international business
Abdullah99
IBUS300powerpointreview.pptReview for Midterm:
Topics Covered
- Global Business: Strategy & Structure
- Differences Across Global Markets:
Culture
Political Economy
- International Trade
- Foreign Direct Investment
- Bre-X Case
- Ceylon Tea Services Case
- AES Telasi Case
Global Business: Strategy & Structure
- Sample Question:
What are the 4 International Strategies, and what are the 2 characteristics of each? Give a company example for each strategy, and explain why you chose that example.
Multinational Corporations: Global Strategy
Differences Across Global Markets: Culture
- Sample question:
Identify the top 5 determinants of culture you would examine in an analysis of a specific country’s culture for a specific company considering operations in that country.
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The Determinants of Culture
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The Determinants of Culture
- Social Structure & Stratification
- Basic unit as individual vs. group
- Social mobility (and class consciousness)
- Political & Economic Philosophies, Religion, & Ethics
- All associated with differences in values and behavior (including productivity)
- Language
- Shapes way world is seen
- Tensions may be reflected in
- Advantages associated with learning (incl. unspoken)
- Education
Associated with differences in and opportunities for development
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Differences Across Global Markets: Political Economy
- Sample question:
Identify the top 5 characteristics you would examine in an analysis of a specific country’s political economy for a specific company considering operations in that country.
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Country Analysis: Political Economy
Political Systems
Collectivism vs. individualism
Socialist vs. free market ideologies
Democracy vs. totalitarian
- Economic Systems
Market vs. command vs. mixed
Economic freedom/Ease of doing business
Competitive Situation (detailed by industry analysis)
- Legal Systems (including enforcement)
Common vs. civil vs. theocratic
Property rights (including of intellectual property)
Contract law
Employment law
Product safety and liability
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Political Economy, continued
Economic Size & Growth
Economic development
Gross national income adjusted for purchasing power
Sen/UN: Human Development Index
- Infrastructure
- Corruption
- Risk: Political, Economic, and Social
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International Trade
- What 2 outcomes do theories of international trade seek to explain? Give an example of each outcome.
- Identify one theory of international trade and its key recommendation.
- Define free trade and identify 1 reason governments constrain free trade and 1 method through which they do so.
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International Trade Theory
Theories have shaped economic policy throughout the world
And development of institutions
WTO
Regional trade blocs
Theories explain
Benefits of trade
Patterns of trade
Theoretical case for free trade dates from 18th century
Adam Smith
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Political Instruments
- Tariffs
Fixed or ad valorem
- Subsidies
- Import quotas, voluntary export restraints
- Tariff rate quotas
Combination of tariffs and quotas (lower tariff for below quota)
- Local content requirements
- Administrative policies (e.g., customs)
- Antidumping policies/countervailing duties
- Regulation (limits/exclusion on particular industries)
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Political Motivations
- Protecting industries
- Particularly those important to sovereignty & security
- Consumer and producer (including employees/jobs) protection
- Supporting foreign policy
- Retaliation
- Supporting social concerns, e.g., human rights
- Dependency theory
That multinational involvement is primarily exploitative
- But again, given benefits, politics may encourage free trade/investment as well
Foreign Direct Investment
- Identify one advantage and disadvantage of FDI over trade, and give a specific company and country example.
- Identify one advantage and one disadvantage of greenfield FDI vs. cross-border acquisitions, and give a specific company and country example.
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FDI: Rationales
- FDI expensive and risky vs. exporting/licensing
- Bear costs of establishing or buying facilities
- Risky as “in” culture, and may be different
Greater likelihood of making mistakes relative to local firms
- But:
Access to markets with lower transportation costs than export
Access to low-cost production with greater control
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FDI: Two Entry Strategies
- Greenfield
Establishment of a new operation in a foreign country
- Acquisition/merger/joint venture
With an existing firm in a foreign country
- Historically, have tended to be acquisitions/mergers
Unless to developing countries
Fewer targets in developing countries
And if targets exist, not necessarily good ones
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Bre-X, Ceylon, and AES Cases
- Sample question:
Relate each of the three cases (i.e., describe how it offers an example of) to two of the topics covered in the course so far.
