Regulations of international business

Licensing

When a company is small it cannot sometimes enter a foreign market. It can sign a licensing agreement with a foreign firm. A license is a legal agreement in which one firm gives another a right to manufacture and sell its product. A company that obtains this right pays the licenser a royalty. Royalty is a certain percentage of the income from the sale of the product.

Businesses that have patents or trademarks usually can use licensing to protect them against counterfeiters. The licensee gains a successful product and the know-how. The licenser often controls the quality of the goods which the licensee produces, because high quality guarantees the reputation of the licenser. The licensee chooses the selling strategies because he knows more about how to sell the product in the foreign market.

VOCABULARY

licensing – лицензирование

agree – соглашаться

agreement – соглашение

small – маленькая (-ий), небольшая (-ой)

enter – входить, вступать, поступать

legal – юридический, правовой

right – право

manufacture – производить

product – продукт

obtain – приобретать, добывать

license – лицензия

licenser – лицензиар

licensee – лицензиат

royalty – лицензионный платёж

certain – определённый

percentage – доля в процентах

income – доход

trademark – торговая марка, торговый знак

protect – защищать

counterfeit – подделка, подлог

counterfeiter – фирма, незаконно использующая чужую торговую марку

gain – получать, достигать

success – успех

successful – пользующийся успехом

often – часто

control – контролировать

guarantee – гарантировать

reputation – репутация

strategy – стратегия

patent - патент

JOINT VENTURES

To go international a large firm can set up a joint venture with a company in another country. In this case two companies pool their resources to design, manufacture and sell the product. Both firms profit by the results of this arrangement. They also share responsibility. One of the firms provides the necessary funds and know-how for producing goods. In return it gets a foothold in the foreign market. The other firm obtains financial aid and technical assistance. And it takes responsibility for handling red tape and organizing sales in the local market.

In the late 1980-s, for example, a Connecticut engineering company set up a joint venture with Russian oil refineries and petrochemical plants. The venture gives the Russians the necessary technology and the Connecticut company has gained a foothold in the world's largest oil industry in return.

VOCABULARY

to go international – выйти на международную арену

joint – совместное

venture – рискованное предприятие

joint venture – совместное (чаще всего краткосрочное) предприятие

pool – объединять, создавать общий фонд, капитал и т.д.

resources – ресурсы

design – разрабатывать

arrange - организовывать

arrangement - организация

share - разделять

responsibility - ответственность

return – возврат, возвращаться

in return – в обмен

foothold - опора

finance – финансы, система финансов

financial - финансовый

technical - технический

aid - помощь

assistance - поддержка

handle – управляться, иметь дело

red tape – (перен.) бюрократия, волокита

organize - организовать

local - местный

late 80-s – конец 80-х годов

SUBSIDIARIES AND BRANCHES

A company can set up a branch in the foreign country to handle the sales of the product abroad. A parent company specifies the tasks and goals of a branch. Those usually consist of marketing and selling the product.

If the managers of the parent company decide to arrange the company's own production facilities (plants, factories, etc) overseas, they set up a subsidiary. A subsidiary works under the laws of the foreign country and to the profit of its parent company. Some subsidiaries are to a great extend independent of their parent companies because the home management believes that the on-site managers are in the best position to make decisions.

VOCABULARY

subsidiary – филиал, дочерняя компания

parent – родитель, родительский

specify – определять, специфицировать

task – задача, задание

goal - цель

marketing - маркетинг

manager – менеджер, управляющий

facility – средство, устройство

facilities – средства производства

etc. (etcetera) – и так далее

overseas – букв. за морем, на заморских территориях, за границей

law – закон, законы

under the law – в соответствии с законом

to a great extend – в значительной мере

independent of – независимый от

management - управление, менеджмент

on-site – букв. на месте

position – положение, позиция

decision – решение

QUOTAS AND TARIFFS

Sometimes the government can encourage or discourage imports and exports of goods. It imposes quotas on certain products. An export quota specifies how much of a product can a manufacturer ship out. An import quota allows you to import to certain limit. The quota may be absolute (we reach a certain amount and can ship no more) or the government can combine it with a special tariff on all units over that amount. For example, we had an import quota of 6.000 automobiles. We had bought 6.000 automobiles with a 6.5 % tariff by the end of the last year, and all others we bought with a 45 % tariff.

The government also imposes special taxes or duties on imported goods. These are tariffs. Tariffs discourage imports because they make foreign goods more expensive. There are revenue tariffs that generate tax revenues and protective tariffs that protect home manufacturers. The purpose of the revenue tariffs is to raise money, and therefore these tariffs are rather low. The protective tariffs are much higher.

VOCABULARY

quota - квота

tariff – тариф

government - правительство

encourage – поощрять, поддерживать

discourage – препятствовать, ставить преграды, лишать стимулов

impose – навязывать, облагать (налогом)

absolute - абсолютный

reach – достигать, доставать (до чего-либо)

amount – сумма, количество, объём

combine – комбинировать, соединять

unit – единица (продукции)

revenue – (государственные) доходы, выручка

revenue tariff – фискальный тариф

generate – создавать, генерировать

protective – протекционистский (тариф)

raise – поднимать, аккумулировать (средства)

therefore - поэтому

rather – довольно, достаточно

EMBARGOES AND SANCTIONS

Governments can prohibit the import or export of certain products for military, sanitary, moral or political reasons. A military embargo prevents weapons going to a certain country. The United States prohibit the import of certain birds and animals for sanitary reasons. Moral reasons are the grounds for embargoing cocaine, heroin and other drugs. Sometimes governments prevent the export for political reasons. For example, the United Nations set embargo on sales to, and purchases from, Rhodesia before it became Zimbabwe.

Sanctions are a form of reaction to illegal actions of another party. There are sanctions against dumping, for example. Dumping means shipping large amounts of a product to another country at prices below the selling price.

VOCABULARY

embargo – эмбарго

embargoing – наложение эмбарго

sanctions – санкции

prohibit – запрещать

military – военный

sanitary – санитарный

moral – моральный

political – политический

reason – причина

prevent – препятствовать, ставить преграды

weapon – оружие, орудие

bird – птица

animal – животное

grounds – основание

drug – лекарство, наркотик

reaction – реакция

illegal – незаконный

actions – действия

party – партия; сторона

dumping – демпинг

price – цена

below – ниже

REGULATIONS OF INTERNATIONAL BUSINESS

Some governments impose various regulations on businesses in their countries. Sometimes these regulations discourage foreign companies from entering home markets. In some countries all international businesses must have local partners. In other countries a foreign firm must have at least one native in the top management of a branch or a subsidiary. Some governments, for example in Mexico, insist that the local partners have the controlling interest. However, big firms like IBM refuse to do business on these grounds and usually manage to find the way out.

Government regulations limit what a company may do. For example, some countries demand that the company files a plan indicating what it is going to produce, how many local workers it is going to hire and how much it will pay the workers. This plan must also fit into the government economic master plan. If the country changes its master plan, the foreign firm must change its plans, too.

VOCABULARY

from entering – от вхождения

at least – по меньшей (крайней) мере

insist - настаивать

interest – здесь: пакет акций

controlling interest – контрольный пакет акций

However – тем не менее, вместе с тем

refuse - отказываться

way out - выход

demand - требовать

files a plan – представить план

indicate - указывать

indicating - указывающий

hire - нанимать

fit - соответствовать

master – хозяин, мастер, глава

master plan – главный план

native – местный житель; здесь: местный бизнесмен

WHAT IS BUSINESS?

Business is a word which is commonly used in many different languages. But exactly what does it mean? The concepts and activities of business have increased in modern times. Traditionally, business simply meant exchange or trade for things people wanted or needed. Today it has a more technical definition. One definition of business is production, distribution and sale of goods and services for a profit. To examine this definition we will look at its various parts.

First, production is the creation of services or the changing of materials into products. One example is the conversion of iron ore into metal car parts. Next these products need to be moved from the factory to the marketplace. This is known as distribution. A car might be moved from a factory in Detroit to a car dealership in Miami.

Third is the sale of goods and services. Sale is the exchange of a product or service for money. A car is sold to someone in exchange for money. Goods are products which people cither need or want; for example, cars can be classified as goods. Services, on the other hand, are activities which a person or group performs for another person or organization. For instance, an auto mechanic performs a service when he repairs a car.

However, there is one other important factor. This factor is the creation of profit or economic surplus. A major goal in the functioning of an American business company is making a profit. Profit is the money that remains after all the expenses are paid. Creating an economic surplus or profit is, therefore, a primary goal of business activity.