Palau's closure of Palau Marine Industries Corp. and international contract enforcement

Business - International

Oceania: Government Orders Fish Company to Shut Down

The Pacific Magazine, Tuesday, October 16, 2007

The Palau Government and the Palau Marine Industries Corp. tuna fishing company had previously sealed an agreement of good faith. The agreement presupposed that the company faithfully follow the rulings of the government and if so, they would be able to carry on their activities; if they failed to follow the rules, the government had the right to close down the business. The tuna fishing company was exporting a monthly average of $1-3 million worth of fish, but they had debts towards the state in the form of tax in the amount of $5.8 million. Based on the unconformity with the good faith agreement, Ricardo Basouch, the Chief of the Division of Revenue and Taxation for the Republic of Palau summoned the PMIC to cease their operations by this Friday. Otherwise, they would be civilly and criminally charged.

Influence on International Management

The decision made by the Palau government is one with international applications as it teaches leaders to step up and defend the agreements signed in front of all parties involved in a business. When the government and the Ministry of Finances decided to close down the PMIC, they revealed the true importance of the rights and obligations of a contract. It impacts the way an agreement is perceived by both parties involved.

As such, within the context of international management, the leaders are shown their authority to implement the measures previously agreed upon. It shows that leaders have the real ability to exercise their functions and their rights in a case when their subordinates or partners do not follow the established rules.

To the second party of an international business, the decision made by the Palau government reveals the actual implications of a signed contract and the consequences it can generate if the terms of the understanding are not followed. Since the PMCI was closed due to tax debts and other broken rules of the good faith agreement, any other companies can be closed if they do not respect the contractual provisions.

As such, the government's decision to shut down the Palau Marine Industries Corp. impacts the international management in the meaning that it highlights the seriousness of an agreement and the consequences that might derive from breaking it. In other words, it supports leaders to exercise their given rights against their partners and it obliges the latter to follow the rules previously established.

2. South America: New South American Bank Planned

BBC News, Tuesday, 9 October 2007

Article Review

Venezuela's President Hugo Chavez initiated the idea of creating a new world bank in South America. The concept was accepted by a total of seven countries - Argentina, Brazil, Bolivia, Ecuador, Paraguay, Uruguay and of course Venezuela - and the new bank will be opened in 2008. The thought of creating a new development bank in South America is based on Chavez's ideal to increase their independence from the United States. Also, he desires for the new bank to be an alternative to the International Monetary Fund and World Bank lending organizations, which he considers biased. The development bank will be located in Venezuela with an initial capital of $7 billion. The participative quotas of each country have yet to be established.

Article Review

On the 10th of October 2007, approximately seven thousand inhabitants of Maharashtra gathered up in front of the Azad Maidan to protest against supermarket chains invading India. Their main discontents regarded German Metro and American Wal-Mart, but also the recently opened Indian Reliance Retail. The participants argued that the store chains were imposing monopoly on the Indian market and that they destroyed the small and local businesses. They also pointed out that the protest was only the first out of a long series to come and that they would only cease their protests when the retailers have left their countries.

Influence on International Management

The actions of the Maharashtra have two opposed impacts on the management community. On one hand, they encourage small and local businesses to stand up for themselves and to eliminate the monopoly threat posed by international conglomerates who open new subsidies onto their territories. As such, local managers are inspired to protect their businesses, their customers and their cultures.

On the other hand, the protests in Asia impact the international managers in the meaning that they increase the awareness in regard to the problems posed on positioning their products onto a foreign country. International managers will better analyze the cultural features of their destination region and the businesses that are being developed there. In order for these companies to properly function within the new territory, they must not pose a threat to local businesses and they should present the population with products that can not be produced internally.