FMCC221.AQ21Am
Group 1: Bulao, De Leon, Lipa, Orobia, Rico, Sayritan, Villafuerte
Topic: International management and Corporate issues (Stakeholders; Responsibilities of
BOD and management; Protectionism; Legal Claims Incurred Around the World; Political,
Legal, and Economic Influences)
STAKEHOLDERS (Erika)
Definition of terms
● International management - the management of commercial activities in a company that
caters across markets and operates internationally. Beyond what is expected of a typical
businessperson, it necessitates knowledge and abilities such as familiarity with the local market
and its competitors, familiarity with the legal and financial system, proficiency with multi currency, and cross-border management.
● International business - includes all business endeavors that support international trade in
products, services, resources, people, ideas, and technological advancements.
International management vs. international business
International business is largely based on economics while international management uses
business policy and strategic management, which are based on the fundamental ideas of
psychology, economics, marketing, and organizational behavior.
Stakeholder
An individual, team, or organization involved in, impacted by, or involved in the
development and completion of a project. They have a personal interest in how it turns out since it
will benefit them financially or professionally and may have a variety of other effects.
Its main responsibility is to bring their knowledge and viewpoint to a project in order to aid
a corporation in achieving its strategic goals. Additionally, they can offer the resources and
supplies needed.
TYPES OF STAKEHOLDERS
● Internal stakeholders - stakeholders that exist inside a business. These are stakeholders
who are directly affected by a project, such as employees.
● External stakeholders - are those who have an interest in the success of a business but do
not have a direct affiliation with the projects at an organization. A supplier is an example
of an external stakeholder.
● Primary stakeholders - (also known as key stakeholders) have the highest level of interest
in the outcome of a project because they are directly affected by the outcome. They actively
contribute to a project. These types of stakeholders include customers and team leaders.
● Secondary stakeholders - helps to complete projects, but on a lower, general level. These
types of stakeholders help with administrative processes, financial, and legal matters.
● Direct stakeholders - are involved with the day-to-day activities with a project. Employees
can be considered direct stakeholders as their daily tasks revolve around projects at a
business.
● Indirect stakeholders - pay attention to the finished project outcome rather than the process
of completing it. Indirect stakeholders concern themselves with things like pricing,
packaging, and availability. Customers are a type of indirect stakeholder.
Examples of Stakeholders
1. Suppliers - are people or businesses who sell goods to your business and rely on you for
revenue from the sale of those goods.
2. Owners - They supply capital or equity to the business and have a say in how everything runs.
There can be multiple owners at a business, and each owner would have equity in the business.
3. Investors - Investors can include owners but they can also be outside vendors who typically
have a right to accurate and timely information such as regular financial statements. Investors
may also have the right to approve or reject major decisions like mergers and acquisitions.
4. Creditors - Creditors lend money to businesses, and they couls also have a secured interest in
the company’s worth. Creditors get paid back from the sale of products or services at your
business. In the event of a business shutdown, creditors get paid before stockholders.
5. Communities - The community in which a business functions can be considered as another
set of stakeholders. Good businesses are considered an asset to any community. Communities are
major stakeholders in businesses because each party (your business and the community) are
mutually beneficial in different ways than, say, a supplier and your business.
6. Trade unions - A trade union (also called labor union) is an organization of workers in a
particular industry that exists to secure good improvements in pay, benefits, safe working
conditions, or social and political status through collective bargaining.
7. Employees
Employees have a direct stake in the company. They interact directly with customers, earn
money to support themselves, and give support to the business operations as well.
8. Government agencies - Government agencies can also be thought of as a major stakeholder
in a business. They collect taxes from the company, its employees, and from other spending the
company does.
9. Customers - Customers are the people who buy business products. Customers expect to buy
the best quality from that business but at a fair price.
10. Media - Every business needs media publication relationships to spread the word about their
brand. Businesses often need to interact with press to make an important announcement or
advertise their product.
RESPONSIBILITIES OF BOD AND MANAGEMENT(Ken and Queency)
Structure of Board of Directors
BOD members hold different positions within the panel. The composition of the board varies as
per the company and state laws. For example, Amazon’s board of directors contains official
positions such as chairman, directors, CFOs, segment-wise CEOs and VPs, etc.
The board size is limited by a company specifying the minimum and maximum limit in its Articles
of Association. Organizations commonly have 3 to 31 directors. Let us look at some designations
and positions common to a BOD in public corporations.
1. Chairman: A chairman leads the board and thus heads the committee or board meetings.
The BOD votes and elects the chairperson. Usually, the company’s chief executive officer
is the chairman.
2. Managing Director: There are usually no restrictions on the number of directors in a
corporation bylaw. For example, in its board of directors panel, Amazon had many directors
overlooking a distinct segment. A managing director is an individual elected by the
company’s executive directors to manage, guide, and monitor business functioning.
3. Executive Director: Such an individual takes active participation in the company’s
management, business operations, sales, and finances. Being the company employee, an
executive director is a part of the board and even gets a salary for the company. The
director represents the cause of the company.
4. Non-Executive Director: A non-executive director doesn’t belong to the organization but
is a part of the board. External directors present an objective and third-person perspective.
Such directors provide critical opinions and advice by charging a certain fee. In addition,
they give voice to stakeholders outside a firm.
5. Other designations: Vice Presidents, CFOs, treasurer, zonal head, vigilance chief, audit
chief, etc., are some other designations common to a BOD.
6. Non-Profit and Private Companies: Private companies usually appoint the board members
from amongst the owner or family members and the executives. For non-profit entities, a
trustee board is quite common.
The Role of the Board of Directors
The board of directors, including the general manager or CEO (chief executive officer), has
very defined roles and responsibilities within the business organization. Essentially, it is the role
of the board of directors to hire the CEO or general manager of the business and assess the overall
direction and strategy of the business.
The six points below outline the major responsibilities of the board of directors.
1) Recruit, supervise, retain, evaluate and compensate the manager.
2) Provide direction for the organization.
3) Establish a policy based governance system.
4) Govern the organization and the relationship with the CEO.
5) Fiduciary duty to protect the organization’s assets and member’s
investment. 6) Monitor and control function.
Roles of Management
● PLANNING
Planning is the development of specific strategies designed to achieve
organizational goals. Forward-looking managers use planning to develop strategies,
policies, and methods for achieving company objectives. Moreover, managers who rely on
planning can anticipate problems before they even arise and therefore can implement
solutions quickly. In addition, planning serves as the foundation for the other management
functions—organizing, staffing, leading, and controlling—by providing direction for a
company; and increases a company's potential for success in accomplishing its goals.
● ORGANIZING
Organizing is the second major managerial function. It is the process of structuring
a company's resources—its personnel and materials—in a way that will allow it to achieve
its objectives. Specifically, organizing entails a fundamental three-step process: developing
tasks, labor units, and positions. First of all, managers must determine the exact actions that
have to be taken to implement plans and achieve
objectives. Second, they must divide personnel into teams with areas of responsibility.
Third, managers must delegate authority and responsibility to individuals and establish
decision-making relationships. Once management accomplishes the first step, it can take a
number of different routes to organize teams and delegate authority. Most organizations are
arranged by either function or division.
STAFFING
Staffing, the third major organizational function, encompasses activities related to
finding and sustaining a labor force that is adequate to meet the organization's objectives.
First, managers have to determine exactly what their labor needs are and then go into the
labor force to try and recruit those skills and characteristics. Second, managers must train
workers. Third, they have to devise a method of compensating and evaluating performance
that complements objectives. This includes designing pay and benefits packages,
conducting performance appraisals , and promoting employees. Finally, managers usually
must devise a system of firing ineffective employees or reducing the workforce . In
addition, management duties related to staffing often entail working with organized labor
unions and meeting federal and state regulations.
LEADING
Leading, or motivating, is the fourth basic managerial function identified by the
process approach to management. It is defined as the act of guiding and influencing other
people to achieve goals. Leading involves leadership, communication, and motivation
skills. In addition, the leadership role for most managers entails four primary duties:
educating, evaluating, counseling, and representing. Educating includes teaching skills and
showing workers how to function within the company and how to perform their assigned
tasks. They do so through both formal and informal means. Examples of informal education
are attitudes, work habits, and other behavior that sets an example for subordinates to
follow.
CONTROLLING
The fifth major managerial function, controlling, is composed of activities that
measure and evaluate the outcome of planning, organizing, staffing, and leading efforts.
Controlling is an essential part of management because it helps managers determine the
fruitfulness of the other functions (planning, organizing, etc.); helps guides employee
efforts towards company goals; and helps a company distribute its resources efficiently and
effectively. Controlling is typically viewed as an ongoing management process that ensures
that the organization is moving toward its goals. The process includes establishing
performance standards, evaluating ongoing activities, and correcting performance that
deviates from the standards.
PROTECTIONISM (Kim)
Protectionism is a policy that protects domestic industries from unfair foreign
competition. Trade protectionism is a measured and purposeful policy by a nation to control
imports while promoting exports. It is done in an effort to promote the economy of the nation
above all other economies.
Types of Protectionism
1. Tarrifs - The taxes or duties imposed on imports are known as tariffs. Tariffs increase the
price of imported goods in the domestic market, which, consequently, reduces the demand
for them.
2. Quotas - are restrictions on the volume of imports for a particular good or service over a
period of time. Quotas are known as a “non-tariff trade barrier.” A constraint on the supply
causes an increase in the prices of imported goods, reducing the demand in the domestic
market.
3. Subsidies - Subsidies are negative taxes or tax credits that are given to domestic producers
by the government. They create a discrepancy between the price faced by consumers and
the price faced by producers.
4. Standardization - The government of a country may require all foreign products to adhere
to certain guidelines.
ADVANTAGES
● More growth opportunities: Protectionism provides local industries with growth
opportunities until they can compete against more experienced firms in the international
market
● Lower imports: Protectionist policies help reduce import levels and allow the country to
increase its trade balance.
● More jobs: Higher employment rates result when domestic firms boost their workforce ●
Higher GDP: Protectionist policies tend to boost the economy’s GDP due to a rise in
domestic production
● Protects a country's new industries from foreign competition: If a country is trying to
grow strong in a new industry, tariffs will protect it from foreign competitors. That gives
the new industry’s companies time to develop their competitive advantages.
● Temporarily creates jobs for domestic workers: The protection of tariffs, quotas, or
subsidies allows domestic companies to hire locally. This benefit ends once other countries
retaliate by erecting protectionist policies of their own.
DISADVANTAGES
● Stagnation of technological advancements: As domestic producers don’t need to worry
about foreign competition, they have no incentive to innovate or spend resources on
research and development (R&D) of new products.
● Limited choices for consumers: Consumers have access to fewer goods in the market as a
result of limitations on foreign goods.
● Increase in prices (due to lack of competition): Consumers will need to pay more
without seeing any significant improvement in the product.
● Economic isolation: It often leads to political and cultural isolation, which, in turn, leads
to even more economic isolation.
● Companies without competition decline in quality: In the long term, trade protectionism
weakens industry. Without competition, companies do not need to innovate. Eventually,
the domestic product will decline in quality and be more expensive than that produced by
foreign competitors.
LEGAL CLAIMS AROUND THE WORLD (Ana)
There are several ways a business can be international:
● It produces goods domestically and sells both domestically and internationally.
● It produces goods in a different country but sells domestically.
● It produces goods in a different country and sells both domestically and internationally.
Legal environment acts as an important factor for setting up or running any business activities by
an individual or any organization in a particular country. The legal environment in one country is
different from another country.
LEGAL CLAIMS OF INTERNATIONAL BUSINESS
1. Language Barriers
When engaging in international business, it’s important to consider the languages spoken in the
countries to which you’re looking to expand
2. Cultural Differences
Just as each country has its own makeup of languages, each also has its own specific culture or
blend of cultures. Culture consists of the holidays, arts, traditions, foods, and social norms followed
by a specific group of people. It’s important and enriching to learn about the cultures of countries
where you’ll be doing business.
3. Managing Global Teams
Another challenge of international business is managing employees who live all over the world.
When trying to function as a team, it can be difficult to account for language barriers, cultural
differences, time zones, and varying levels of technology access and reliance.
4. Currency Exchange and Inflation Rates
The value of a dollar in your country won’t always equal the same amount in other countries’
currency, nor will the value of currency consistently be worth the same amount of goods and
services.
5. Nuances of Foreign Politics, Policy, and Relations
Business doesn’t exist in a vacuum—it’s influenced by politics, policies, laws, and relationships
between countries. Because those relationships can be extremely nuanced, it’s important that you
closely follow news related to countries where you do business.
6. Tax
Taxes vary from country to country, but one consistent approach is that every Tax Authority
prefers to maximize the contribution it receives from businesses operating within its borders.
7. Differences in Employment Laws
Wages and the working environment in overseas locations are often inferior to those in the United
States, even when you fulfill all local legal requirements. If you hire workers there, you face the
issue of what pay levels and working conditions are acceptable
POLITICAL, LEGAL AND ECONOMIC INFLUENCES (Leira and Kate)
1. Political Influences
● Trade Restrictions: It affects the demand for and supply of goods and services on
international markets. Specifically, trade protection prevents market forces from
operating freely to determine the equilibrium quantity and price. As a result,
protection results in an inefficient allocation of resources on a global scale.
● Administrative Policies: These are the bureaucratic policies and procedures
governments may use to deter imports by making entry or operations more difficult
and time consuming.
● Foreign Trade Policy: The foreign trade policy is essentially a set of guidelines for
the import and export of goods and services.
● Tax Policy: The choice by a government as to what taxes to levy, in what amounts,
and on whom. It has both microeconomic and macroeconomic aspects. The
macroeconomic aspects concern the overall quantity of taxes to collect, which can
inversely affect the level of economic activity; this is one component of fiscal
policy.
● Level of Corruption: One of the primary challenges organizations encounter is
corruption. The ability to influence businesses—regardless of whether doing so
creates value—can allow officials to take advantage of their power.
a. Extortion: Public officials using their power to obtain wealth through threats
or force
b. Theft: Public officials appropriating government assets for personal gain c.
Capture: Firms paying government officials to influence political decisionmaking for profit
● Foreign treaties and Bilateral Agreement: Foreign treaties are agreements between
two countries in written form and International law applies. Foreign treaties and
bilateral agreements primarily benefit a country by increasing the market for its
products through coordinated bargaining between two nations.
● Tax and Economic Policies
2. Legal Influences
● Consumer Rights and Protection Law: It is designed to protect consumers from
fraudulent companies or practices, and preserve their rights in the marketplace.
“How does this affect businesses though?”, you might ask. For example, consumer
law results in large companies having to dedicate a fair amount of their resources
into putting out detailed information about their products and policies. On the other
hand, consumer law in itself makes a business for some private watchdog
companies.
● Labor Law: It dictates how companies’ employees should be treated. Minimum
wage laws can limit the various different employment possibilities a company can
offer, child labour laws can affect the way tight-knit home businesses in third world
countries operate, and dismissal laws can make firing employees (for whatever
reason, perhaps unproductivity) that bit harder.
● Sale of Goods Act: This governs how you describe and sell goods and services,
ensuring they’re of satisfactory quality and fit for purpose. If they don’t meet the
requirements, consumers can get their money back.
● Securities Law: If a business is seeking to obtain financing through different types
of investors, it may be subject to legal issues such as security law. For example, if
you decide to offer promissory notes (a special type of loan) to investors, the
offering will often be considered the offering of a security and will subject you and
your business to state and federal securities laws and regulations.
3. Economic Influences
● Inflation: Inflation increases the price rate of goods and services in a certain period.
Many countries experience inflation, especially our country. It is uncontrollable
since the price of goods and services may be lower in one country or higher in
another. The price of the products produced in the country will become more
expensive than the same product produced in the other. Buyers' consumer spending
decreases as a result of rising inflation.
● Exchange Rate: Exchange rate is the rate of one currency for the purpose of
conversion to another currency. If there is an exchange rate change in a certain
country, there is also an increase in the price of products and services. As a result,
income in imports may rise and income in exports may decline in that nation.
Exports rise as a result of cheaper exports brought on by a falling currency rate.
Moreover, A lower currency exchange rate makes imports more expensive, while
promoting exports by lowering the cost of purchase for buyers abroad.
● Demand: Since the country is growing and developing, the demand for goods and
services increases. Demand for goods or services is a crucial element of global
trade. It affects the price of products that they are supplying. For example, the
demand for potatoes impacts the price and trade balance of potato exporting and
importing countries. If a small potato importer faces a falling price, its overall
imports might fall.
● Trade Policies: Trade policy is a law, practices and regulations that the government
has set for imports and exports. Trade restrictions have an effect on a nation's
export-import balance as well. It is a set of standards that encourage cooperation
and low exchange obstacles, or creating trade laws and regulations. Trade policies
affect international trade by limiting the choices of products, raising the prices of
the goods and services due to the fact that there is added tax, lowering the income
since we are supplying our goods and services outside the country.
And other Economic influences:
● Poverty
● Income Distribution
● Interest Rate
Resources:
https://www.internationalrelationsedu.org/what-is-international-business/
Buckley, P. J. (1995, January 1). International Business Versus International Management?
https://www.accaglobal.com, A.C.C.A.- (2014) International Management: Rising to the
Challenge, ACCA Global.
https://www.investopedia.com/terms/b/boardofdirectors.asp
https://www.extension.iastate.edu/agdm/wholefarm/html/c5-71.html
https://www.masterclass.com/articles/stakeholder-explained
https://www.activecampaign.com/blog/types-of-stakeholders
https://www.referenceforbusiness.com/encyclopedia/KorMan/Management.html https://www.wallstreetmojo.com/board-of-directors/
https://www.thebalancemoney.com/what-is-trade-protectionism-3305896
https://corporatefinanceinstitute.com/resources/economics/protectionism/
https://www.investopedia.com/terms/p/protectionism.asp