Executive Insights: How does this Firm Make Money? Understanding your Overseas Partner1

Abstract

It is common knowledge that the health of any relationship depends on the degree to which parties “understand” the needs of each other. Businesses are exchange organizations created to make money. Therefore, in an international business relationship what the parties “need” seems obvious and many would not belabor this issue. Although it is true that all businesses intend to make money, it is not true that they all make money the same way. One of the misconceptions of developed country executives going into international partnerships is that their foreign partners make their money the same way they do. Understanding the sources of profits of prospective foreign partners is important as they will determine whether there will be a partnership, and also whether a partnership will last.