MGMT 378

International Business

House Rules

1. The back row of students will clean up the classroom and straighten chairs/tables

after each session.

2. No electronic distractions—if you violate this rule you will stand and sing a Justin

Bieber or Jonas Brothers song of my choice.

House Rules

3. Cheating brings pain. Failing to confess cheating brings pain. Failing to report cheating brings pain.

Reporting (and, when possible, documenting) cheating brings rewards.

This course can help you

Understand our world betterGet better jobsGet internationally oriented jobsBe more comfortable with people from other countriesSee the world with new eyes Make your life more interesting

We’ll talk about

Globalization, internationalizationRole of technology, cost advantagesCultureEntry methods/business formsImporting/exporting how-toA variety of cases/examples

ThinkHigh participationCross-functional, integrated view of businessTrust, honesty, integrity, high standards

AND

Sufficient time and energy

Shared goals to start with

Symptoms: Lousy papersNot keeping upCan’t answer questions or contribute to discussionAbsence, tardiness, sleepinessDifficulty with midterm exam

Causes:Conflicting prioritiesExcessive course loadJuggling a job and too many courses

Typical Workload Problems

A 5 %B 15 %C 55 %D/F 25 %

A typical semester might look like this…

Syllabus and schedule highlights

http://yourpeakescape.com/uscupstate

GradingPreparation/participation—see syllabus

Ten-point scale, no pluses/minuses

Papers: part of prep/part, follow the format, due on time.

Section 1: Globalization and International Linkages

Implications of globalization for countries, industries, firms, and communities.

Major trends in global and regional integration.

Changes in economic power, trade and investment flows.

Major economic systems and recent developments.

International Management

International management:Managing in a multinational company;Adapting management practices to different economic, political, and cultural environments.

Multinational corporation (MNC):Operations in more than one countryInternational salesManagers and owners from a mix of countries

Globalization and Internationalization

Globalization: process of integration among countries with a vision of a single market entity: Social Economic Political Technological Cultural Internationalization: when a business crosses national and cultural borders.

Globalization: Pros and Cons

Pros: economic growth, jobs, technology, lower prices.Pros: economic growth, jobs, technology, lower prices.

Cons:Cons: losing jobs to lower-wage countries;losing jobs to lower-wage countries; trade deficits;trade deficits; slow wage growth;slow wage growth; environmental and social impacts.environmental and social impacts.

Global and Regional Integration:

Global Agreements: WTO World Trade Organization GATT General Agreement on Tariffs and Trade

Regional Agreements: NAFTA North American Free Trade Agreement CAFTA U.S.-Central American Free Trade Agreement EU European Union ASEAN Association of Southeast Asian Nations FTAA Free Trade Agreement of the Americas

International Economic Power in the Global Economy:

World is changing due toWorld is changing due toEconomic integration Economic integration Growth of emerging marketsGrowth of emerging markets

The World’s Largest Economies 2005 and 2020 (Projected) Measured by GDP at Market Exchange Rates:

Most Populous Countries in 1980, 2000, and 2050 (Projected):

Trends in International Investments and Trade

Investment:Investment:80% of foreign direct investment (FDI) from 80% of foreign direct investment (FDI) from

developed countries developed countries Continuing rise, inc from new investors (e.g. China)Continuing rise, inc from new investors (e.g. China)

Trade: Trade: >50% world trade is United States, European >50% world trade is United States, European

Union and JapanUnion and JapanContinuing growthContinuing growth

Economic Systems of the World

Market Economy Market Economy

Command EconomyCommand Economy

Mixed EconomyMixed Economy

Economic Performance by Region

North AmericaNorth AmericaSouth AmericaSouth AmericaEurope (EU, Central and Eastern Europe)Europe (EU, Central and Eastern Europe)Asia (Japan, China, emerging markets of Asia)Asia (Japan, China, emerging markets of Asia)Other developing and emerging countries (India, Other developing and emerging countries (India, Middle East, Central Asia, Africa) Middle East, Central Asia, Africa)

Remember: History Matters!!Remember: History Matters!!

North America

North America:Generally free market economies

United States:Good market for foreign MNCForeign investment welcomedU.S. firms dominate many European markets; gaining in Asia

Canada:Biggest U.S. trade partnerBig US investment in CanadaCanada legal/business environment similar to US

Mexico:Biggest Latin American economy Very strong maquiladora industry w/ US markets Rising trade with Europe, AsiaCompetes with Asia for US market

South America

History of high foreign debt and high inflation Brazil, Chile, Argentina—strongest economiesHistory of trade barriers now declining

European Union

EU has emerged as a functional economic union EU has emerged as a functional economic union

Links/spread into Central , Eastern, Southeastern Links/spread into Central , Eastern, Southeastern EuropeEurope

Substantial FDI in EU: M&A, alliances, etc.Substantial FDI in EU: M&A, alliances, etc.

Central and Eastern Europe

Big examples: Russia, Czech Rep., Hungary, PolandBig examples: Russia, Czech Rep., Hungary, PolandDismantling of price controls and state ownershipDismantling of price controls and state ownership1990s/2000s: Perestroika—economic and political 1990s/2000s: Perestroika—economic and political restructuring, Privatizationrestructuring, PrivatizationInflation, crime, corruption, wealth disparities. Inflation, crime, corruption, wealth disparities. Western Europe/China investingWestern Europe/China investingMembership in International Monetary Fund (IMF), some Membership in International Monetary Fund (IMF), some in EU,in EU,Political uncertainty, old habits/relationships die hardPolitical uncertainty, old habits/relationships die hard

Asia

JapanJapanPhenomenal success 1970s/1980sPhenomenal success 1970s/1980sMinistry of International Trade and Industry (MITI)Ministry of International Trade and Industry (MITI)KeiretsusKeiretsus

Vertically integrated industriesVertically integrated industriesTen year recession in 1990sTen year recession in 1990s

Bad bank loans for real estate—billions of dollarsBad bank loans for real estate—billions of dollarsNow: International competition—China, SE AsiaNow: International competition—China, SE Asia Ageing populationAgeing population

ChinaChinaAnnual growth 8-11%Annual growth 8-11%Foreign investors interested despite political risk, Foreign investors interested despite political risk, trade piracy, restrictionstrade piracy, restrictionsTrends: Income disparities, pollution, political unrestTrends: Income disparities, pollution, political unrest

The Four TigersSouth Korea

Chaebols (large family-held Korean conglomerates)Relationship issues: China, North Korea

Hong KongNow part of People’s Republic of ChinaWealthy free market system/tension with ChinaSingapore Singapore

Highly educated, high-tech islandHighly educated, high-tech island

TaiwanTaiwan Tension with China, which claims itTension with China, which claims it High-tech and industrialHigh-tech and industrial

Southeast Asia

Baby Tigers (Thailand, Malaysia, Indonesia):Baby Tigers (Thailand, Malaysia, Indonesia):Large population Large population Cheap laborCheap laborNatural resourcesNatural resourcesAttractive to outside investorsAttractive to outside investorsCorruptionCorruption

Developing and EmergingIndiaIndia

Huge poor population, big middle classHuge poor population, big middle classGrowth in software, ITGrowth in software, ITAttractive to West (educated, English speaking, Attractive to West (educated, English speaking, technologically sophisticated)technologically sophisticated)

Middle East and Central AsiaMiddle East and Central AsiaOil and natural resourcesOil and natural resourcesUnemployment, politics, religionUnemployment, politics, religion

AfricaAfricaNatural resourcesNatural resourcesGenerally poor, weak infrastructureGenerally poor, weak infrastructure1,000 languages and dialects1,000 languages and dialectsPoverty, starvation, war, illiteracy, corruption, Poverty, starvation, war, illiteracy, corruption, overcrowding in various partsovercrowding in various parts

Developing and Emerging

Some questions for you

1. What are pros and cons for globalization in different parts of the world?

2. How has NAFTA affected North America and the EU affected Europe? What importance do these economic pacts have for international managers in North America, Europe and Asia?

3. Why would MNCs be interested in South America, India, the Middle East, Central Asia, and Africa, the less developed and emerging countries of the world?

What we just didSection 1:

Globalization and International Linkages

Implications of globalization for countries, industries, firms, and communities.

Major trends in global and regional integration.

Changes in economic power, trade and investment flows.

Major economic systems and recent developments.