Course

Introduction/
Course
syllabus
  The course of International Business covers key global business
issues such as cultural, political and ethics aspects; cross-border
trade and investment; the global monetary system and
competition in the global environment.
 Apart from these, the basic content of the course also includes
Course international activities that fall largely within functional
disciplines such as global production, outsourcing, logistics;
overview global marketing; R&D and global human resources
management.
 A variety of realworld examples and cases from small, medium,
and large companies around the world are used for students to
discuss, analyze and solve within the context of the appropriated
theory.
 Explain

• Explain how and why the world’s countries differ and understand,
realize and analyze the different challenges business faces when
they operate in an international environment and in a changing
world

Course Present

objectives • Present a thorough view of the economics and politics of

international trade and investment and examine the various
cultural and political issues that impact international business
activities.

Examine

• Examine the strategies and structures of international businesses.

Text books and References
 Class attendance: 5%

Homework + Quiz: 5%

Examination,
assessment Group presentation: 15% (divide into groups)
and grading
Mid-term exam: 15%

Final exam: 60%

 Course calendar

Part 1: Introduction and

Part 2: Country difference
Overview
Chapter 1: Globalisation Chapter 2: National difference in Political Economy
Chapter 3: Differences in Culture
Chapter 4: Ethics in International Business

Part 3: Competing in a Global marketplace

Chapter 5: The strategy of IB Chapter 8: Global production, outsourcing &

Chapter 6: Entry strategy and Strategic Logistics
Alliances Chapter 9: Global marketing and R&D
Chapter 7: Exporting, Importing and Chapter 10: Global human resources management
Countertrade
Chapter 1:
Globalization
 Understand Understand what is meant by the term Globalisation

Recognize Recognize the main drivers of globalization

Learning Describe Describe the changing natural of global economy

objectives:
Explain the main argument in the debate over the impact of
Explain globalization.

Understand how the process of globalization is creating

Understand opportunities and challenges for business managers.
 Definition: Globalization refers to the shift
toward a more integrated and
interdependent world economy
Hill (2015, tr.15)
What is the
meaning of
“Globalization”
Two facets of globalization:

• Globalisation of market
• Globalisation of production
Globalization Moving away from an economic
system in which nation markets
of market are distinct entities, isolated by
trade barriers of distance, time
and culture, and toward a system
in which national markets are
merging into one global market.
Hill(2015, tr.18:19)
 Globalization of production

- Definition: Trend by individual firms to disperse parts of the productive processes

to different locations around the globe to take advantage of national differences
in the cost and quality of factor of production like land, labor and capital. Hill(2015,
tr.19:20)
Companies can:
 Lower their overall cost structure
 Improve the quality or functionally of their product offering
 Example of globalization of production: Video: “Story of an iPhone - Analytics in Supply Chain Decisions”
Link Youtube : https://www.youtube.com/watch?v=YbM_LydRlnM&t=2s
 Global Institutions
• help manage, regulate, and police the global
marketplace
The • promote the establishment of multinational treaties to
govern the global business system
emergence
of Global Examples include
Institutions • the General Agreement on Tariffs and Trade (GATT)
• the World Trade Organization (WTO)
• the International Monetary Fund (IMF)
• the World Bank
• the United Nations (UN)
The emergence of Global Institutions

❖ The World Trade Organization (like its predecessor GATT)

❖ polices the world trading system
❖ makes sure that nation-states adhere to the rules laid down in trade treaties
❖ promotes lower barriers to trade and investment
❖ The International Monetary Fund (1944) maintains order in the international monetary system
❖ The World Bank (1944) promotes economic development
❖ The United Nations (1945)
❖ maintains international peace and security
❖ develops friendly relations among nations
❖ cooperates in solving international problems and in promoting respect for human rights
❖ is a center for harmonizing the actions of nations
Drivers of
globalization
(1) Declining trade and
Two macro investment barriers
factors
underlie the
trend toward
greater
(2) Technological
globalization change
 International Trade: Occurs when a firm
exports good or services to consumers in
(1) Declining another country.
trade and
investment
Foreign Direct Investment (FDI): direct
barriers investment in business operations in
foreign country.
 1920s – 1930s:
Trade and
investment
barriers were very Under GATT,
high in order to more than 100
protect domestic countries agreed
industries from to lower trade
Route of foreign
competition
and investment
barriers
declining
trade and
investment After WWII, the The WTO
barriers advanced
industrial nations
launched to aim
for further
of the West liberalizing the
committed global trade and
themselves to investment
removing barriers framework.
to the free flow of
goods, services
and capitals.
 (1) Declining trade and investment barriers
Average Tariff Rates on Manufactured Products as Percent of Value
Tariff and
non-tariff
barriers
from 1995 to
2015
 For globalization of market:
Implications (+) Firms can view the world, rather than a single
of declining country, as their market
trade and (-) Domestic firms face with intense competition
investment from foreign competitors.
barriers for For globalization of production:
globalization - Firm can base production in the optimal location
for that activity
(2) Technological change

1. Microprocessors and Telecommunications:

 The explosive growth of high power and low cost computing
 Development of satellite, optical fiber, and wireless technologies..
2. The Internet and World Wide Web:
 Mạng WWW → develop the information backbone of the global economy.
 It allows businesses to expand their global presence at a lower cost than ever before.
3. Transportation Technology
 The development of commercial jet aircraft and super freighters and containerization
→ reducing time and costs of shipping goods over long distance.
  For globalization of market:
 lower information processing and communication costs - firms
can create and manage globally dispersed production systems.
Implications  lower transportation costs - firms can disperse production to
of economical, geographically separate locations

technological
 For globalization of production:
change for  low cost global communications networks - help create an
globalization electronic global marketplace
 low-cost transportation - help create global markets
 global communication networks and global media - create a
worldwide culture, and a global market for consumer products
 3. The changing of demographics of the Global
Economy

Before 1960s:
(1) US dominance in the world economy and trade picture
(2) US dominance in world foreign direct investment
(3) The dominance of large multinational US firms on the international business
(4) Half the globe is communist.
After 1960s:
 All four of these qualities either have changed or are now changing rapidly
(1) The changing world output and world trade picture
Hill (2015, tr.34)
(2) The changing foreign direct investment picture
Percentage Share of Total FDI Stock 1980-2007
(2) The changing foreign direct investment picture
FDI Inflows 1988-2008
 100%
TRIỆU USD 80%
60%
40%
20%
0%

2016
2008
2004
2000

2002
2003

2005

2007

2009
1990

1992

1994
1995
1993

1997
1998

2001

2006

2010

2012

2014
2013

2015

2017
2018
1991

1996

1999

2011
Developed economies Developing economies Transition economies

Global FDI inflows 1990-2018

(Unit: million USD)
32
(3) The changing nature of the multinational enterprise
A multinational enterprise (MNE) is any business that has
productive activities in two or more countries

There has been a rise in

The growth of mini –
non – US
multinationals.
multinationals.
 (3) The changing nature of the multinational enterprise

There has
been a rise in
non – US
multinationals

Before, many former communist nations
were essentially closed to Western
international business.
(4) The changing world order
Between 1989 and 1991, a series of
democratic revolutions swept the
Communist World. Many of the former
Communist nations of Europe and Asia
seem to share a commitment to
democratic politics and free market
economics.
THE GLOBAL ECONOMY OF THE 21ST CENTURY

- The US is no longer be the dominant in the

global economy like before

- The world is moving toward a more global

economic system

- The world witness rapid change in

developing countries like China, South Korea
and Taiwan
Viewpoint of Viewpoint of
Thomas Pankaj
Friedman Ghemawat

THE GLOBALIZATION DEBATE

Is the shift toward a
more integrated and
interdependent
global economy a
good thing?
4. The globalization debate

The globalization debate focus on 4 main aspects:

(1) Jobs and income
(2) Labor policies and the environment
(3) National sovereignty
(4) The world’s poor.
HOME WORK
 Critics argue that falling barriers to trade
are destroying manufacturing jobs in
advanced countries

(1) Jobs And

Income Supporters contend that the benefits of
this trend outweigh the costs

• countries will specialize in what they do most

efficiently and trade for other goods—and all
countries will benefit.
(2) Labor Policies And The Environment

❖Critics argue that firms avoid costly efforts to adhere to

labor and environmental regulations by moving production
to countries where such regulations do not exist, or are not
enforced
❖Supporters claim that tougher environmental and labor
standards are associated with economic progress
❖as countries get richer from free trade, they implement tougher
environmental and labor regulations.
(3) National Sovereignty

 Is today’s interdependent global economy shifting economic power away

from national governments toward supranational organizations like the
WTO, the EU, and the UN?
 Critics argue that unelected bureaucrats have the power to impose policies
on the democratically elected governments of nation-states
 Supporters claim that the power of these organizations is limited to what
nation-states agree to grant
 the power of the organizations lies in their ability to get countries to agree to follow
certain actions.
 Is the gap between rich nations and poor nations is getting
wider?

Critics believe that if globalization was beneficial there

(4) The World’s should not be a divergence between rich and poor nations
Poor
Supporters claim that the best way for the poor nations to
improve their situation is to
• reduce barriers to trade and investment
• implement economic policies based on free market economies
• receive debt forgiveness for debts incurred under totalitarian regimes
 ❖Managing an international business differs
from managing a domestic business because
❖countries are different
Managing in ❖the range of problems confronted in an
international business is wider and the problems
the global more complex than those in a domestic business
marketplace ❖firms have to find ways to work within the limits
imposed by government intervention in the
international trade and investment system
❖international transactions involve converting
money into different currencies
 Understand Understand what is meant by the term Globalisation

Recognize Recognize the main drivers of globalization

Summarize Describe Describe the changing natural of global economy

chapter 1
Explain Explain the main arguments in the debate over the
impact of globalization.

Understand Understand how the process of globalization is creating

opportunities and challenges for business managers.
Review Question

The shift toward a more integrated and interdependent world economy is

referred to as?

a) economic integration
b) economic interdependency
c) globalization
d) internationalization
Review Question

The merging of historically distinct and separate national markets into one huge
global marketplace is known as?

a) global market facilitation

b) cross-border trade
c) supranational market integration
d) the globalization of markets
Review Question

Firms that are involved in international business tend to be

a) large
b) small
c) medium-sized
d) large, small, and medium-sized
Review Question

Which is not a factor of production?

a) trade
b) land
c) capital
d) energy
Review Question

The sourcing of good and services from around the world to take
advantage of national differences in the cost and quality of factors of
production is called?

a) economies of scale
b) the globalization of production
c) global integration
d) global sourcing
Review Question

Which organization is responsible for policing the world trading

system?

a) the International Monetary Fund

b) the United Nations
c) the World Trade Organization
d) the World Bank
Review Question

What is the single most important innovation to the globalization of markets and
production?
a) advances in transportation technology
b) the development of the microprocessor
c) advances in communication
d) the Internet
Review Question

Which of the following trends is true?

a) the United States is accounting for a greater percentage of world trade than
ever before
b) the United States is accounting for a greater percentage of foreign direct
investment than ever before
c) the share of world trade accounted for by developing countries is rising
d) the share of foreign direct investment by developing countries is declining
Review Question

Which of these is not a concern of anti-globalization protesters?

a) globalization raises consumer income

b) globalization contributes to environmental degradation
c) globalization is causing a loss of manufacturing jobs in developing
countries
d) globalization implies a loss of national sovereignty