Identify three major countries with which your chosen company operates. Preferab

ID: 385411 • Letter: I

Question

Identify three major countries with which your chosen company operates. Preferably, the three countries are in different continents.

Are these three countries members of the IMF, the World Bank, and WTO?

Do you believe that these three countries actively follow guidelines of these three major international institutions?

Compare the institutional structure of these three countries to determine if they promote globalization, i.e., (a) are their political institutions transparent and (b) do they have a functioning judiciary system?

Do you believe that the three countries under consideration practice policies that promote globalization? For example, what are those countries’ policies toward (a) governance, (b) competitive markets, (c) property rights, and (d) corruption?

Determine whether your company is a producer of goods or services. What are the major products and/ or services provided by your company? Are those outputs sold only domestically or are they also exported?

Do these products and services face tariff or non-tariff barriers in the target export markets? What are the tariff rates or non-tariff barriers imposed on these items?

Identify regional trading blocs with which your chosen company operates as well as the benefits that your company gains because it is part of those trading blocs.

Would your company be better off under a system of multilateral trade liberalization like the WTO, or with bilateral or regional trading blocs?

If you were visiting a foreign country to negotiate a transaction on behalf of this company, what cultural knowledge would you need to gain before the visit? How and from where would you get the information?

Explanation / Answer

Identify three major countries with which your chosen company operates. Preferably, the three countries are in different continents.

As a company that specializes in U.S. government contracts, CACI International operates throughout the world in a variety of roles, each of which varies in size in accordance with what the government is looking to accomplish. Three major locations where they operate are the United States, the United Kingdom, and Afghanistan.

Are these three countries members of the IMF, the World Bank, and WTO?

Afghanistan is a member of the IMF and the World Bank; however, it is not yet a member of the WTO, although its admission has been rumored to be near at hand for the past five years or so, along with other countries in the region, such as Kazakhstan (World Bank, 2015; Miles, 2014). Although Afghanistan is a member of the IMF and World Bank, the tumultuous security situation in the country over the past 50 years has seen its membership to both organizations fall in and out of activity (IMF, 2015).

The United Kingdom and the United States are both full-fledged members of the IMF, the World Bank, and the WTO (WTO, 2015).

Do you believe that these countries actively follow guidelines of these three major international institutions?

Specifically with Afghanistan, I think that the government finds it hard to meet all of the required guidelines of these three organizations. This is a combination of a lack of government control into the rural areas of the country as a whole, as well as the tumultuous security situation in the country right now (Barfield, 2010). However, I think that the next five to ten years will be a turning point one way or another for Afghanistan’s international trade presence in the world.

I do believe that the United States and the United Kingdom follow the guidelines for these three major organizations.

Compare the institutional structure of these three countries to determine if they promote globalization, i.e. (a) are their political institutions transparent and (b) do they have a functioning judiciary system?

The United States and The United Kingdom have two political and judiciary systems that are not always transparent; however, in comparison with other countries, such as Afghanistan, their transparency is impressive and does seem to encourage globalization. As they both have robust international economic trade that continues to trend upwards, it’s fair to say that their institutional structures do encourage globalization on a large scale.

Afghanistan is not a country that has a transparent institutional structure. The political institution, although it has improved over the past year, continues to be a religiously dominated hierarchy that does not lend itself well to international cooperation and global trade (Barfield, 2010). Their judiciary system, although it has made a large deal of progress over the past 15 years, still remains antiquated and ineffective when compared to other modern judicial systems. It suffers from a large backlog of cases, and also a generalized disagreement with Western judicial prosecution that has been imposed, although it goes against the government’s own religious views on judicial punishment.

I think that the United States and the United Kingdom both have similar policies concerning governance, competitive markets, property rights, and corruption. However, this is not to say that their policies are completely effective. For example, widespread corruption throughout the United States’ financial sector in the early 2000s, including the Enron scandal, had reverberating negative financial effects around the world (Duarte et al, 2013). This resulted in tighter financial reporting restrictions in the form of the Sarbanes-Oxley Act of 2002, which had an effect that was felt not just in the U.S., but also in its foreign trade partners.

Concerning competitive markets, I do think that the United States and the United Kingdom have trade policies that encourage the competition of private sector markets around the world. Both countries have a very robust consumer-based market, with the United States boasting the largest consumer economy in the world.

Concerning property rights, I also think that the United States and the United Kingdom both practice healthy measures to protect these. Specifically over the past decade, the stark different between western property rights efforts and efforts of other large countries, such as China, has become much more pronounced. However, currently, the U.S. and the U.K. maintain strong property rights measures.

On the other hand, Afghanistan, as a developing trade country, does not have as strong of policies as the U.S. and the U.K. Concerning governance, Afghanistan is struggling to ensure that its own governing measures extend outside of the capitol of Kabul, much less to the outlying areas of the country. Concerning competitive markets, much of Afghanistan’s trade is done through ancient tribal trade routes that largely do not submit to the overarching authority of the Kabul-based government, which makes it hard to measure Afghanistan’s own competitive trade policies. Concerning property rights, Afghanistan does not have an effective control method to ensure that property rights are protected. In fact, counterfeit items – specifically media items – are one of the main items that one will find in a market in the country. Concerning corruption, Afghanistan is still thoroughly infested with it, even though there have been great efforts over the past twenty years to address this. However, this is likely a problem that is too culturally engrained to be able to ever fully remove it.

Determine whether your company is a producer of goods or services. What are the major products and/or services provided by your company? Are those outputs sold only domestically or are they also exported?

CACI International is a producer of mainly services in the form of filling U.S. government contracts that require specialized human resources. The predominant consumer of CACI’s services is the Department of Defense; however, there are also many other departments of the U.S. government that utilize the company’s services.

CACI International’s outputs are mainly sold domestically. However, the company does also do business with some select U.S. partners. Agreements with the U.S. government do govern which countries CACI can do business with, which somewhat limits their capability to export their services worldwide.

Do these products and services face tariff or non-tariff barriers in the target export markets? What are the tariff rates or non-tariff barriers imposed on these items?

As the company’s main export is expertise, tariffs are an element that does not heavily affect the business. However, there are numerous non-tariff barriers that come into play when CACI exports some of its human resources to operate on the worldwide stage. An example of a non-tariff barrier would be that, in many countries, CACI employees often face heavy non-resident taxes that make it very hard for the company to find personnel that are willing to pay such heavy fines on their income. Although this factor can vary heavily depending on country, it is largely seen as a way for those countries to hire domestic employees, as opposed to international transplants, which CACI specializes in bringing in.

Identify regional trading blocs with which your chosen company operates as well as benefits that your company gains because it is part of those trading blocs.

As CACI International holds its headquarters in the U.S., the main trading bloc that benefits it is the North American Free Trade Agreement (NAFTA) (Regional Trade Blocs, 2015; NAFTA, 2011). As the company does operate both in Canada and Mexico, this directly positively impacts any trade to and from those countries that it may do. As of 2010, Canada and Mexico accounted for 32.3 percent of U.S. exports.

Another possible trade agreement on the horizon that would benefit CACI is the Transatlantic Trade and Investment Partnership (TTIP). This would intrinsically link the European Union (EU) and the U.S. in terms of trade (EurActiv, 2015). As CACI does operate in countries throughout Europe, this would directly positively benefit their operation in the region. However, measures allowing the U.S. President to enable this measure to take effect have failed to gain approval by U.S. lawmakers as recently as a few weeks ago.

Would your company be better off under a system of multilateral trade liberalization like the WTO, or with bilateral or regional trading blocs?

I believe that CACI International would benefit more under a bilateral or regional trading bloc than a multilateral trade liberalization such as the WTO. The main reason for this is that CACI, being a company that specializes in exporting human resources, could likely tailor the terms of a bilateral or regional trading bloc than it could with a bigger multilateral trading organization. If CACI could be a member of a regional trading bloc that specifically spoke to human labor experts being traded amongst countries involved in the deal, then they could reap a greater benefit from this.

For this question, I will use Afghanistan as a prime example. If I were to travel to Afghanistan to meet with a government trade representative about a possible future transaction involving CACI specialized human resources, then I would have to heavily research their cultural viewpoints beforehand. As there are some significant negative feelings towards western companies operating in the region, cultural awareness is something that’s absolutely necessary if hoping to successfully deal with the country.

There are two main cultural pieces of information that I would feel are necessary to know before visiting the country. The first is that having a beard is a necessity to gaining respect in the Afghan culture. Even though this may go against hygiene standards in some U.S. companies, this is something that must be waived in order to respect the culture of the country that you are visiting (Barfield, 2010) The second piece of information would be that, when commencing a business meeting, it is customary for the host to first provide tea and execute 10-15 minutes of non-business-related conversation (CIA World Factbook, 2015). This can be conversation about the weather, a soccer team, some other light-hearted international event, or anything of the sort. These two pieces of information are crucial to beginning a business conversation correctly with an Afghan counterpart.

There is a large Afghan expatriate community in the U.S., and they are generally very easy to find (Barfield, 2010). I feel that one gains the most knowledge from someone who has lived and worked in the region. If you are unable to find an Afghan expatriate, then I would find a U.S. person who has spent a significant amount of time working in Afghanistan with the local populace. No matter where you are going in the world, I feel that speaking to someone who has spent a significant amount of time there is the best way to understand the culture that you are walking into and, thus, increase your chances of being successful in your corporate negotiations.

References

Barfield, T. (2010). Afghanistan: A Cultural and Political History. Princeton: Princeton University Press.

CIA World Factbook, South Asia: Afghanistan. (2015).

Duarte, J., Kong, K., Young, L., & Siegel, S. (2013). The Impact of the Sarbanes-Oxley Act on Shareholders and Managers of Foreign Firms.

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