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  • Subject Code : BBB4M1
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  • Subject Name : International Business

International Business Fundamentals

Table of Contents

Introduction

Country Overview

Culture

Competitive Advantages

International Organisations

Managing International Risk

Global Business Ethics and Social Responsibility

Conclusion

References

Introduction to Netherlands International Business Portfolio

The Netherlands is a beautiful and culturally diverse nation. With a GDP of 902 billion USD, it is the 6th largest economy in the European Union. The GDP growth rate is around 3%. The population of the Netherlands is estimated to be around 17 million. The estimated labour force is 7.9 million and the unemployment rate as of February 2020 is 2.9%. The currency of the Netherlands is Euro. Netherlands is a member of the World Trade Organisations (WTO) since 1995 and the GATT (General Agreement on Tariffs and Trade) since 1948. It is also a member nation of the EU (European Union). The main export items for them are machinery, manufacturing goods, chemicals, mineral fuels, food and livestock. The import items are fuel, vehicles, electric equipment, organic chemicals, iron and steel. Their main export and import partners are Germany, Belgium, the United Kingdom, France and Italy. The Netherlands has the highest English proficiency among the European countries and is ranked the 6th happiest country in the world, taking into consideration factors such as health, life expectancy, social support and freedom. The capital, Amsterdam, is historically significant, as it is home to places like the Van Gogh Museum and the house where Anne Frank hid as a child during the Second World War. The Netherlands is culturally diverse and one of the richest countries in the world, making it an ideal place to expand one’s business in.

Country Overview

Transportation

The main modes of transportation in the Netherlands are through road and water, though air travel is also present. Trade is mostly carried out through the intricate network of waterways and the well-connected railway lines, which connect to the important cities of the neighbouring countries. Amsterdam and Rotterdam are the min ports of the country as well as the continent. Around 30% of the goods are transported through water and approximately 80% of goods are transported via railways. The government is planning to improve the ports and bridges as well as add more rail tracks and waterways to improve the connectivity. The long-term goal is to optimize these modes of transportation so that there is less pressure on the roads. 

Government

The Netherlands is a consociation state. The political system consists of the Parliamentary Representative Democracy, Constitutional Monarchy and a Decentralised Unitary State. The Chief of State is the King. However, the monarchy is constitutional, i.e., its powers are limited by the Constitution. The people choose the parliamentary representative and the Prime Minister is appointed by the monarchy to serve a four-year term.

The country is open to trade and the government fiscal policy has been expansionary. The government expenditure has been high, but so have the tax revenues. The per capita income has been high and equally distributed. The country has also enjoyed an increase in GDP and a gradual workforce expansion. The Netherlands has a market economy and it ranks 14th in the free economy index. The various policies encourage trade and business. The system of taxation is progressive and it contributes to vertical equality.

Education

Literacy rate in the Netherlands is 99%. Both public and private schools are present in the country. The medium of education in high schools is Dutch but most schools nowadays are bilingual as English is considered to be an important language. Dutch children undergo 8 years of primary education and 4-6 years of secondary education. After completion of secondary education, students either opt for vocational training or higher education. The level of tertiary education and graduate employment is higher than the EU average. Around 49% of the population aged between 30 years and 34 years hold tertiary educational degrees. The higher education system of the Netherlands is ranked 7th in the world.

Communication

Nearly 15 million people in the Netherlands use smartphones. There has been a steep rise in the use of the internet, with about 16.13 million internet users in the country, as of 2020. A decline has been observed in the circulation of newspapers as it keeps decreasing by 3%-4% annually. It is the geriatric population which mostly relies on the newspaper for information, while the younger population is dependent on the internet and digital media for the news and other information. The most popular daily morning newspaper is De Telegraaf.

The Netherlands, being a democracy, enjoys the freedom of the press. The government does not interfere in what is being written, said or printed by the media, as long as it is within the framework of the law.

Culture

Business Practices

The work culture in the Netherlands is not too formal, leaning towards a more relaxed and informal approach. The Dutch are extremely punctual when it comes to meetings and appointments and expect the same of others. They like to plan their appointments to avoid last-minute hassles. In terms of negotiation, being an egalitarian society, the Dutch believe everybody has a say, providing an opportunity to all concerned parties to contribute. They are straightforward and direct in their dealings and mean what they say. There is little room for emotion or subjectivity in negotiations and diverse opinions are not only accepted but also encouraged. The language of business is English and most of the people are fluent in it. Business lunches are very common to discuss and negotiate deals. Most business entertaining is done in restaurants, by dining out. Spouses are often invited to business dinners as well. Dinners tend to carry on till late into the night.

Business Protocols

Greetings are usually in the form of a firm handshake and instead of a greeting word, the Dutch prefer mentioning their last name as a form of introduction. Shouting out a greeting is considered rude and impolite. Addressing clients and colleagues by their first name is considered polite and acceptable. People in the Netherlands dress fairly conservatively for work and formal attire is preferred. Sometimes, the choice of one’s clothing also depends on the mode of commute taken to work, as some people prefer to cycle to work too. The Dutch have a reputation for being honest and corrupt practices such as bribery are not encouraged. Maintaining and respecting boundaries is also an important practice.

Competitive Advantage

When the Netherlands is mentioned, there are a few products which come to mind. These products are what the country is associated with and their businesses are booming in the economy. They are the cheese market, clogs and bicycles.

The cheese industry is one of the most popular industries in the Netherlands. There are five kinds of cheese in the market – Woerden, Alkmaar, Gouda, Edam and Hoorn. Out of these, the woerden cheese market is the most commercial in nature and gouda cheese is the most well-known variety. Gouda and Edam also have the most shares in the market. The Netherlands is the second-biggest exporter of cheese in the world, after Germany. This makes the cheese industry one of its biggest revenue providers. The industry is still expanding, with plenty of opportunities for it to grow further.

Clogs is the product one pictures while thinking of the Netherlands. These wooden shoes worn by factory workers are an integral part of the country’s heritage and are unique as they are not available anywhere else. In the past, clogs were made by hand. Now they are handmade as well as machine mace and are a hit with the tourists as well as the local people who work in factories or indulge in other forms of manual labour. The clogs industry has stood the test of time and continues to enjoy its popularity. Over six million clogs are produced annually and sold locally as well as exported.

Another product the Netherlands is known for is bicycles. They happen to be the largest exporters of bicycles in the whole of Europe. There are more bicycles than cars in the country. Interestingly enough, there are more bicycles than people in the Netherlands. It is the most frequented mode of transportation. The reason their bicycles are so popular is that they are reliable, of superior quality, sustainable, provide comfort and are easy to pedal. An estimated one million bicycles are exported abroad annually by this country.

Expanding a Canadian business enterprise in the Netherlands can be fruitful and profitable for both parties. The Netherlands would be a good place to expand not only a Canadian business but any business. The economy of the country is growing and is open to accommodate more industries. English is the common medium of communication, is commonly used and preferred in a business setting. The GDP per capita is high due to the even distribution of income. As a result, the spending power of the people is also high. This means people have more money to spare and will end up contributing to the new business. Another interesting fact about the Netherlands is that it ranks 27th in the Ease of Doing Business Index. Setting up one’s business there is a no-hassle and straightforward procedure, making it the ideal place to grow one’s business in. The Netherlands is known as the gateway to Europe. It has well-connected waterways and railroads. Its location and transportation facilities make it favourable for business expansion. Additionally, the work culture and work-life balance are an example of one of the best there is, making it a wonderful place to work. 

International Organization

The Netherlands is a member of the EU (European Union). It is also a part of the World Trade Organisations (WTO) since 1995 and the GATT (General Agreement on Tariffs and Trade) since 1948. Being a member of the European Union, the Netherlands is a part of many Free Trade Agreements (also called FTAs). Some of the other trade agreements the Netherlands is a part of are the Transatlantic Trade and Investment Partnership (known as the TTIP) and the Comprehensive and Economic Trade Agreement (CCTA). As a county, they are extremely open to the practice of the trade.

There are various benefits associated with getting involved in trade agreements. Since the Netherlands government has expansionary plans for its fiscal policy, getting involved in trade agreements is extremely beneficial for them. Trade help import goods, thereby procuring goods and services which were otherwise not available sufficiently as well as export goods, thus generating revenue out of the surplus. Engaging in trade helps lower the tariff barriers which promote welfare between countries and provide access to better quality goods. Trade provides access to new markets and aids in diversifying the market, which provides consumers with more choice. It also encourages competition, thereby pushing the industry to innovate which is beneficial for consumers. With so many advantages of trading, it is quite natural for any country to be a part of trade agreements.

The World Trade Organisations has helped member countries such as the Netherlands by facilitating globalization, reducing tariff and other barriers to really low levels on manufactured goods, thereby promoting an increase in trade activities. Trade is one of the main pillars on which the economy of the Netherlands stands, being a part of trade organisations and agreements has helped it flourish and achieve success.

Managing International Risk

Risk Assessment

Political Risks - The Netherlands has been a politically stable country. The country is a decentralised unitary state, consisting of a parliamentary representative who is elected by the people and a constitutional monarch with limitations on their powers. The country has been free from violence and terrorism. The government is very supportive of ideas related to the expansion of the economy and freedom of media is encouraged. The government, additionally, is also supportive of ambitious projects, entrepreneurs and start-ups. They are also known to provide financial aid and resources to business owners during the initial stages of their business, making it an ideal country for business expansions.

Economic Risks - The economy of Netherlands is the 6th largest in the European Union, making them one of the most favourable economies to consider expanding a business in. a limitation of this economy, however, is its excessive dependency on its trade activities. They are economically sound in every other aspect except for their dependency on trade. According to the current scenario, there appears to be a worldwide slowdown concerning trade and recession has been affecting various countries. The decreasing trends related to trade could have an adverse impact on the economy of the Netherlands, with a decrease of 0.8 to 1.2 per cent being anticipated in the years 2020 and 2021. The government has been trying to shift focus and bring about a change in policies concerning the fiscal policy and labour market. However, if things do not change soon it may lead to a serious financial crisis in the country. There also seems to be a rapid supply of labour, which is causing an increase in unemployment.

Social and Cultural Risks – There have been instances of high social exclusion and poverty in the past. Now, society and culture are fairly open and tolerant. The attitude of the people is liberal and supportive of diversity. Crime rates are low and there are no major concerns regarding the safety of the people. The Netherlands boasts of multicultural practices due to many people migrating there for better opportunities.

Natural and Physical Risks – One of the most vulnerable nations in the European Union to natural disasters and climate changes, the Netherlands is prone to flooding. Over the years though, it has become better at coping with this problem. Though it is vulnerable to physical risks, it more than compensates for it by being socially, ecologically and economically stable.

Global Business Ethics and Social Responsibility

Ethical Issues

Environmental Issues – The major environmental threats the Netherlands is experiencing are the impact of climate change, loss of biodiversity and the overutilization and exploitation of natural resources. The increasing growth in population and economic activities are being a burden to the environment, thereby harming it. The country has not met its goals in terms of increasing greenery and creating dedicated green spaces in urban areas and reducing the harmful carbon dioxide, nitrogen oxides and ammonia emissions. The government needs to review its policies concerning environmental changes and make changes with respect to cost-effectiveness.

Workplace Safety – The country is known to have a good and ideal work-life balance. Ethics surrounding the workplace are relaxed, as long as one follows the necessary protocols and meets the expectations of the job.

Human Rights - Human rights have been embedded in the constitution of the Netherlands. The government plays an active role in safeguarding the Human Rights of the citizens. The country is a part of international Human Rights agreements. Dutch law promotes gender right and equality.

Bribes and Corruption - Instances of bribes and corruption are rare in the Netherlands. These offences are taken seriously and come under the criminal code.

Treatment of Labour - laws related to labour is relaxed and stable in the Netherlands. It is not mandatory to join labour unions and being a member or non-member will not affect the status of one's employment. In the recent past, they passed a landmark bill in an attempt to abolish child labour in the country.

The Netherlands has always been a predominantly Christian state. However, a recent decline has been observed in religious affiliation, especially that of Christianity. This fall in number can be attributed to factors such as secularization and globalisation. There have been conflicts in the past between religion and the Government, such as when the law allowing same-sex marriage was passed. But there have not been any serious threats concerning the Christian religion and values.

Conclusion on Netherlands International Business Portfolio

Based on the information acquired while creating the business portfolio of the Netherlands, it can be stated that this is indeed a good country to expand one’s business and invest in. There are similarities between the Netherlands and Canada concerning many aspects - both have a colonial past, have English as their business language, consist of hospitable and friendly people, have a flourishing economy, encourage trade and promote diversity and multiculturalism. Hence, expanding a Canadian business in the Netherlands would be a practical and effortless move. There is massive scope for growth of any business in the Dutch economy, the people have high spending capacity due to their high per capita income and trade can be carried out fairly easily given their wonderfully interconnected waterways and rail routes. The people in the Netherlands are straightforward, the business ethics and conventions are accommodating and the overall culture o the country is easy to blend into for an outsider. The government of the country is stable and is business-friendly, meaning that they will not be creating obstacles or posing as a threat. Low instances of crime, violence, terrorism and corrupt practises are just the many advantages and reasons added to the list to invest in this country. Their economic policies are favourable for business as they have an expansionary outlook. Though there may be threats to the environment and natural risks may be involved, the fact that the country is taking them seriously and formulating preventive measures bodes well for the businesses planning to associate themselves with this country.

Keeping the bigger picture in mind and considering everything, the pros outweigh the cons while deciding whether the Netherlands is an ideal location to expand one’s business. Hence, moving a business here for expansion and profit purposes would be a lucrative step for the business as well as beneficial to both the countries involved.

References for Netherlands International Business Portfolio

Belczyński, Krzysztof. “Netherlands (NLD) Exports, Imports, and Trade Partners.” OEC - The Observatory of Economic Complexity, 2020, oec.world/en/profile/country/nld.

“Business Etiquette.” Business Culture, 22 Oct. 2013, businessculture.org/western-europe/business-culture-in-netherlands/business-etiquette-in-netherlands. 

“Cheese Production Volume in the Netherlands 2008-2019.” Statista, 2 July 2020, www.statista.com/statistics/453443/netherlands-volume-cheese-produced.

“Dutch (Netherlands) Cheese Market Research Report Till 2026 : Netherlands Industry Analysis.” Decision Databases, 2020, www.decisiondatabases.com/ip/140-dutch-netherlands-cheese-market-report.

“EUROPE BICYCLE MARKET GROWTH, TRENDS, AND FORECASTS (2020 - 2025).” Mordor Intelligence, 2020, www.mordorintelligence.com/industry-reports/europe-bicycle-market.

“Europe :: Netherlands — The World Factbook - Central Intelligence Agency.” The World Factbook, 2020, www.cia.gov/library/publications/the-world-factbook/geos/nl.html.

“GDP per Capita in the Netherlands 1960-2018.” Statista, 24 June 2020, www.statista.com/statistics/530398/netherlands-gdp-per-capita.

“Humble Dutch Clogs Stand the Test of Time | Expatica.” Expat Guide to The Netherlands | Expatica, 18 May 2020, www.expatica.com/nl/moving/society-history/dutch-clogs-102704.

“International Trade in Goods - Statistics Explained.” Eurostat, 2020, ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_goods.

Ministerie van Buitenlandse Zaken. “Home - Netherlandsworldwide.Nl.” Netherlands Worldwide, 15 Oct. 2020, www.netherlandsworldwide.nl.

“Netherlands Map.” Maps of World, 2020, www.mapsofworld.com/netherlands.

Oortwijn, Jack. “Dutch Market Sees Double-Digit Turnover Growth at End of Selling Season.” Bike Europe, 20 Sept. 2018, www.bike-eu.com/market/nieuws/2018/09/dutch-market-sees-double-digit-turnover-growth-at-end-of-selling-season-10134558.

Service Canada. “Home - Canada.Ca.” Government of Canada, 2020, www.canada.ca/en.html.

TakeProfit. “Netherlands GDP Value & Rate 2020 | Per Capita | GDP Structure.” Take-Profit, 2020, take-profit.org/en/statistics/gdp/netherlands.

“Trade Unions and Employers Associations in The Netherlands.” L&E Global Knowledge Centre, 5 Oct. 2020, knowledge.leglobal.org/employers-associations-and-trade-unions-in-netherlands/#:~:text=Dutch law does not provide,membership of a trade union.

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