The Complexity of International Business

One of the fascinating characteristics of international business regards the sheer complexity of an international enterprise. In what ways are the international enterprises complex, one might wonder. The complexity comes with the legal responsibilities and rights the companies have and the social effects and power the organizations possess.

The Legal Responsibilities and Rights

The legal responsibilities and rights of each enterprise vary by the countries' laws in which said enterprise operates. The structure chosen by the leaders of the enterprise also affects the legal rights and responsibilities of the enterprise.

For example, McKinsey & Co. is a global partnership. Generally speaking, partnerships do not have the same reporting responsibilities and accountability to stockholders that corporations have, as partners derive their incomes from the partnership and also share in the legal liabilities from their or their partners' actions on behalf of the partnership. Only with such a structure could managing director Ian Davis state, "We take pride in doing what is right rather than what is right for the profitability of our firm. Our credibility depends on it. Leadership at McKinsey is not about rising above others, but in helping others - consultants and clients - exceed their own expectations."

Social Effects and Power

The social effects and power corporations have come from the employment opportunities corporations offers, the organizations' values, the impact that organizations have on the local economies, and the secondary effects resulting from the companies. For example, the primary effect of a company means more jobs for the local economy. The jobs mean paychecks, which will be spent on housing, food, utilities, and other consumer goods. With stable housing, adequate food, heat, clothing, etc., the children of employees are better positioned to learn in school, because home life is good. Doing well in school provides a foundation for doing well later in life. The values of an organization further impact the culture by either introducing new values into a region or by reinforcing the existing values.

An example of the introduction of new values can be seen in the automotive industry. In the past, Detroit produced massive muscle cars, distinctly American. However, during the 70's, a fuel shortage in the US led to lines of cars spanning blocks, waiting for an opportunity to get what few gallons of gas they could at highly inflated prices. The fuel shortage combined with massive muscle cars' miles per gallon led to space in the consumer car market for fuel efficient vehicles. Japanese auto makers responded by creating small, light cars that produced more miles to the gallon. This shift to valuing smaller cars by Americans came because a multinational corporation provided the smaller car.

An example of the reinforcement of existing values can be seen in the coffee industry. Starbucks Coffee Company, an organization whose mission is to provide premium coffee, looks for growers who want to grow or already grow premium coffee. Accordingly, Starbucks pays its growers that grow "Gold Standard" coffee a premium for their coffee. Growers use sustainability in their growing practices and produce a high quality coffee.

Another standard Starbucks uses that demonstrates involvement in the communities of its growers is its Black Apron exclusive coffees. Every farm chosen for this standard receives a monetary award for social programs such as schools, clinics, and promoting sustainable coffee growing practices.

Starbucks finds its coffee growers by going to coffee growing regions and searching out local coffee growers who already show commitment to these types of values - sustainability and providing high quality coffee. The company spends much money teaching the farmers interested in becoming Starbucks' coffee growers how to meet its standards and how to engage in sustainable farming practices. By committing to finding regular coffee growers, Starbucks reinforces the existing local values while educating its coffee growers to increase their standard of living.

The complexity of international business enterprises leads to more than social effects and changes. The legal responsibilities and rights of an international enterprise represent only one of the expectations others have of enterprises. The roles the organizations play and their abilities to affect peoples' lives display a worldwide reach.