Power Point Notes
http://wps.prenhall.com/bp_daniels_ib_11/44/11301/2893110.cw/index.html
International Business
Norman Leech 620-4087
Classmates
John
Melane
Kaitlin
Chelsea
Brent
Nicole
Jan/10/11
Canada exports 85 % products to USA, 4% to China
Visible minorities in Canada,
Vancouver, 51%, Toronto 49%, Calgary 24%, Montreal 24 %
2-5 years 45% of workforce is set to retire
1.7 children per couple in Canada
1.6 doomed to extinction
Need 350,000 immigrants per year in Canada
Metric, currently China has 1 car per 1000 people; USA has 897 cars per 1000 people
Countries and cultures are different
Jan/17/11, CH2/Ch3
Paris = place where dictators hang out
E.g. baby doc, ex Haiti Dictator
Study Chapter objectives to prepare for exams
USA “life liberty and the pursuit of happiness”
Canada “POGG, peace order good government”
Culture changes = more interaction with other cultures the more you change your values over time
E.g. Japanese = slurping your soup is considered a compliment when eating food
E.g. Canada and USA are false countries
Cultural imperialism = colonization = 1950-1960
When British conquered India they banned a tradition called sudhit (when a husband dies the wife is supposed to kill herself and burn with his ashes during cremation
Creolization (opposite to cultural imperalisation)
Japan in 15-1600, believed they were the best and closed there culture to outsiders, didn’t want to change.
1970 = multiculturalism in Canada
Accommodation of the Chinese in Canada
USA for blacks
In 1950 French was predominate language
Chinese is largest language Mandarin
After WWII the most common language in the world was English, English language of business
Language is VIP it sets up apart
If you are born in USA you are USA citizen
CANADA + USA both secular societies, no state religion, separation of church and state
Irish birth control is illegal
Japanese assume blacks are lower classes
Ascribed status, caste systems in India
England has serfs and lords classes
Mexico appearance and formal dress is very important
Country club events very important for upper class
USA + CANADA live to work
Latin America they work to live
Japanese culture there is no word for NO
Canada has high context culture (implicit)
Low context culture (explicit) you give directions to your people always
Monochromatic = single task
Polychromatic = multitask
For example in Peru perception of time management is horrible, while in Japan to be even 1 minute late is considered extremely rude
Polycentric = we think we are right
Ethnocentric = when in Rome, do like the Romans
Geocentric = in Japan and Russia, drinking is part of conducting regular business
Culture is VIP there is in class political systems
E.g. Ivory Coast, chaos government chaos when elections occur compared to an orderly transition when City of Calgary elects a new mayor
E.g. Sudan is in Crisis and Somalia is a complete failed state with chaos and anarchy, no legitimate government
Norway has 90 % tax rate, but everyone has subsidized university education
Sweden you have progressive taxation on speeding tickets, more you make the more you pay for example a millionaire got a speeding ticket in Sweden and he was forced to pay $300,000 for that ticket
In Canada the average tax rate is ~ 52%, maxing out at $128,500 for income bracket, with AB being the lowest and QC being the highest tax jurisdiction
Note in USA you are not considered to be making a lot of money unless you make $350,000
Pluralistic = open, versus democratic
Totalitarian = monopoly of power by single agent
188 countries in the world 139 are totalitarian, democracies are the minority
Reacting government = Hugo Chavez in 1970 past determines the future
Radical governments = blow it up and start over again, Vladimir Putin is example
Fascism = believes 1 culture is better than all other cultures, e.g. Adolph Hitler, need a scapegoat, Jews
Japanese Culture, was fascist, believed they were the master Asian race, for example in 1940 soldiers would have a comfort girl and chain a non Japanese girl to the bed and have there way with her during the wars
Polpot Cambodian dictator who killed 1.7 to 2.5 million of his own people out of a population of 8 million people http://en.wikipedia.org/wiki/Pol_Pot
Communism = equal work for equal pay
Note there are only 5 countries right now that are communists, China, North Korea, Cuba, Vietnam, and Yemen at this time
Mexico, separation of presidential guard and standard military
Political Risk = government changes mind, for example Venezuela government just take over 12 billion dollar investment of Conocco Phillips
Note: China only allows 15 % of profits to go back to the corporations in china
Legal systems = international law does not really exist, have treaties between countries
Diplomatic immunity = allows diplomats under diplomatic business to not be prosecuted in a visiting country, limited to state function, for diplomats only
If you need to go to embassy, Canada embassy will just kick you out first if you have a problem, go to British, Australian or USA embassy
Double Jeapordy = cannot be convicted of the same crime 2 times, for example Karla Homolka
Civil law = you are guilty until proven innocent
Geneva Convention = base standard for treating others created after ww2
Theocratic law = religious laws embedded into government
E.g. Iran has Muslim law
E.g. Amish community in BC has polygamy
Jan/24/11
Melanie = accounting major, Erin = accounting,
Use violence to promote change
Terror has logic to change the average citizen to tell politicians to change the direction of government policy or actions
Mexico = 70 % of population wonder if they can feed themselves every day, the average salary in Mexico is $13,000 per year.
When you martyr yourself your payment is 70 virgins when you die
White slavery; sell 12 years old into brothels
USA state of the union sets the agenda for the year in USA
USA 1960 JFK goal was to put the man on the moon in 1 decimate
USA created a policy that had effects on research, industry, business, create jobs, education and tax regimes
2002 State of the Union
Note 911 Canada was snubbed
Canada asked for advance payment on 300 beds during the crisis for payment
International relations is very complex
USA is very important and you should try and get up to speed on there issues
Canada is on the top 1 % of the world economic infrastructure, for example banking industry for ATM and electronic commerce
Note: # not as important in this class concepts are
China, when you do business 85 % of profits must stay in China and you must have transfer of technology to the government
GDP increases
PPP = how much money can you make % of income to necessities
Calgary is the second most expensive city in North America to park
GST in Canada is 5 % was 7 %,
Value added tax in UK was 16 % now 20 %
Human development index
1 % of Mexican population is university educated
10 % of Canadian population is university educated
African culture to not use birth control is part of there culture, 40 % kids die in Africa
1974 seatbelts were introduced and smoking was later then banned
Zimbabwe had 15000 % inflation per year, 1995-1998 750% in Zimbabwe
Canada in 1984 the banking interest rates were 20 %
Latin America 45 % unemployment
Canada its 7% unemployment
1200 Homeless in Calgary, 2200 in summer very good stats
Balance of payments Canada makes more than USA
Trade surplus CANADA, Trade deficit USA
Canada has no property rights; only province that has property rights is Manitoba
Royalty system in AB
CH5 Globalization,
MNE e.g. LG in Korea
You can use gun boat diplomacy, park a ship over a territory with guns aimed at enemy and negotiate
Law of unintended consequences = try to do the right thing and get the wrong result
CANADA largest export to USA is cars
Cultural relativism = when in Rome do like Romans
Cultural movement = amnesty international, child labour, slavery, bribery, torture
Bribery in Canada is illegal
Germany bribery is codified into law and can be used as a tax write off
Canada Piracy = Newfoundland, grand bans
Copenhagen accused China, Mexico, and India except C02
Jan/31/11
Chinese saying “may you live in interesting times”
James Carvel “It’s all about the economy stupid”
USA has the highest corporate tax rates in the world
50 % of Americans pay no income tax in USA
Top wealthiest 4 % pay 37 % of taxes in USA
80 % of budget is fixed costs
12 million illegal in the USA
In the past Egypt was considered leaders in the Middle East
Censorship of governments by Saudi Arabia and China after the Egypt crisis
Exam questions all long answers, e.g. tell me everything about culture (from Megan)
In any country aircraft jobs are considered high technology and high paying jobs
For example in Canada bombardier
Britain has strategic trade policy and is exceptionally good at it
1972 = gold by states
Gold common, limited supply, has value, cannot be replicated, value in weight of gold
Rothschild’s family, were Jewish, bankers, who issued promissory notes, from one agent to another agent so, gold would not have to be transported, revolutionized banking industry
5 brothers trade with other bankers, great business model were great facilitators of international trade.
Factor proports, extra stuff to sell
Country of Fiji that many of the UN soldiers come from this country, that the government actually makes a profit from making soldiers for the UN
Country similar theory = USA+CANADA, Germany+ Holland
Political, economic interest, similar cultures, languages, economics
PLC = product life cycle
Standard car technology is easy to fix when in Latin America
Technology = leapfrog, e.g. LAN lines to Cell phones
Porter Diamond = all factors, demand costs, related suppliers, firms strategy, rivalry
Switzerland, factor endowments is banking
Hong Kong, harbor, labour and financial services
3d world have poor infrastructure and transportation to move products from A to B
Complimentary infrastructure, e.g. Cancun, beaches, airplanes, hotels, peoples
Air Canada, flights, part of Canada flies even when un profitable, will fly to areas that no other parts of remote Canada
Canadian Telecom companies is a protected industry
Also Canadian publishing industry is a regulated industry only Canadian bookstores can be owned by Canadians
Super channel, was CANADA owned cable company but then it went under
CRTC TV
MDA, space arm program
Cab Licence in Calgary is 60K
Cow Licence in CANADA is 100K
China in 1980, was agriculture society
Industrial revolution Den, Xia Ping
Satellite TV considered one of the greatest inventions of all time
1) liberalize world
2) promotion of industrialization
3) create factories
4) 300 million people moved from farms to cities
Sydney Steel mills in Canada were unprofitable for 20 consecutive years before they shut it down for political reasons
“keeping up with the Jones” mentality normal in Canadian Society
e.g. Tariffs 30 % taxes on shoes coming into Canada
Embargo, Canada can’t trade with about 5 countries
NTB = non tariff trade issue, e.g. baseball bats in Japan to USA, USA bats not as safe as Japanese
Metric System in Canada
WTO = eliminate tariffs between members
Feb/7/11
Exam, all essay questions, tie stuff together, work together, 3 shorter questions, point forms, charts, content VIP, write succinct answers, 2 hours, 3 shorter questions, 1 case question, big marks do outlines for longer answers, no tr8icks, tests on what you know
Ch 1-8
Assignment # 1, 10-12 pages, content most important, academic style no 3d person, do thesis and conclusion, write hypothesis and conclusion first then fill in the other sections, must be logical, is there proof, grammar and spelling very important, note wikapedia not an academic source, use multiple websites, websites serve there own interests, make sure you use multiple sources, prove your answers, major current events in the world,
E.g. South and north Korea, wikileaks, uprising in Egypt, single sided, and double spaced, no yes no simple question.
Cross Natural agreement,
Free trader, e.g. EU most integrated economy in the world
NAFTA is only at inception of free trade
Measure 75 % external
USA and CANADA trade $1 billion trade per day
Want to eliminate trade barriers
e.g. Beer restrictions in Canada per provinces, brewers in each province
Canada, Nafta, WTO, Sin taxes, Free trade EU most advanced while NAFTA least advanced trading bloc
GATT = combat soviets with satellite states, reaction to USSR
Tariffs = tax between other countries, tax add it as it comes into country, punish other countries .e.g. add 30% tax
WTO = no international law, benefits of signatures, all have to follow the rules
China worked hard to get into WTO, tribunal is layered in
Softwood lumber dispute, USA says vast lands is private land, sell tree at $125, CANADA, government dollars own crown lands, 70% land owned by government stumpage fee, $25 to government, CANADA won dispute and USA owes them 5 billion dollars
1) WTO rules USA owes them 5 billion
2) Canada allowed to put tariff on anything till we get our money back
Uruguay round took 8 years meeting, result was the formation of the WTO
Afghanistan has no ports and 3 hostile neighbors
CANADA has resources 32 million
USA has capital 300 million
Mexico has new market and labour, 112 million, note Mexico city has 30 million
Free trade, custom unions, unified
Common market, EU can work anywhere in EU, try and get an EU passport
Lots of shades of grey in logic
EU formed out of coal and steel unions, 1948, coal was primary source of energy
Governments must give up some sovereignty in EU
Agriculture was not agreement for EU
Turkey applied to EU
1) 100 million poor people
2) turkey is the Mexico of EU
3) Turkey boarders would have brain drain to leave for rest of EU, and the poor would leave
4) Bridge between the west and middle east
5) Labour unions don’t want turkey in the EU, would reduce wages
6) Must be secular to enter EU, no theocracy allowed
7) Norway is like Alberta ½ in and ½ out
Note, no common agriculture policy CAP is false
Greece
1) 50 % agree government workers don’t show up to work
2) 10 % don’t pay taxes
3) that’s why there in crisis
Italy, Spain, Portugal, Greece, all have money problems at this time
Nafta, think we would get locked of Europe, before France was largest importer of CANADA of grain, after EU the switched to largest exporter of grain
Nafta, baseline, Cuba very poor country
Gringo = foreigner
ASEAN
Sultan of Brunei, wealthy oil country, his ex spouse gets 10Million a month for alimony payments, all oil owned by sultan
APEC = pacific has to touch your showed to be a member
½ the population, 60 % of GNI
Africa, basket case
Opec, asked Canada to join opec they said no, then asked AB if they wanted to join opec
Social stratification affects business strategy and operational practices
Clash of civilizations = innate and irreconcilable differences in culture can cause back lash
IPR = intellectual property rights
GNI = market value of all final goods and services produced by a country in a given year
Trade surplus = exports are greater than imports (Canada)
Trade deficit = imports are greater than exports (USA)
Feb/28/11
Write on Canadian company success or failures, more analysis
Libya supplies 2 % of world oil supply
1) oil is finite resource
2) Canadian employee at Suncor, price of oil affects his employment
3) Fear of oil speculation drives prices up
4) Totalitarian dictatorships can control resources
5) Only 2 % of dictators that fall convert to democracies
6) Most dictators are replaced by another dictator
7) Large secret police
8) Mercenary army
9) Minority tribes
10) 40 years in power
11) Kalifah, alguada wants, Islamic empire restored, united Islam, pan Arab, pan Islam state
12) Wants Egypt and Saudi Arabia gone
13) Wants sharia law
14) USA moved air craft carrier to Libya
15) Hosinmobaric has 70 billion cash in the bank
16) Tunisia is soft dictator, free health care, free education, problem is there no jobs in the country
Note every time the Canadian dollar goes up 1 cent the AB government loses $100 million dollars in oil royalties
AB this year forecasted budget on $85/ oil price
New projects hopefully a go at $100/oil
F(x) money denomination in the currency of another
Money = commodity = supply/demand
Foreign exchange markets USA is most recognizable
Dollar at parity at this time CANADA to USA
London has largest currency exchange in the world ~ 50 % moves thru London
“Sun never sets on British empire”
Spot market 2 day future,
FX swap, most complex
Nick Leason, currency swaps bankrupted a 120 year old bank Bernes Bank
28 year old trader lost a bank 7 billion dollars in Fx trades but was government bank
Convertibility = fully convertible
WW2 officially ended 2010 when Germany made final reparations payments
1) end ww2 took 90 years in debt payments
2) reparation payments were to high in ww1
3) IMF + Breton woods
4) IMF was super bank
5) Marshal plan to rebuild Europe
6) 2 countries go to run country by IMF
a. Indonesia and Argentina when there economies collapsed
7) SDR special drawing rights like asking mom and dad for loan when your broke
8) IMF is the bank of last resort
9) Disasters, natural disasters or poor financial management
a. Argentina had 3 separate currencies at one point
USA in own crisis can’t even pass a budget
CANADA official policy was that currency would be good at 0.85 C/ 1 USA dollar, 30 year policy
China solved that problem by pegging its currency against USA dollar
March 7/11, CH11
Gas prices go up every Tuesday
Space shuttle last launch
March 22 budget CANADA
Strategy
Eaton’s was around for 90 years now gone
Competitive analysis very important for big companies
Sales most important
China strategy
1) business is war
2) anticipate and understand
TATA, India will build a car for $2500, this company 50 % of GNP in India, its owned by Jaguar, can go 140km/ hour
Gm 51 % of Americans wants it to fail
1963 Toyota opened its first car plant
Honda was originally an electrical plug product that allowed more than 1 item to be plugged into socket
Corporate intelligence
1) change in government regulation
2) linked In is corporate intelligence
Strategy 11.4 diagram
Competition sales increase, intelligence decrease, sales decrease
Wage rates
Mexico need to understand 2 bonuses paid out per year equal to 3 months salary one on Christmas and one in June, mandatory
After 1 year of service, firm harder to fire person
Buy local strategies generally tend to backfire
11.5 diagram
CANADA has reputation abroad to leave when things get rough, over capacity and short term strategy
e.g. Mexico, CANADA tower left in Mexico not built,
Multi domestic Strategy
1) polycentric, let them run it as long as they make money
Global strategy = coke,
Transnational Strategy = coke, English, Japanese logos, language advertising
Ch 12-3 figure
18 months to process a visa in Canada, one of the worst systems, Canada is awful for red tape
Liability of forgiveness
Automatic disadvantage
Rice control in Venezuela
Competitive and political risk
March 14/11
1-10 Richter Scale, 9.0 Jap Quake, every .10 on scale is 10 fold increases in damage so 6.5 to 6.6 quake is 10 time more powerful
Japan Quake is 4th largest earth quake in 110 year recorded history
Japan averages about 1700 quakes per year
80 miles, 24K wide, tsunami 30 ft high traveling at speed of fighter jet which is 400Km per hour, estimate 10 to 40K dead
40,000 Canadians live in Japan,
CANADA gives food, money, dart, strategic airlift
Symbol for disaster = opportunity
Yanato doshi = we will overcome (Japanese saying)
Sydney McNally UofL international Coordinator 329-2148
USA largest trading partner is now china
Day orders = commodities sold day by day basis
G7 = Canadians spend about 40 % day working, Germans have highest efficiency spend about 66 % of day working
Note less than 3 % of university grads have international experience
Exporting abroad CANADA have poor reputation abroad
Advanced exporting, part of core business
Pitfalls of exporting
Customs + immigration in Canada, both roles combined
Legally you haven’t entered Canada till you pass customs officer.
Drug dealing in Malaysia is illegal, death penalty in Malaysia
Customs broker, independent agent who helps in custom transactions
Custom officer, law enforcement, has audio and video conferencing
Freight forwarder, international specialist assist in delivering goods
CPR invented 2 car loader
Counter trade = reciprocal flow of goods and services
Offset trader, import to Canada
C17 strategic airlift cost 17 billion, note now Boeing must buy 17 billion worth of good from Canadian firms
March/28/11
Chinese saying “May you live in interesting times”
In Japan the financial decisions are all made by women, while men make the money
In Ireland birth control is illegal and contraband
In Middle east porn and alcohol are illegal
In Malaysia drugs are illegal
In Amsterdam drugs are legal on the street
Costa Rica anything related to military is considered illegal even clothing
Carlos Slim is richest man in world with 50 billion dollars he is Mexican Telecom owner
Average Mexican lives on 13,000$ per year.
Canadian mostly middle class, you are considered wealthy in Canada if you make $67,000; if you make 116,000 in Canada you are considered rich
In USA $250,000 is the magic number, about 357,000 is good, note 40 % of Americans pay no income tax
Calgary has 1.1 million people and only 2100 are homeless
USA corporations pay 36 %, income tax in 1938 it was 90%, and individuals have very low tax rates.
Canadians low tax rates 16-18 % corporate tax, and 25-50% personal taxes
Europe very liberal sexuality in advertising
Dumping is below the cost of another country to produce and sell product
e.g. 10$ in china a, 8$ at china, or $10 $10 in china, and 15$ in Canada, control WTO and government
Indonesia largest pirating in the world
Banking in Canada is pull strategy
Banking in Japan is push strategy
Coke commercial translation “brings good things to life”
Dakar Noir, translation woman on mans hand, had to be changed in middle east from mans hand on top of woman
Japanese product wanted to market there product call it “crap or snatch”
Lettuce in Mexico is not washed
TM = trade mark in Canada protected
USA Disney has lots of people protecting there trade mark
Africa, Baby food, low literacy rates, thought they were eating dead babies
Manufacturing, Costco,
2 million dollars per square fed in Japan downtown
manufacturing up to 13 levels
80 % of food outlets in Mexico are owned by Walmart
15 years of ecommerce
16.4 Figure, 10-12 years Canadian,
CH 19, international finance, marketing and finance
Sell product make money
CEO, = either sales/ marketing or finance training
Note: all pawn shops in Mexico are owned by the government
Mexico mortgage rates are 25 % currently down from the record high of 700%
CANADA dollars can be changed to any currency
You can open up accounts anywhere in the world,
Note in safe havens like Cayman Islands it’s a criminal offense to discuss anything about a bank account if you are an employee
10 * 16 Cayman Island, there is a $3/ year bicycle tax other than that 10,000 people live there and there are 10,000 registered banks
World tax systems in CANADA or USA = means you live anywhere in world you still pay tax
Mexico and Uk are going to world tax system
Dubai economy is run on banking system, 50 % of all cranes in the world currently are in Dubai it used to be 80 %
Hong Kong used to be financial hub now its move to shanghais
CFO now does job of political risk it used to be done by the mail room; in Europe they have schools that train people in political and economic risk programs
Enron COO and CEO, tax evasion and lied to government and borrowed money against its own subsidiaries and did not declare that debt, as a result SOX was created out of Enron disaster
19.7 Letters of credit 4-5% average
Hippos eat babies
VAT = value added tax in Canada = 5 %, UK its 20 %, Mexico its 15 %
1919 income tax in Canada was a temporary measure, hasn’t been removed since, and CANADA has 135 countries with tax treaties
April/11/11
Final exam format, 2 short questions, 1 business case study, basic stuff, and underlying theories, both, 2 to 2.5 hours, No CH14 and no CH18, CH9 to 20 on exam
Supply chain = purchasing
25 years ago all done in Canada, now sourcing is global, logistics and finance, price decrease, access to ecommerce on internet, currency, taxation, tailor marketing to sales
Quality standards
CAD = resources, USA capital, Mexico labour
Marcia doras = free trade zones, assembled to exported to tax
Ireland, is an entire free trade zone, wanted manufacturing so companies like GM would set up shop,
In Canada about $50,000 wages is 50% of population and 100,000$+ is 5% of population
Calgary Airport is a free trade zone
JIT = just in time, bring them in only when you use them
JIT perfected by Japanese, Toyota, Honda, source materials in 38 countries
Walmart uses JIT delivery, has 1 billion dollars of sales per day and uses 2 Cray super computers, has more computing power than any company in the world except the Pentagon, even rents out satellites to analyze weather patterns to figure out what to stock in stores, has also meteorological department
JIT has real time tracking, JIT, GPS, ecommerce,
Ford F150 plant is run by person on JIT in Detroit
Predator missiles are run missions in Afghanistan piloted by people in Washington
Psychographics and Neugraphics
Psychometrics, track buying patterns, direct marketing, DSS,
e.g. Booze and condoms, Diapers and Booze, Videos
Expats, Head office, need good teachers, spouse and kids, newbie curve for expats
1) beginning love it exhilarating
2) 3 to 6 months
3) frustration misery loves company
4) 9-12 months understanding stage
STUDY QUESTIONS
CHAPTER 1
Globalization and International Business
1. What are international business and globalization? What is the relationship between them?
2. Why should you study international business?
3. Explain how globalization has changed over time and differs both among countries and within countries.
4. Identify and explain the seven forces that have been causing the growth in globalization.
5. How is technology affecting the growth of international business?
6. Why have most governments lowered restrictions on international trade?
7. What is the relationship between competition and globalization?
8. Why do countries cooperate with other countries? How does this cooperation affect international business?
9. What are the main criticisms of globalization?
10. What is meant by off-shoring? What are the major arguments for and against it?
11. Why do companies engage (What advantages do they gain?) in international business?
12. Define and give examples of merchandise and service imports and exports.
13. What are the types of foreign investment?
14. What is a multinational enterprise (MNE)?
15. What do we mean by a company’s physical and societal environments? Why should companies understand them when engaging in international business?
16. How does a company’s competitive environment affect its international operations? How might its competitive environment differ from one country to another?
17. What are the three main viewpoints about the future of globalization?
CHAPTER 2
The Cultural Environments Facing Business
1. Define culture and cultural membership.
2. Why is cultural awareness important in international business? What are methods and problems in building cultural awareness?
3. What are the advantages and shortcomings of using the nation as a proxy for a culture?
4. What features influence cultural stability and cultural change?
5. What are major ways that societies rank people? What social stratification systems exist? Why is an understanding important in international business?
6. Describe the major theories that explain why work motivation may differ from one country to another.
7. Describe the relationship preferences explained by power distance and individualism versus collectivism.
8. What cultural factors help to explain risk-taking behavior? How do differences affect business?
9. Explain the concepts of low-context versus high-context cultures, monochronic versus polychronic cultures, and idealistic versus pragmatist cultures.
10. What problems occur when moving either from one language to another or from one country to another that share the same official language? What are suggestions to deal with these problems?
11. What influences how much adjustment companies and managers must make when operating in different cultures?
12. What are ethnocentrism, polycentrism, and geocentrism, and what are the problems and/or advantages of each?
13. What factors should companies consider when trying to minimize resistance to changes they might introduce to foreign societies?
14. What are the major scenarios about the future of national cultures? How does cultural imperialism fit into these scenarios?
CHAPTER 3
The Political and Legal Environment
1. What is the individualistic paradigm and how does it influence how governments intervene in the economy?
2. What is the collectivist paradigm and how does it influence how governments intervene in the economy?
3. What is a political ideology?
4. What are the fundamental features and elements of a democracy?
5. What are the fundamental features and elements of a totalitarian system?
6. What are the types of a totalitarian political system? What differentiates them from each other?
7. What sorts of political systems exist in the world today? What conditions have spurred political change? How do political systems change and evolve?
8. What is meant by political risk? What are the major causes and costs of political risk?
9. What are the characteristics of an active versus passive approach to managing political risk?
10. What is the role and function of a legal system?
11. What are the principal types of legal systems?
12. How does a country’s legal system affect operational aspects of the local business activity of domestic and foreign companies?
13. How does a country’s legal system affect strategic aspects of the local business activity of domestic and foreign companies?
14. What is intellectual property? What types are there? What is an intellectual property right?
15. What are the consequences and outcomes of intellectual property rights violation?
16. Why might IPRs' disputes become more prevalent in the future?
CHAPTER 4
The Economic Environment
1. What are the benefits of international economic analysis?
2. What is GNI?
3. What is the implication of Human Development Index to measuring economic development?
4. What do we mean by inflation? How does it affect the business environment?
5. What do we mean by unemployment and debt? How does it affect the business environment?
6. What do we mean by income distribution and poverty? How does it affect the business environment?
7. What is the balance of payments? What is the current account component of the balance of payments? What is the capital account component of the balance of payments?
8. What is meant by an economic system?
9. Identify the fundamental features of a market economy.
10. Identify the fundamental features of a command economy.
11. Identify the fundamental features of a mixed economy.
12. Describe the idea of economic freedom and what it means to the economic development of a country.
13. Most formerly command economies are going through a transition to a market economy. What does this mean?
14. What are the means of a transition to a market economy?
15. What is privatization? How does it work?
CHAPTER 5
Globalization and Society
1. Why does the size of many MNEs concern many countries?
2. Which stakeholders must companies satisfy? Why is this process more difficult for companies operating internationally?
3. Why is it difficult to make generalizations about the overall effect of FDI?
4. Describe the potential economic effects of MNEs.
5. What are the potential gains and losses of FDI to both the home and host countries? How do these benefits and losses change over time?
6. Why are ethical decisions more complicated for MNE managers?
7. What are the two basic views about accepting contradictory cultural practices?
8. What are two possible objectives for socially responsible behavior?
9. What are NGOs? What do they do? What potential problems could stem from their actions?
10. Why is the argument that “anything legal is ethical” insufficient? What are the main reasons for complying with the law?
11. Explain and give an example of extraterritoriality
12. What is the difference between civil and common law?
13. How does bribery affect the performance of countries and companies? Why do companies engage in bribery?
14. What types of payments are legal and illegal under the Foreign Corrupt Practices Act of the United States? What are the controversies surrounding the FCPA?
15. What other efforts are under way to stop bribery?
16. How is the Kyoto Protocol affecting MNEs?
17. What are some of the major labor issues facing companies? In which industries and countries are these issues most significant?
18. Why do companies need to act more responsibly?
19. What is a code of conduct? What are four dimensions to an effective code of conduct?
CHAPTER 6
International Trade and Factor Mobility Theory
1. Why is the understanding of international trade theory useful to managers in international business?
2. What are mercantilism and neomercantilism and the arguments for against them?
3. Explain absolute advantage and the determinants of it.
4. Explain comparative advantage and how it differs from absolute advantage.
5. What assumptions underlie the theories of specialization in international trade? What are the limitations of these assumptions?
6. Why are large countries usually less dependent on international trade than small countries are?
7. Explain the logic of the factor proportions theory and the complexities in applying it.
8. Why does most world trade occur among countries with similar characteristics?
9. How and why does production of many products shift from one country to another as hey go through their life cycles (product life cycle theory of trade and investment)?
10. What are the tests and limitations of the product life cycle (PLC) theory of trade and investment?
11. What is a strategic trade policy and its limitations?
12. What are the four conditions in the Porter Diamond? What are the uses and limitations of the Porter Diamond?
13. Why do production factors move from one country to another?
14. What are the effects of international factor mobility on origin and destination countries?
15. Explain the relationship between international trade and factor mobility from the standpoint of cost reduction.
CHAPTER 7
Governmental Influence on Trade
1. What is trade protectionism, and why is an understanding of it useful for managers?
2. What are the conflicting results of trade policies?
3. Explain the argument for using protectionism to reduce unemployment. Why might the protectionism not fully work as planned?
4. Explain the rationale for and problems of making the infant industry argument work as intended.
5. Why do developing countries sometimes impose import restrictions to increase their levels of industrialization? What problems might result from these restrictions?
6. Compare import substitution policies with export-led development policies.
7. Explain why and how governments impose trade restrictions to improve their relative trade positions.
8. Why might governments enact export restrictions? What are the possible negative consequences of these restrictions?
9. Explain the price control objectives from import restrictions.
10. What are the noneconomic rationales for governmental intervention in the free movement of trade? What problems exist in using protectionism to achieve the noneconomic objectives?
11. Define and explain the different types of tariffs (duties).
12. Define and explain the non-tariff barriers that directly affect prices to limit trade.
13. List and explain the nontariff barriers that limit the quantity of goods traded.
14. What are the main arguments for limiting trade in services?
15. When a company faces import competition that threatens its market position, what alternatives might it follow?
CHAPTER 8
Cross-National Cooperation and Agreements
1. What are three ways to approach economic integration? How do they differ?
2. Why are regional trading groups important for MNEs’ strategies?
3. Compare and contrast the WTO and its predecessor, GATT.
4. Why is geographic proximity an important reason for economic integration?
5. What are the types of economic integration and the differences among these types?
6. Explain the static effects of regional economic integration. Under what conditions may they develop?
7. What is the difference between trade creation and trade diversion resulting from regional economic integration?
8. Explain the dynamic effects of regional economic integration. What are the functions of the European Commission, European Council, European Parliament, and European Court of Justice?
9. What is the euro and the rationale for it?
10. What are the implications of the European Union on corporate strategy?
11. Describe the main challenges facing the European Union.
12. What was the rationale for NAFTA?
13. What are the rules of origin and local content provisions of NAFTA?
14. How has NAFTA impacted trade and employment?
15. What are the major regional trading groups in Latin America, Asia, and Africa?
16. What are the two basic types of commodity agreements? How do they differ?
17. Contrast the buffer stock system and the quota system for commodity agreements.
CHAPTER 9
Global Foreign Exchange and Capital Markets
1. What are foreign exchange and the exchange rate?
2. Explain the differences among spot transactions, forward transactions, and future contracts.
3. For what reasons are U.S. dollars so widely traded?
4. What are the four biggest markets (locations) for foreign exchange trades?
5. Define a foreign exchange bid, offer, and spread.
6. What is meant by a discount or premium between the spot and forward exchange rates?
7. What is a foreign exchange option?
8. What is the difference between hard and soft currencies?
9. What is a multiple exchange rate system?
10. Why do companies use foreign exchange?
11. What is arbitrage?
12. What institutions do companies use for exchanging currencies?
13. What is a Eurocurrency (as opposed to a “euro”) and what are some of its key characteristics and uses?
14. Contrast a foreign, euro, and global bond. What should companies consider when deciding which form of bond to use?
15. What are some approaches to using stock markets to raise funds?
16. Why is the trend of listing on more than one exchange beginning to reverse?
17. What are ADRs? How are they used?
18. What are global share offerings, and why are companies increasingly using them?
CHAPTER 10
The Determination of Exchange Rates
1. What is the International Monetary Fund (IMF)? What are its objectives?
2. What is a Special Drawing Right (SDR)? How is it used?
3. List and define the categories of exchange rate regimes.
4. What is a black market?
5. What is the role of central banks? How do they carry out this role?
6. In what forms do central banks hold their assets?
7. How does a floating exchange rate system work?
8. How does a government maintain a currency value in a managed fixed rate system?
9. Explain the adjustment system that enables a pegged currency system to work.
10. Explain how inflation affects currency values according to the purchasing power parity (PPP) theory.
11. What is the Big Mac Index, and what are its limitations?
12. What is the relationship between the Fisher Effect and the International Fisher Effect in terms of currency values?
13. What is the difference between fundamental forecasting and technical forecasting of exchange rates?
14. What aspects of exchange rate movements does forecasting predict?
15. What are the key factors to monitor when trying to predict exchange rate movements?
16. Why do we need to bother with predicting exchange rate changes?
CHAPTER 11
Strategy in International Business
1. What are some of the general features of the challenge and importance of strategy in international business?
2. What are the competing views of firm performance in terms of the industry organization (IO) versus general management perspectives?
3. What is industry structure? How can managers interpret it?
4. How does a firm create value in terms of low-cost leadership?
5. How does a firm create value in terms of differentiation?
6. What is the value chain?
7. What does core competencies refer to? Why should managers pay attention to it?
8. What conditions influence how MNEs configure and coordinate their value chains?
9. Define global integration. How do international firms respond to this sort of pressure?
10. Define local responsiveness. How do international firms respond to this sort of pressure?
11. What are the principal types of strategies that a company can choose?
12. What is an international strategy? What are its defining characteristics? Why would managers choose this type?
13. What is a multidomestic strategy? What are its defining characteristics? Why would managers choose this type?
14. What is a global strategy? What are its defining characteristics? Why would managers choose this type?
15. What is a transnational strategy? What are its defining characteristics? Why would managers choose this type?
CHAPTER 12
Country Evaluation and Selection
1. Why do international managers need to understand how to evaluate countries and select among them for operations? What are the major considerations in developing an overall location strategy?
2. When deciding where to locate production and sales efforts, how and why might companies use scanning techniques? How do these techniques differ from the making of final country selections?
3. What are the major indicators/variables that are important in comparing countries for market potential?
4. Explain why/how the ease and compatibility of operations is important in choosing where to operate.
5. When using scanning techniques, what variables are important in indicating where to go to secure resources?
6. Why is the existence of red tape and corruption important in choosing where to operate?
7. What is meant by liability of foreignness, and how does it influence companies’ international location decisions?
8. Compare the advantages of locating foreign operations to avoid where competitors have gone versus locating where competitors are.
9. How might political risk occur? How can companies respond to it?
10. What risks other than political risks should companies consider when making international location decisions?
11. Compare the major types of published data/information managers can use to compare countries. What are the problems in relying on these data?
12. Explain how grids and matrices can be used as tools to compare countries.
13. How should reinvestment and harvesting be treated in companies’ location decisions?
14. What are meant by a diversification strategy and a concentration strategy for international location decisions? Under what circumstances would one strategy be preferable to the other?
15. Why do most companies examine expansion proposals one at a time rather than comparing various expansion proposals?
16. How might demographic and technical factors influence changes in the future prime locations for production and sales?
CHAPTER 13
Export and Import Strategies
1. How prevalent is exporting today?
2. What are the strategic advantages of exports?
3. What are the characteristics of exporters?
4. What are the features of the stages of export development?
5. What are the pitfalls of exporting?
6. What are some of the characteristics of designing an export and import strategy?
7. What are the strategic advantages of imports?
8. What are customs agencies? And what is their role?
9. What is indirect selling?
10. What are the types of third-party intermediaries that assist exporters?
11. What do we mean by direct selling?
12. What sources of assistance are available to the exporter who is using the direct selling strategy?
13. What is countertrade and what is its implication to trade?
14. What are barter, buyback, and offset trade?
CHAPTER 14
Direct Investment and Collaborative Strategies
1. What factors may limit exporting as a feasible means to sell abroad?
2. Explain the primary reasons that spur companies to want a controlling interest in foreign operations.
3. Compare the advantages of making a foreign direct investment by buying a facility versus starting up a new facility abroad?
4. What are the motives/advantages for companies to enter into collaborative arrangements? Which of these are specific to international operations?
5. How do companies' international objectives, resources, and experience influence their choice of operating form abroad?
6. Explain the different types of licensing arrangements. What are the methods of pricing in these arrangements?
7. Why do companies have licensing agreements with companies they own abroad?
8. What is franchising, and how does it differ from licensing? What operational modifications do franchisors make abroad?
9. What is a management contract, and what are the possible advantages to both parties in the contracts?
10. What is a turnkey operation? What features generally make turnkey operations different from other collaborative arrangements?
11. What types of ownership sharing can exist in joint ventures and consortia? What are equity alliances, and why would companies form them?
12. What are the major problems that can occur in collaborative arrangements? How might joint ventures dissolve?
13. Explain why/how companies need to manage the dynamics of collaborative arrangements.
14. How should companies effectively deal with partners and manage the ongoing activities of collaborative arrangements?
15. Countries often restrict foreign control of key industries. What are the arguments for and against this limitation?
CHAPTER 15
The Organization of International Business
1. What is the challenge of organization in international business? Why do managers increasingly worry about it? What trends drive current change?
2. What is meant by vertical differentiation?
3. What is meant by horizontal differentiation? How can one define the properties and purposes of structure?
4. What are the features, properties, and practices of the functional structure?
5. What are the features, properties, and practices of the divisional structure?
6. What are the features, properties, and practices of the product and area structures?
7. What are the features, properties, and practices of the matrix and mixed structures?
8. What is meant by contemporary structures? What are its primary characteristics?
9. What are the functions and forms of contemporary structures?
10. Identify the major types of coordination systems. What does each sort aim to accomplish and how?
11. Identify the major types of control systems. What does each sort aim to accomplish and how?
12. What are the primary operational methods of control?
13. Define organization culture. Identify its linkages to the MNE’s performance and strategy.
Marketing Globally
1. How does international marketing differ from domestic marketing?
2. What is a production orientation to marketing strategy? Under what situations is that a valid orientation for international operations?
3. Explain what are meant by sales orientations, customer orientations, strategic marketing orientations, and societal marketing orientations for international marketing.
4. What is the relationship between international market segments and target markets? How might companies adjust to tap them successfully?
5. What factors influence companies to alter versus standardize their products internationally?
6. Explain the controversies concerning international companies’ marketing in Third World countries.
7. What are the advantages for companies to broaden versus narrow their product lines for foreign markets?
8. What factors make pricing, especially in exporting, more complex internationally than domestically?
9. What problems occur in pricing because of cost changes over time and cost/price differences among countries?
10. What situations influence how much of a promotional budget a company should spend on push versus pull in foreign markets?
11. What are the main advantages and problems for global standardization of advertising? How might companies deal with these problems?
12. What conditions hamper the use of a worldwide brand? What alternatives do companies take?
13. How do variances in distribution channels internationally affect companies’ international marketing?
14. What factors are conducive to companies’ self-handling of distribution in foreign markets? What is the effect of the Internet on self-handling versus external handling of distribution internationally?
15. Explain the different gaps in a gap analysis tool and how a company may use this tool to manage its marketing mix internationally.
CHAPTER 17
Global Manufacturing and Supply Chain Management
1. What is a global supply chain?
2. Describe the key factors that determine the success of a global manufacturing strategy.
3. Differentiate among the following manufacturing strategies: efficiency/cost, dependability, quality, flexibility, and innovation.
4. What is meant by offshore manufacturing, and why would a company pursue that strategy?
5. What are the different ways a company can configure its manufacturing facilities worldwide?
6. What are the different elements of global supply chain management?
7. How does a company’s information system add to the efficiency of global supply chain management?
8. How does quality affect the global supply chain, and what are some internationally recognized quality standards?
9. Compare and contrast the ideas of acceptable quality level (AQL), total quality management (TQM), and Six Sigma.
10. Define sourcing. Why do companies pursue global sourcing strategies? What are the advantages and disadvantages of domestic and global sourcing?
11. Describe and compare the three main configurations of sourcing.
12. What are some elements to consider in the make-or-buy decision?
13. Describe the four phases of globalization in the purchasing function. What are the five major sourcing strategies a company uses as the purchasing function becomes more "global"?
14. What are just-in-time (JIT) inventory systems? How does global sourcing complicate inventory management systems, especially in relation to JIT?
15. What are foreign trade zones (FTZs)? How are they primarily used?
CHAPTER 18
International Accounting Issues
1. What are the major factors influencing the development of accounting standards and practices around the world?
2. How do the cultural values of optimism versus conservatism affect country differences in accounting systems?
3. How do the cultural values of transparency versus secrecy affect country differences in accounting systems?
4. Explain the difference between macro-uniform based and micro-based accounting systems. What are some examples of countries that fit each system?
5. In what ways do financial statements in one country differ from those in another country?
6. What are the major forces leading to convergence of accounting standards, and what are the key organizations involved?
7. How must companies account for transactions denominated in foreign currencies?
8. What is meant by the translation and consolidation of foreign currency financial statements?
9. How can companies translate their foreign currency financial statements into the parent currency, and how are translation gains and losses recognized?
10. What are environmental reports, and why are they so important?
11. What are some of the important issues of performance evaluation and control of MNEs?
12. How do transfer pricing strategies affect performance evaluation?
13. What is the balanced scorecard, and how is it used internationally?
CHAPTER 19
The Multinational Finance Function
1. What are the major corporate finance and treasury functions?
2. What is the capital structure of a company, and how do companies use offshore financial centers to help generate capital?
3. What is capital budgeting in a global context?
4. What are the global dimensions of cash management?
5. What are the major financial issues related to exporting and importing?
6. What is foreign currency translation exposure, and how can it affect an MNE?
7. What is foreign currency transaction exposure, and how does it affect the cash flows of a company?
8. What is economic exposure? How does it arise?
9. What are some foreign currency hedging strategies that an MNE can adopt?
10. What are some factors that U.S. firms must consider in determining the taxation of earnings from foreign source income?
11. Define transfer pricing and explain what operating concerns companies should consider when determining international transfer prices?
12. What is meant by a tax credit, and how is it used?
13. How do non-U.S. governments tax foreign source income, and what is the value of tax treaties?
CHAPTER 20
Human Resource Management
1. What does HRM mean within the context of an international company?
2. What are some of the strategic implications of HRM?
4. What is the goal of a company’s staffing policy?
5. What is the relationship between a company’s staffing policy and its interpretative framework?
6. What is the relationship between a company’s staffing policy and an ethnocentric interpretative framework?
7. What is the relationship between a company’s staffing policy and a polycentric interpretative framework?
8. What is the relationship between a company’s staffing policy and a geocentric interpretative framework?
9. What is the relationship between a company’s staffing policy and its chosen strategy?
10. What conditions shape how a company selects a potential expatriate?
11. What are the leading reasons for expatriate failure?
12. What are common predeparture methods that companies use to prepare expatriates prior to their international assignment?
13. What methods might a company use to compensate an expatriate?
14. What are the logistical, professional, and personal challenges of expatriate repatriation and retention?
15. How do MNEs in general and HRM in specific deal with international labor relations?
