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DANANG UNIVERSITYDA NANG UNIVERSITY OF ECONOMICS SUBJECT: INTERNATIONAL BUSINESSClass: 44K02.Members: Tran Thi Phuong AnhLuong Thi Khanh LyNguyen Tran Thao MyNguyen Thi Thu ThamHoang Nhu Khanh LinhVu Thi Thuy DuyenDa Nang, November 20t, 2019List of Diagrams Diagram 1. Democracy Index..............

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DANANG UNIVERSITY DA NANG UNIVERSITY OF ECONOMICS 

SUBJECT: INTERNATIONAL BUSINESS

Class: 44K02.1 Members: Tran Thi Phuong Anh Luong Thi Khanh Ly Nguyen Tran Thao My Nguyen Thi Thu Tham Hoang Nhu Khanh Linh Vu Thi Thuy Duyen

Da Nang, November 20t, 2019

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List of Diagrams Diagram 1. Democracy Index.......................................................................................................................5 Diagram 2. Freedom Trend..........................................................................................................................9 Diagram 3. Open Markets............................................................................................................................9 Diagram 4. Rankings on Doing Bussiness topics........................................................................................13 Diagram 5. Ease of Doing Bussiness Score on Doing Bussiness topics.......................................................13 Diagram 6. Intellectual property................................................................................................................15 Diagram 7. International property right index (IPRI) in 2019.....................................................................15

List of Contents I/ POLITICAL SYSTEMS..................................................................................................................................4 ECONOMIC SYSTEM.....................................................................................................................................8 II/ LEGAL SYSTEMS.....................................................................................................................................12 CONTRACT ENFORCEMENT...................................................................................................................13 LEVEL OF PROPERTY PROTECTION.........................................................................................................14 THE PROTECTION OF INTELLECTUAL PROPERTY....................................................................................14 III/ CUTURE................................................................................................................................................ 16 POWER DISTANCE..................................................................................................................................17 INDIVIDUALISM VERSUS COLLECTIVISM:...............................................................................................17 MASCULINITY VERSUS FEMININTY:........................................................................................................18 UNCERTANINTY AVOIDANCE:.................................................................................................................18 LONG-TERM ORIENTATION:...................................................................................................................18 IV/ EVALUATE BENEFITS, COSTS AND RISKS...............................................................................................19 BENEFITS................................................................................................................................................19 COSTS.................................................................................................................................................... 19 POLITICAL FACTORS...........................................................................................................................19 ECONOMIC FACTORS.........................................................................................................................19 LEGAL FACTORS..................................................................................................................................20 RISKS......................................................................................................................................................20 POLITICAL RISK...................................................................................................................................20

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ECONOMIC RISK.................................................................................................................................20 LEGAL RISK.........................................................................................................................................20

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I/ POLITICAL SYSTEMS The political system is the system of government of a country and it is assessed on two criteria: the degree which the government attaches importance to individuals or collectives and the degree of democracy and totalitarianism.

( From International Business- Competing in the Global Marketplace, Charles W.L.Hill ) Individualism emphasizes personal goals and individual rights. An individualist is motivated by personal rewards and interests. Individualists set personal goals and goals based on themselves. Collectiveism focuses on group goals, what is the best for collectives and personal relationships. The collective is motivated by team goals. A long- term relationship is very important. Team members easily sacrifice their personal interests or praise to recognize and celebrate the success of the group. Democracy is a form of government where the citizens of the nation have the power to vote in which the citizens exercise power directly or elect representatives from among themselfs to form a governing body such as a parliament.

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Totalitarian countries are nations in which the government does not permit its people to partake in political decision making. Instead of giving the people a voice, a totalitarian country is ruled either by a single dictator or a group that has not been collectively elected by the people. Commonwealth of Australia has always maintained a stable liberal democratic political system which is clearly shown in the following index table: Diagram 1. Democracy Index

Democracy Index 12 10 8 6 4 2 0

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(https://worddisk.com/wiki/Democracy_Index/) Based on the chart of Australia's democracy index 2018, it can be seen that the two elements of fair, free elections and citizen's freedoms reach absolutely 10 points. A democratic rating of 9.09 / 10 is a high number indicating that Australia is a full democracy. In addition, Australia remains the 9th most democratic country in the world with indicators of election, government or majority. Therefore, Australian citizens also enjoy many interests such as:  Freedom of election and being elected.

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 To stand for parliament.  To have the right to apply for Australian passport, free entry to Australia as well as visa-free countries for Australian citizens.  To have opportunity to work in all positions of the Australian Defense Force and civil servants.  Registration for children born overseas to acquire Australian citizenship under "Origin".  To get help from the Australian Diplomatic Office when you go abroad. (https://www.immigration.com.vn) Moreover, the Australian government system is based on a tradition of liberal democracy including religious tolerance, freedom of speech and association.  According to Reporters Without Borders, Australia is the 19th country in the world for the freedom of the press (2018) with a score of 15.46. Australia has good public media.

(https://rsf.org/en/ranking/2018)

In fact, Australians must obey many laws that restrict free speech including libel laws, hate speech laws, sexual harassment laws, and laws against intimidation. As a result, the

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space left to demand investigative journalism has also been reduced by the fact that independent investigative reporters and denunciators face harsh laws.  The Government of Australia allows people to be free of belief and the Government generally still respects this in reality. The relationship between religions has contributed to the freedom of this belief. Australia is a country that focuses on collective socialism, which means that Australia focuses on the advantages of common goals rather than personal goals. According to a report by the OECD 2015, Australia ranked 5th in the top 10 highest tax payers in the world. Australia's tax system is organized in a stratistructured structure, which means the higher the income, the greater the tax. Example, Your earnings are less than 600 AUD, you do not have to pay taxes. The highest tax rate is 47% applied to individuals earning over 62,500 AUD. This level does not include an income deduction of Medicare of 1.5%. This collection is mandatory and must be closed at the same time as the income tax. In Australia, the overall demand of society is generally seen to be more important than freedom of each individual. Therefore, citizens in Australia will benefit from access to good health systems, quality education and a wide range of community facilities. (such as parks and playgrounds) are supported through this tax revenue (http://vinaservicesgroup.com/tin-tuc/thong-thue-cua-uc.html/) CONCLUSION: Australia is considered a relatively good country for foreign investment enterprises to invest in because Australia has a democratic political system, With the power of the east, most of the benefits of the population are secured. The Australian political system focuses on collective socialism, the benefits of a collective group will be more advanced than the benefits of individual individuals. However, the democratic political system of Australia still has rules that require businesses when choosing Australia as a market for development, which needs careful consideration before investing in.

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II/ECONOMIC SYSTEM The economic system is the way in which resources are allocated and controlled in a country's market. The economic system refers to the role of government in regulating and controlling economic activities. For countries that value individual interests over collective interests, it is easy to see free market economic systems. In contrast, when countries think that collective interest is more important, governments tend to have more control and tighter control than the others. Understanding the economic system is necessary to assess the business in each country. Australia's economic system is a mixed economy, with very high levels of market freedom. Australia's efforts to harmonize the elements of the two forms of economy, the market economy and the command economy, help the government control the profits from business and provide the necessary policies to stabilize growth and distribute income evenly. But Australia also tends to be a market economy to help the economy achieve high efficiency. According to heritage.org, Australia’s economic freedom score is 80.9, making its economy the 5th freest in the 2019 Index. Its overall score is unchanged from 2018, with higher scores for labor freedom, government integrity, fiscal health, and trade freedom offsetting a steep drop in judicial effectiveness. Australia is ranked 4th among 43 countries in the Asia–Pacific region, and its overall score is well above the regional and world averages.

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Diagram 2. Freedom Trend

In particular, the overall index of economic freedom has twelve components grouped into four broad categories: Rule of Law; Government Size; Regulatory Efficiency and Open Markets. In the economic system section, we focus on analyzing three components proving that Australia is a country with high economic freedom score. Three components are shown in the following chart: Diagram 3. Open Markets

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Chart analysis:  The Trade Freedom index measures the absence of tariffs and other barriers that affect the international trade of goods and services. Australia's score is quite high, reaching 87.6 points, an increase of 1.4 points compared to 2018. Australia ranks 8th in the world for free trade. The average applied tariff rate is 1.2 percent, which is quite low compared to other countries. Australia has entered into 11 FTAs (Free Trade Agreements) with both individual countries and groups of countries such as China, Korea, Thailand, ASEAN, New Zealand and so on. A number of other agreements are currently under negotiation. Australia negotiates FTAs to benefit exporters, importers, producers and investors by reducing and eliminating certain barriers to international trade and investment. Australia's trade and tax policies are quite transparent, but non-tariff barriers (regulations on quality, food safety, etc.) are quite strict. All imported food items must comply with the food hygiene and safety regulations set by the Department of agriculture. Industrial products should comply with technical barriers. In general, imported products must comply with the regulations on packaging and labeling.  The Investment Freedom index for Australia from The Heritage Foundation measures the restrictions to investment activity both within the country and across borders. A higher score means fewer restrictions. Australia's score were unchanged from the previous year, 80 points, which is the lowest among the three components. At this score, Australia is on par with Canada and Germany in terms of investment freedom. Government policies do not significantly interfere with foreign investment. Australia is one of the countries with significant tax incentives such as:  Tax incentives for scientific and technological projects.

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 Reduce capital costs for petroleum and mineral exploitation industries.  Tax incentives for small and medium businesses. Therefore, if investing in Australia, investors will have the opportunity to enjoy tax incentives and service incentives. In some states, when becoming a permanent resident, the investor will be exempted from the tax on buying houses with small valuable real estate, investors are no longer limited in the right to buy residential real estate. In addition, they will enjoy better credit, more incentives for personal loans, home loans, car purchases ... Australia has a foreign investment approval regime that regulates certain types of acquisitions by 'foreign persons' of equity securities in Australian companies and trusts, and of Australian businesses and Australian real property assets. The Foreign Investment Review Board (FIRB) is a non-statutory body that advises the The Government monitors the foreign investment to ensure that the investment will benefit Australia. In particular, foreign investors are limited to investing in "new" properties so that their investment adds to the existing housing stock in Australia. This is to prevent speculation, which has little benefit for the Australian economy, and that could result in escalating housing prices. The Financial Freedom index for Australia from The Heritage Foundation measures the efficiency of the banking system and the interventions of the government into the financial system. A higher score means more efficient banking institutions and less government intervention. Australia's financial freedom index remains the same as in 2018 and is equal to 90 points. In this score, Australia ranked first in the financial freedom rankings. Financial regulation in Australia is split mainly between the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA). The Australian Securities Exchange has also played a role in regulating market conduct.

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The Australian government's intervention in finance is very low, regulation of financial institutions is minimal but may extend beyond enforcing contractual obligations and preventing fraud. In conclusion, all three of Australia's scores are higher than the world average, which proves that the Australian market is an open market. With almost all industries open to foreign competition, Australia is an attractive and dynamic destination for investment.

III/ LEGAL SYSTEMS According to International Business – Competing in the Global Marketplace, 8th Edition của Charles W. L. Hill, the legal system of a country refers to the rules, or laws, that regulate behavior along with the processes by which the laws are enforced and through which redress for grievances is obtained. Each country has the different legal system so considering and researching differences will reflect the attractiveness and specific characteristics of each country to make a decision that “ In this countrym should we invest or not?”. Therefor, the legal system of each coutry is very important for international business because it determines the business form, establishment of rights and obligations of related parties. In different countries, goverments will have different ways to define the legal system, which specifies how companies can conduct business so that it is important and necessary to find out the legal system of a country before deciding to invest. There are three main types of legal systems-or legal tradition-in use around the world: common law, civil law, and theocratic law. The legal systems in Australia is common law, which is based on traditon, precedent and custom. Tradition refers to a country's legal history,precedent to cases that have come before the courts in the past, and custom to the ways in which laws are applied in specific situations. Generally, common law is more flexible than others. In order to estimate the legal systems, investors need to identify and

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evaluate legal issues such as contract enforcement, taxition, property protection, intellectual property rights, product responsibilities and product safety. CONTRACT ENFORCEMENT Diagram 4. Rankings on Doing Bussiness topics

The bar chart illustrates contract enforcement in Australia rank among the top five on the global, which showed quickness in solving legal issues.

Diagram 5. Ease of Doing Bussiness Score on Doing Bussiness topics

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The assessment of the level of contract enforcement in Australia was rated 79 on a scale of 100 This is an ideal number for investors entering the Australian market. LEVEL OF PROPERTY PROTECTION. Property protection refers to the legal right to use under which an asset is exchanged in exchange for any collection related to that property.Assets include: land, housing, equipment, capital, mineral ownership, business and intellectual property (ideas protected through patents, copyright tables, and trademarks. )Accordi...