Question
Over the past several weeks, you have been learning about the various issues surrounding the challenges and numerous situations that exist legally that differ from those of the United States. You have been placed in charge of the Business Development and Expansion committee for your company. You are charged with the task of researching and identifying a country to expand your company’s operations. Take the feedback from the Phase 4 DB into consideration, and make any additions or deletions as you deem necessary.
Your international business expansion plan should include the concepts and ideas that were covered over the past several weeks. You are to select a country that does not recognize all of the established legal guidelines reviewed previously, but the potential profit that could be realized warrants the risk. The following points need to be addressed in your international business expansion plan:
The issue of common and civil law systems internationally
Intellectual property, copyright infringements, and legal ramifications
Violation of human rights of employees and child labor law violations
Public perception of companies doing business with companies that engage in that kind of activity
What has been the impact of the European Union of the business environment?
Anything else that you deem important to support your international business expansion plan
Sample paper
Organizations and globalization
Exxon Mobil is a large multinational corporation with headquarters in Texas, United States. Exxon Mobil started operations in the 1870s as Standard Oil Company. Over the years, the company has transformed into a multinational corporation by making acquisitions or entering into partnerships. The company started as a regional marketer of kerosene in parts of the United States. Over the years, Exxon Mobil has evolved to become the largest petroleum and petrochemical company in the world. The company focuses on oil development and production. Oil development involves the manufacture of lubricants and petrochemicals for industrial use. Exxon Mobil has operations in a limited area of the UAE region. The company has concentrated in oil development and production within Abu Dhabi, Dubai. In the recent past, the company has developed interest in expanding oil production into Indonesian region where oil production has been declining despite the country having massive oil resources.
The Issue of Common and Civil Law Systems Internationally
Indonesia follows a civil law system. The civil law system borrows much of its characteristics from the Roman law. There are certain key features in civil law systems. First, there is presence of a written constitution that forms the basic legal framework (World Bank Group, 2016). The constitution enshrines the basic rights and duties upon individuals. Another characteristic is that under the civil law system, only the legislative enactments are inclusive for all state members. Judges have little scope to develop laws, although they may follow previous rulings. The civil law systems in the country follow the outlined codes. As such, there are separate courts for solving administrative, civic, and constitutional disputes (World Bank Group, 2016). Another characteristic is that there is less openness regarding contracts. There are many implied provisions on contracts by the law. The provisions act as guides or as the regulatory framework in contract signing.
The Indonesian civil law is a set of codified principles similar in form and nature to the Dutch civil code. The major parts of the law include Property Law, Family Law, Person Law, and Inheritance Law (Soerodjo, 2016). Currently, the county is still bound by the Dutch laws in situations where there is no new legislation effecting new laws. The civil law system differs significantly from the common law system, and thus affecting investment decisions in the region. The common law system provides extensive freedom of contract compared with the civil law system (World Bank Group, 2016). There are only a few implied provisions. Another key feature is that common law does not necessarily constitute of codified laws or a written constitution. Under common law systems, the judicial decisions are biding. Such decisions can only be overturned through legislation.
Intellectual Property, Copyright Infringements, and Legal Ramifications
Intellectual property rights concerns those who hold valid patents to a certain production technology. Holding a patent gives the right for the owner of the patent to exclude others from applying the patented technology without seeking rights. Exxon Mobil holds numerous patents in oil production and manufacture of petrochemicals. For instance, the company has patents in candle wax composition making, crude bio oil pretreatment and upgrading, reverse osmosis membranes and osmosis, and among others (“Fresh Patents”, 2017). The research and engineering division of Exxon Mobil Company has been critical in patenting new technologies. Indonesia has already established the fundamental intellectual property right provisions to govern research and development in the region. The country already follows the outlined World Trade Organization provisions governing intellectual property rights (ExxonMobil, 2015). For instance, all patents are eligible for exclusive use to the owners for a period of 20 years. Indonesia adopted a new Copyright Law in 2014, by including elements of international standards. The new law clearly stipulates about the fair use of copyrighted material.
Violation of Human Rights of Employees and Child Labor Law Violations
Exxon Mobil conducts its operations with regard to the applicable laws and regulations in a country. The company maintains a commitment to respect the human rights even in the international countries. Exxon Mobil has outlined standards of business conduct that provide a conceptual framework for maintaining responsible operations across the world. These standards are consistent with the Fundamental Principles and Rights and Work established in 1998 by the International Labor Organization (ExxonMobil, 2017). ExxonMobil’s subsidiaries in overseas countries are required to adopt human rights and employee standards that reflect those of the parent corporation in the United States. The company has fought against unethical work practices including workplace discrimination, child labor, and forced labor.
There are incidences of child labor violation in the Indonesia region. However, Indonesia made a huge step in 2015 aimed at eliminating any forms of child labor and trafficking. The national task force responsible for eliminating child labor and child trafficking adopted a five-year action plan aimed at reducing such incidences (United States Department of Labor, 2016). The task force also aims at improving the lives of those children who have experienced human trafficking, forced labor, child labor, and other human rights violations. Indonesia has had incidences of child labor, including worse forms of abuse such as commercial sexual exploitation. The National Task Force to Combat Trafficking has already rescued over 16,000 children suffering from various forms of abuse (United States Department of Labor, 2016). This demonstrates willingness to end children rights violations in the region.
Public perception of companies doing business with companies that engage in that kind of activity
There are mixed perceptions of companies engaging with those companies that promote illegal activities such as child labor and employee discrimination. The mixed perceptions arise from the fact that there are high poverty levels in Indonesia. As such, children often seek for employment in order to earn their daily bread. Data from the U.S. Department of Labor (2016) indicates that children involvement in labor is predominant in the rural areas where the poverty index is high. About 12.5 percent of children engaged in labor come from rural areas while only 5.9 percent are from urban areas. Campaigns against child labor have intensified in the recent past. Part of the aim is to change the public perceptions on child labor as something that denies children the opportunity for a better future. There are also harsher penalties for those found guilty of engaging in child trafficking.
Impact of the European Union of the business environment
The European Union (EU) has significant influence in Indonesia’s business environment. Currently, Indonesia enjoys strong relations with Europe. Indonesia shares similar trade values with EU on various matters including democracy, human rights, regional development, and environment issues (European Union Action Service, 2016). The EU and Indonesia have already signed the Partnership and Cooperation Agreement (PCA) pact which regulates various areas including science and technology, trade, counter-terrorism, education, energy, and among others. As such, the EU has significant influence on how Indonesia runs various activities under the economic agreement. In 2016, Indonesia entered into another trade agreement with the EU dubbed the Comprehensive Economic Partnership Agreement (CEPA) (European Union Action Service, 2016). The CEPA agreement will enable both the EU and Indonesia to take advantage of increased relations between the two to improve trade. CEPA will provide three major benefits. First, the agreement will promote trade between EU and Indonesia. Secondly, there would be positive impacts to trade brought about by trade liberalization. Thirdly, this agreement will promote technology and skills transfer between the countries (European Union Action Service, 2016). This cooperation improves the business environment thus making it suitable for foreign investment.
Other Factors
Indonesia is described as an emerging economy. Investors are flocking into the region due to increased political stability, large natural resource base, and a large consumer base. In 1998, Indonesia made the transition from authoritarian leadership to an increasingly democratic state, with devilment of power away from the central government. This has increased stability in the region and led to improved economic growth. Nonetheless, the county still faces various significant challenges that threaten economic growth and development. The major challenges are corruption, poor infrastructure, and the threat of political instability. Some provinces in Indonesia are demanding for secession, which could destabilize the entire region politically.
In summary, Indonesia provides an attractive environment for oil and gas production and marketing. The country is endowed with large oil and gas reserves. By investing in this region, Exxon Mobil will likely earn profits from its investments. Indonesia has strong trade ties with the European Union. This relationship has ensured that Indonesia develops trade regulatory policies and rules that reflect those in the EU region. As such, Indonesia has already established a favorable trade environment even for foreign companies. Indonesia has established a strong regulatory framework guiding businesses. For instance, the country has developed policies to curb child labor.
References
European Union Action Service. (2016). Indonesia and the EU. Retrieved from https://eeas.europa.eu/headquarters/headquarters- homepage_en/680/Indonesia%20and%20the%20EU
ExxonMobil. (2015). Antitrust and competition law: legal compliance guide. Retrieved from http://cdn.exxonmobil.com/~/media/global/files/other/2015/antitrust-and-competition- law-legal-compliance-guide.pdf
ExxonMobil. (2017). Corporate citizenship report. Retrieved from http://corporate.exxonmobil.com/en/community/corporate-citizenship-report/human- rights-and-managing-community-impacts/approach
Fresh Patents. (2017). Exxonmobil Research and engineering company patents. Retrieved from http://stks.freshpatents.com/Exxonmobil-Research-And-Engineering-Company-nm1.php
Soerodjo, I. (2016). The Development of Indonesian Civil Law. Scientific Research Journal (SCIRJ), 4(9): 30-37.
United States Department of Labor. Child labor and forced labor reports: Indonesia. Bureau of International Labor Affairs. Retrieved from https://www.dol.gov/agencies/ilab/resources/reports/child-labor/indonesia
World Bank Group. (2016). Key features of common law or civil law systems. Retrieved from https://ppp.worldbank.org/public-private-partnership/legislation-regulation/framework- assessment/legal-systems/common-vs-civil-law
Related:
