Discuss the Role of International Contract Essay
As the global market perpetuates itself, business survival hinges on a company's ability to compete globally. To maintain market competitiveness, companies are actively looking beyond their national boundaries to source for components and/or finished goods (Rajagopal & Bernard, 1994) and continuously searching to integrate and streamline business activities with its suppliers to improve supply chain responsiveness (Toni et al, 1994). According to Burt et al (2003), such buyer-supplier collaboration requires the companies to proactively manage its supplier management as well as the contract management that administer the terms of the business relationship with its suppliers.
Business relationships between separate …show more content…
As international business evolved globally, dealing with international business partners often yield serious problems when differences in cultural behavior, communications, legal system, custom restrictions, engineering practices and societal values have an adverse effect on the business operations (Cateora, 1996; Skipper, 1999; Nibley, 2000; Keegan, 2002). Hence, to overcome business disputes that would likely to arise due to miscommunications, misunderstanding and misinterpretation of the requirements and expectations of a business relationship, written agreements that clearly specify the required degree of cooperation, conformance and inter-organisational will encourage contracting parties to achieve long-term interest in the relationship as well as providing the degree of stability in the relationship management (Frankel et al, 1996). Rajesh et al (2004) went on further to demonstrate that the benefit of a written contract creates an opportunity to design desired patterns of partner behaviour in terms of business transactions and explicate penalties from failure to perform to