*7.2.1. Across the border processing* **Graphic 7: Across the border processing (ad. 6.2.1.)**

#### **host country active processing home country Supply of merchandise for (treatment) processing return of the processed merchandise passive processing host country home country Supply of merchandise for (treatment) processing return of the processed merchandise Reasons**: Utilisation of wage differences Division of labour between partner companies Outsourcing of production due to capacity reasons Export promotion

#### **Figure 7.** Across the border processing

#### *7.2.2. Licensing, franchising*

Export of know-how and patents


#### *7.2.3. Direct Investment (DI)*

#### Advantages:

**7.1. Basic types of international trade**

 price fixing at the world market purchasing power at the world market Indebtedness of the sales-market

no influence

14 Perspectives on Business and Management

marketing and advertising

 sanctions and conflicts at the world market expenses of the competitors for R & D,

**Figure 6.** Influence of decision-makers on three different business level

location of the country

7.1.3. Transit trade (through third country)

7.2.3. Foreign direct investment (FDI) and joint ventures

**•** reducing production costs abroad (cost and location advantage),

**•** accessing core resources (safeguard supplies of raw materials),

**•** making easier market entry in case of trade barriers,

Reason: creation of better framework conditions and reduction of production costs.

• size and structure • product- & productionstructure • management- and marketing-program •finance-structure • expenses for R & D and advertising

**Company decision makers**

**Graphic 6: Influence of decision-makers on three different business level**

• status of organisation etc.

**World economy factors Regional influence factors**

infrastructure: material, personnel

information market, capital market and

© S. Zafarpour

indirect influence

direct influence

and institutional access to labour market,

technology market

**7.2. Special types of international trade**

7.2.1. Across the border processing

→ Increase in competitiveness by

7.2.2. Licensing, franchising

7.2.4. Cooperation

7.1.1. Exports (direct/indirect) 7.1.2. Imports (direct/indirect)


#### Disadvantages


**•** Political risks Services of residents in foreign economic regions in order to create durable economic relations

#### **Active direct investment**

**Graphic 8: Direct Investment (DI) (ad. 6.2.3.)**

(investment and participation, foundation of companies, purchase, mergers, joint venture)

#### **Passive direct investment**

© S. Zafarpour **Figure 8.** Direct Investment (DI)

#### **7.3. Cooperation**

Joining of economically and legally independent companies in order to execute offers together

*Economic boom*

Cheap capital (low interest rate) → self-automation tendencies

Result: Establishment of many small enterprises

*Recession*

Expensive capital (high interest rate) → saving tendencies

Result: Bad orders position (cutback in employment)

Enforcement for cooperation

Advantages:


Disadvantages:

**•** In case of flat hierarchy (on leadership level)

Types: vertical horizontal, complementary

### **8. Level 7: Foreign trade financing**

**•** Political risks

**7.3. Cooperation**

*Economic boom*

*Recession*

Advantages:

Disadvantages:

Enforcement for cooperation

**•** Reduction of foreign trade risks

economic relations

16 Perspectives on Business and Management

**Active direct investment**

**Passive direct investment**

**Graphic 8: Direct Investment (DI) (ad. 6.2.3.)**

**host country**

**host country**

Cheap capital (low interest rate) → self-automation tendencies

Expensive capital (high interest rate) → saving tendencies

**•** Economies of scope (joint marketing, acquisition, R&D, etc.)

**•** Opportunity to create direct contacts with foreign partners

**•** Abolishment of intercompany competition (price war)

**•** In case of flat hierarchy (on leadership level)

Types: vertical horizontal, complementary

Result: Bad orders position (cutback in employment)

Result: Establishment of many small enterprises

Services of residents in foreign economic regions in order to create durable

© S. Zafarpour **Figure 8.** Direct Investment (DI)

Joining of economically and legally independent companies in order to execute offers together

(investment and participation, foundation of companies, purchase, mergers, joint venture)

**home** 

**home** 

**country Capital export**

**country Capital import**

The financing of trade and any other businesses are of the most challenging barriers.


Source: Reinhard Moser Source: modified S. Zafarpour based on Das Exportgeschäft (Moser R., Topritzhofer E.)

**Figure 9.** Financing on different levels

#### **9. Level 8: International business**

Every society basically aspires to have low unemployment, to have high rates of increase in per capita national income, and to maximise economic and social welfare. This fundamental idea has been imbibed in conventional Keynesian economics [4] and well implemented in the New Deal policies of the United States in the 1930s. Keynesian policies have been largely responsible for achieving the said goals at national and international level during the 1950s and 1960s. The spell was broken in 1973 with stagflation and recession in the United States and Europe. However, with the process of globalisation that started in the 1990s, the liberali‐ sation policies of WTO have once again focused on the mentioned goals. This has made the role of international business management more or less indispensible.

#### **10. Summary**

This multiple theoretical analysis of international business management is a modest contri‐ bution to the understanding of the complexities and independency of different protagonists and players to bring the economy of a country to higher levels of equilibrium. It means the reduction in unemployment and increased per capita incomes of the people, especially of the low and middle class, who will consume, save, and invest more that would lead to higher employment levels. This would ultimately lead to the maximisation of total economic welfare; in other words, it would meet Maslow's conditions of needs. **Graphic 10: Basic needs of the people everywhere**

Source: Maslow's hierarchy of needs (Maslow 1970) Source: Maslow's hierarchy of needs (Maslow 1970)

**Figure 10.** Basic needs of the people everywhere

#### **Author details**

#### Schapour Zafarpour

Address all correspondence to: schari.zafarpour@chello.at

Vienna University for Economic and Business, Austria

#### **References**

sation policies of WTO have once again focused on the mentioned goals. This has made the

This multiple theoretical analysis of international business management is a modest contri‐ bution to the understanding of the complexities and independency of different protagonists and players to bring the economy of a country to higher levels of equilibrium. It means the reduction in unemployment and increased per capita incomes of the people, especially of the low and middle class, who will consume, save, and invest more that would lead to higher employment levels. This would ultimately lead to the maximisation of total economic welfare;

Self-actualisation

Ego

Social

Safety

Physiological

role of international business management more or less indispensible.

in other words, it would meet Maslow's conditions of needs.

**Graphic 10: Basic needs of the people everywhere**

Source: Maslow's hierarchy of needs (Maslow 1970)

Address all correspondence to: schari.zafarpour@chello.at

Vienna University for Economic and Business, Austria

Source: Maslow's hierarchy of needs (Maslow 1970)

**Figure 10.** Basic needs of the people everywhere

**Author details**

Schapour Zafarpour

**10. Summary**

18 Perspectives on Business and Management

