insist, not the most
important… not yet).
The ten most spoken languages and their native speaker numbers (in million):
1. Mandarin: 1.200.
2. Spanish: 405.
3. English: 360.
4. Hindi: 310.
5. Arabic: 295.
6. Portuguese: 215.
7. Bengali: 205.
8. Russian: 155.
9. Japanese: 125.
10. Punjabi: 102.
Here you have a map with spoken languages (percentage) per continent:

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