session 1i buse608

8/13/2019 Session 1i BUSE608

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DR SAJJAD HAIDER

Introduction to Module

Introduction to International Business

BUSE 608

International Business

KAAU, 2011-12


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DR SAJJAD HAIDER

$700 billion

27 billion

$2 trillion

12 billion

$1 trillion


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DR SAJJAD HAIDERSource: http://news.bbc.co.uk


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America sneezes and the UK catches the cold

FTSE

CAC

DAX

Nikkei

Nasdaq

Dow

Jones


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Sydney

Hang Seng

BSE

RTS


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Click on an event on the timeline

http://news.bbc.co.uk/1/hi/business/8242825.stm


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APA Chinese worker moves large tires at an

assembly line for buses made by Chinese auto manufacturer Foton

By JENNIFER LOVEN, AP White House Correspondent Jennifer Loven, Ap White House Correspondent

Sat Sep 12, 5:34 pm ET

WASHINGTONPresident Barack Obama's decision to impose trade penalties on

Chinese tires has infuriated Beijingat a time when the U.S. badly needs Chinese help on

climate change, nuclear standoffs with Iran and North Korea and the global economy.

China condemned the White House's announcement late Friday as protectionist and said it violated

global trade rules. At home, the punitive tariffs on all car and light truck tires coming into the U.S.

from China may placate union supporters who are important to the president's health care push.

To the White House, it was "simply about enforcing the rules of the road and creating a trade system

that is based on those rules and is fair for everyone," spokesman Robert Gibbs told reporters

traveling with Obama on Saturday to a health care event in Minneapolis.

Chen Deming, China's minister of commerce, said the penalties would hurt relations with the U.S. A

ministry statement said Obama had "compromised to the political pressure of the U.S. domestic

trade protectionism."



Introduction and Outline

There are two significant aspects to this module:

The international business environment, and the changes

which have taken place in the post-war period

The operation of business on an international basis, and the

implications for managers in terms of strategy, structure andoperational functions



Introduction and Outlinecont

The module will develop an understanding of what is

different about international business through study of the

international environment covering such issues as:

Changing world trade and investment conditions

International economic agreements

Political and economic risk Cultural and ethical differences

International competitive conditions



Introduction and Outlinecont

The module also examine why and how companiesinternationalise their operations, covering issues as:

Decisions on foreign market entry methods, ranging fromexporting to different forms of foreign direct investment (FDI)

Issues which arise in the operation of international business,incorporating decisions on international business strategy, and the

management of business functions such as human resourcemanagement, logistics and marketing



Learning Outcomes

At the completion of this module students will be able

to:

Evaluate the key factors influencing the post-war trends in

global trade, investment and competition

Identify and analyse the opportunities and risks which exist in

the international business environment



Learning Outcomescont

Critically assess the relevance of international trade,

investment and competition theories to the analysis of current

business and management issues (both from a government and

MNC perspective)

Understand the motivating forces behind different foreign

market entry decisions and evaluate the appropriateness of

each entry method in a range of circumstances

Analyse the strategic and functional decisions which companies

take in the course of their international operations



Reading List

The essential text for the module is:

Hill, C.W.L.,

International Business:

Competing in the Global Marketplace(7thEdition), McGraw-Hill, 2009



Reading List Cavusgil, S. T., Knight, G., and Tiesenberger, J. R. 2008. International Business: Strategy,

Management and the New Realities. Prentice Hall.

Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P. 2008. International Business:

Environments and Operations. 12thEdition. Prentice Hall.

Recommended journals/Newspapers/Web links: Journal of International Business Studies (JIBS)

Financial Times (FT.com)

The Economist (Economist.com) http://nulis.napier.ac.uk/

http://proquest.umi.com/login
http://nulis.napier.ac.uk/http://nulis.napier.ac.uk/



TopicL1 W1 Introduction to International BusinessL2 W1 Globalisation of the World EconomyL3 W1 Political and Economic RiskL4 W1 Cultural and Ethical RiskL5 W2 International Trade TheoriesL6 W2 FDI: Home/Host Country PerspectivesL7 W2 International Economic AgreementsL8 W3 Foreign Market Entry StrategiesL9 W3 Strategy, HRM and Marketing

W4 FINAL EXAMINATION



tutorial

participation

contribution

TopicL1 W1 WalMarts Global Expansion

IKEAL2 W1 Wipro Ltd

Ecuadorean Valentine RosesL3 W1 Building a Market Economy in

Piracy in the Video Game MarketL4 W1 Nike: The Sweatshop debateL5 W2 Italian Ceramic Tile Industry

The Rise of the Finlands NokiaL6 W2 FDI in South AfricaL7 W2 The Great Banana Wars

NAFTA and the Textile IndustryL8 W3 Getting Airline Alliances Off the

GroundL9 W3 Nestle: Global Strategy

W4 FINAL EXAMINATION


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Assessments

There are three forms of assessment for this module,

and the overall mark will be made up as follows:

50% Coursework

1. 30% Coursework, Submission date ...

2. 20% Tutorial Participation and Contribution (Continuous)

50% Exam


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Coursework

Coursework Question:

Evaluate the impact of global recession on international

trade and investment with respect to the country of

your choice. Support your arguments with the use of

relevant examples wherever possible.


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Guidelines Length: Minimum 2,000 words, maximum 3,000 (Reports in excess of the word limit will be cappedto 40%)

Completion date: December, 2011

All reports should be typed and must include a list of references.

Give the word count on the front page (indicate clearly)

A list of references along with appendices while necessary is NOT included in

the word account.

Web references MUST contain the full URL and state the date accessed e.g.:

http://www.wto.org/english/tratop_e/tratop_e.htm

(Accessed 08 September 2009)
http://www.wto.org/english/tratop_e/tratop_e.htmhttp://www.wto.org/english/tratop_e/tratop_e.htm


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Case Study Analysis

In this module, tutorials will be based on the analysis of case

studies, mostly taken from the Hill text.

In the examination there is also a compulsory case study

question on a case which students will only see on the day

It is, therefore, essential that students understand our

expectations of you in terms of conducting an effective case

study analysis


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Case Study Analysiscont

In tutorials, and in respect of the exam compulsory casestudy question, students will be expected to answer

specific questions about the case

However, for a full expos on the subject, students should consult :

Strategic Management, Competitiveness and Globalisation, Concepts and

Cases, Hitt, Ireland and Hoskisson: read the full chapter; Preparing an EffectiveCase Analysis Any edition has the full chapter, available in the library


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Case Study Analysiscont The case should then be read thoroughly, to identify the facts which

are critical to the analysis

The question(s) are likely to require students to identifytools/frameworks which will have to be applied in the analysis

The analysis will further be required to enable students to evaluate thekey issues and come to a coherent judgement in relation to the

question(s) posed

Students should be aware that the foregoing methodology will berequired, not only in tutorials, but also in the compulsory case studyexam question


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Introduction to International Business

BUSE 608

International BusinessKAAU, 2011-12


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Globalisation

Cultural &

Ethical Risks

Political &

Economic Risks

InternationalTrade Theories

International

Economic

Agreements

FDI: Host/Home

Country

Perspectives

Foreign Market

Entry

Strategies

Revision/CW

feedback

MFO: Strategy,

HRM and

Marketing

Introduction to

International

Business


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Learning Outcomes

Define what constitutes international business

Evaluate the key differences in conducting business

internationally, as opposed to remaining in a companysdomestic market

Critically assess the objectives of an organisation ininternationalising its operations

Understand the key factors in the development of the worldtrading system


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What is International Business

International business consists of transactions carried out

across national borders to satisfy the objectives of

business organisations Business activity which crosses national boundaries takes

several forms:

Trade exporting/importing

Contracting licensing/franchising

Investment foreign direct investment (FDI) through wholly

owned subsidiaries, alliances, or acquisitions


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The Internationalisation of Business

Sectors with which the study of international business is

concerned:

Manufacturing: taking advantage of cost-effective locations

Resource-based: minerals/metals, oil and agriculture

Construction: multinational projects such as dams & airports

Services: rapid expansion in financial services, telecoms and

retail


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What is Different about IB?

Additional costs:

Trading costs e.g. import duties, distribution agents

Travel/relocation costs e.g. use of expatriate managers

Local market costs e.g. government regulations,

product/service modifications


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What is Different about IB?

Additional risks:

Political/Legal e.g. import/investment barriers, lack of legalprotection

Economic/Financial e.g. inflation levels, foreign exchange risks

Cultural/Ethical e.g. differences in values, beliefs, and practices


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What is Different about IB? Hill puts it thus Managing an international business is different from

managing a domestic business for at least four reasons:

1. Countries are different

2. The range of problems confronted by a manager is wider and theproblems themselves more complex than those confronted by a managerin a domestic business

3. Managers must find ways to work within the limits imposed bygovernmentsintervention in the international trade and investmentsystem

4. International transactions involve converting money into differentcurrencies


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World Trading System The UK was the pioneer of free trade (from the 1850s)

The Great Depression put the cause back significantly (NB

the Smoot-Hawley tariff in the USA)

This was reversed in the expansionist post war climate

the establishment of General Agreement on Tariffs and Trade

(GATT), a multilateral trade agreement, in 1947


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GATT

Tariff reduction was spread over 8 rounds

Membership grew from 19 to over 120 nations

Although GATT was extremely successful in reducing barriersto trade and investment, in the 1980s new strains to the world

trading system appeared: the successof Japan; the failure

of the USA; and the increasing use of bilateral trade

agreements Early 90s GATT becomes World Trade Organisation (WTO)


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WTO Since 2003 the WTO has had 145 members, with a further 25

countries negotiating for membership

Between 1995 and 2003, more than 280 trade disputes

between member countries were brought to the WTO,

compared with a total of 196 cases handled by GATT in its

entire existence

The WTO has widened its remit to encompass regulations

governing foreign direct investment (FDI), and hassubsequently reformed the international regulation of the

global telecoms and financial services industries


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WTO

A further significant issue to the WTO has been that of protectingintellectual property products of the mind, ideas (e.g. books,music, computer software, designs, technological know-how)

The 1995 Uruguay agreement contained a protocol to protectintellectual property (the trade related aspects of intellectualproperty rights the TRIPS agreement)

As with GATT, the WTO has been successful in further lowering tradeand investment barriers. There remain problem areas, however,

particularly in disputes between developed and developingcountries a theme that will be covered in depth in lecture 2 onglobalisation


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Summary

International business is different because it involves

costs and risks not present in a companys home market

International managers are, therefore, faced with a muchmore complex set of problems arising out of differences

in diverse international business environments


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Summary

Businesses internationalise their operations for a variety

of reasons, ranging from increasing the scale of their

markets to counteracting competitive pressures

although international expansion may have more to do

with the ego of the senior executives than delivering

shareholder value


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Summary International trade and investment has grown

substantially in the post war period, aided by multilateral

agreements such as GATT and the WTO

The range of areas covered by the WTO has been

extended to cover service businesses, and intellectual

property rights

Next weeks lecture will explore the role which suchmultilateral agreements has played in advancing the

process of globalisation


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Reading List

This lecture is based around Hill Chapter 1, as is next

lecture

Class Discussions:

Cave Rescue (handouts)

Wal~Marts Global Expansion, Hill p. 443

IKEA, Hill p. 36

session 1i buse608

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