How to Succeed in International Business?

Description
International business is a term used rarely to describe all commercial transactions that take place between two or more regions, countries and nations beyond their political boundary. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons.

The Challenges of Succeeding in International Business An Asian Case Study
Morale was high at the Florida based construction & contracting company. They had just been invited to join a consortium of companies that had pre-qualified for a big public works tender in the Near East. The lucrative offer had come via e-mail. After concluding the initial round of correspondence with their counterparts in Naimistan, a two man team made up of a senior engineer and a business development executive flew to Naimistan to meet up with their potential partners and sign the consortium agreement. The cross Atlantic trip had gone well, and they had been well received by their hosts at the airport, taken to their hotel and were pleased to see that a well planned itinerary awaited them. Two mid- level managers took them out to dinner that night, and a jovial relationship was established. The next day, still dazzled by the late night and effects of jet lag the Florida team met with the senior executives of the consortium and gave a strong power point presentation as to their capabilities, past business performance and key deliverables. Everyone was all smiles at lunch, and things were very cordial in the afternoon during the contract negotiations. The US team emailed the tentative consortium agreement for final approval to their Florida offices late in the afternoon and were treated to a special evening of entertainment and fine dining "Asian" style by the corporate execs. Nothing was off limits they were told. They could have any and all forms of entertainment that night, whatever their hearts and minds pleased. Next morning, they had received confirmation from the legal department at corporate headquarters that the agreement was acceptable and that they could go ahead and sign. The agreement was signed, pictures were taken and small gifts were exchanged. After having generated so much good will in such a good time, it was decided that the new consortium partners should visit the government office which was organizing the tender in order to introduce the U.S company. You had to build relationships before you could do business they were told. Up until that time, the whole process had been extremely professional. The meeting with the local government authorities went ahead as planned, but it was not possible to gauge the results of the meeting from the U.S. company's point of view. They had also received some conflicting news from the government officials. The pre-qualification for tender that had been won by their new business partners had apparently been cancelled and the process would start over again.

Their new partners assured them that this was a normal occurrence for this part of the world. Other disturbing news started to trickle down as comments of the need to make facilitation payments arose. The U.S team automatically countered with their need to abide by the Corrupt Foreign Practices Act, but their hosts assured them that it would be they who would take care of things, not the American's, but that the American's should know that such a arrangements existed and were a part of everyday life if you wanted to do business in this part of the world. The trip was concluded with a lavish good bye dinner and further entertainment, "Asian" style. The team was in a jovial mood when they arrived back in Florida and were congratulated by the CEO for their accomplishment. Their Asian counterparts meanwhile prepared for the new pre-qualification process and asked for intensive documentation. A joint project team was established for the project and earnest work commenced to supply their consortium partners with the necessary materials to win the pre-qualification bid. At the same time hints that certain facilitation expenses were being made to government authorities were being relayed to the American company over the phone. But, never in writing. After a while, these vague remarks became very much clearer as their foreign partners started to talk numbers. The US stance was the same. We cannot be involved, we don't want to know about it. Two months after the signing of the consortium agreement, the new pre-qualification bid was held, and their consortium failed to qualify. Their Asian counterparts blamed them in part for not assisting them in paying up the facilitation fees, and claimed that they would have won had the size of the payment been larger! They vowed to have the pre-qualification tender cancelled and the process renewed once again. Surprisingly within two weeks they had actually managed to do just that and the tender process was restarted. This was apparently a business tactic that was used frequently to disrupt and delay the tendering process. But by this time, the American company had lost faith in their partners having allocated resources freely against the promise of lucrative rewards and had decided to withdraw from the project. The Asian partners accused the American's of being short sighted, inflexible, and shallow. The American's accused the Asian's with being untruthful, slow, and not results oriented. Both sides threatened each other with law suits and asked for damages. Lawyers wrote letters back and forth, but even they had problems communicating. Both sides refrained from going to court because the cost of litigation would have been too expensive, but wrote letters of complaint to their respective embassies. The culture gap between the companies had played an important role in how this project went bad. Communicating across cultures can be extremely difficult. What the beginning is for one
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culture can well be the end for another. If you enjoyed this case study please review some of the other cases by Jim Kayalar which come with instructive teaching notes.

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