question

when investors establish a plant overseas, this is called ... ... (6.10)
if they buy shares or long-term debt obligations, this is called ... ... (9.10)
dealers using two foreign exchange markets to benefit from rate differentials are said to engage in ... (11)
producing in large quantities becomes cheaper because of ....... (9 2 5)
the ... (4) was set up in 1947 to encourage international trade and to minimize protectionism
we started with a ... (4), buying all the stocks available on the stock exchange. That got us 15% of their stocks. then we
made a ... ... (8 3 )
... ... (7 7) requires all parties concerned in the venture to contribute to compensate the losses caused to those whose
cargo has been lost or damaged
a cash grant is called an ... whose purpose is to ....
... offers door to door delivery services
if you ... you make transactions that are designed to reduce risk regarding a paricular price, interest rate or exchange rate
a ... anticipates future changes in a market and makes risky transactions, hoping to make a gain
... is dividing a market into instinct group of buyers who have different requirements of buying habit
... is the difficult task of reversing negative demand
... are raw materials such as agricultural products and metals that are traded on special exchanges
rate of return is often measured in terms of profits realized on ....
in some parts of the world, bank may be slow to ... (5) payment to the exporter's bank
both words mean 'a person who does business on behalf of another company.' the word (5) ... is used where there is a
long-term relationship, earning commission, whereas the word ...(6) is more common for individual transactions.
in the (8) ..... phase sales growth slows and then stablize. Producers attempt to (13) ..... products and brands are key to
this
(7 10) ... ... is the process of withdrawing products from the market where they are no longer profitable
a company's owners
all the money that a company will have to pay to someone else in the future, including taxes, debts, and interest and
mortage payments
anything owned by a business (cash investment, buildings, machines, and so on) that can be used to produce goods or
pay liabilities
the reduction in value of a fixed asset during the year it is in use (charged against profits)
(the value of) raw materials, work in progrss, and finished products stored ready for sale
getting control of a company by buying over 50% of its shares
when a company's top executives buy the company they work for
adding new and different products or services
the differences between what a country pays for all its imports and receives for all its exports
the system in which a currency could be exchanged for a fixed amount of gold
... are places where goods are sold to the public-shops, stores, kiosks, market, stalls, etc
the classic product life cycle is introduction, growth, .... and decline
.... is the attempt to destroy unwholesome. demand for products that are considered undesirable
.... is the (impossible) situation in which a country is completely self-sufficient and has no trade
total self-sufficiency and the consequent absence of foreign trade
a cash grant is called ......, whose purpose is to.....

strategy of adapting products and their marketing strategies in each national market that suit local preferences is....
in the maturity phase of product life cycle, sales growth slows and then ....
... involves revitalizing falling demand
a country exporting more than import has a ....
in the documentary collection if the importer .... the bill, the exporter may have to find an alternative buyer or ship the goods
back
.... involves altering the times pattern of irregular demand
in the introduction stage of product life is cyle, the product is promoted to create .....
a strategy of offering the same products using the same marketing strategy in all national markets is the....
the first step of the procedure for documentary collectioin, the exporter task is to ask his bank to .... a bill of exchange on
the overseas buyer
if a country can produce something more cheaply than anywhere else in the world, it has a (an)....
the date at which a loan will be repaid
reduction in unit costs arsing large scale of production
having a responsibility or an obligation to do something e.g., to pay a debt
a document that shows details of goods being transported. it entitles the receiver to collect the goods on arrival
central banks..... the banking system, fix the minimum interest ratel issue bank notes
imposing trade barriers in order to restrict imports
trade in services (banking, insurance, tourism, and so on)
an arrangement by which a customer can withdraw more from a bank account than has been deposited in it up to an
agreed limit; interrest on the debt is calculated daily
some companies prefer to grow organically, but it is quicker to grow by ....
multinational companies usually have .... in different countries
operating all over the world while taking account of local cultural habits, beliefs, and preferences in each country or market
means .....
.... generally fix a country's minimum interest rate
Unlike quotas, ..... produce revenue for the government
Adding trade in services to goods give you the ..... ...... .......
Ships' cargoes are covered by ..... policies
The best form of advertising is free ..... ....... ......... advertising, which occcurs when satisfied customers recommend
products or services to their friends
..... involves revitalizing falling demand, for example, for churches, for city areas, or aging film stars
..... ....... for arbitration is like Brand recognition for consumer goods
In February 2000, Vodafone Airtouch succeeded in its hostile ...... Mannnesmann
Television commercials, Advertisements and endorsements are all means of ...... goods
a product is not just an assembled set of components: it is something customers buy to ....(7) a need they feel they have.
The (5).... and the (6) ...... of the product are as important as its specifications
(4) ... was designed to promote free trade by reducing both tariff and nontariff barriers to in'l trade
(4,7) ...... is the least secure payment mothod to the exporter
(11) .... buy or sell currencies in order to make a profit by making capital gains or by investing at higher interest rates
(6,1)... has the widest cover
Some countries try to be ... .... in certain commodities so that they are NOT dependent on imports
Among other things, a ... .... .... contains details of the goods, their destination and the name of ship carrying them
when 2 companies merge they usually have greater ... ... .... than as separate companies
the difference between the monoey values of a country's visible imports and exports
Trend toward greater interdependence among national institutions and economics (13)...
Inability of a nation to produce a good more efficiently than other nations, but an ability to produce that good more
efficiently than it does any other good (10,9)
Financial assistance to domestic producers in the form of cash payments, low interest loans, tax breaks, product price
supports, or some other forms: (9)
Many authors argue that marketing concept has replaces the (7,7).... ....
The third "P" is (5)....., which concerns where the product is available
exporters are often paid by way of a bill of .....
another word for the intermediaries between producer and customer is
The person who uses something is called a consumer, the person who buy something in a store is a ....
Charging a high price for a new product is known as market...
Selling a new product cheaply in order to get a large market share is called market
.... and .... are the two aspects of foreign trade: a country spends money on goods it .... and gain money through its ....
Manufacturers sell their goods to ... and in return, .... buy from them
... is the most secure payment method
price wars and competition occur as the market reaches .....
Most MNCs expanded overseas because trade barriers such as ..... and ... had been set up against goods
the most complete insurance is against ...
The Bretton Wood agreement stipulated that all members would express their currencies in ...
key
(foreign) direct investment
(foreign) portfolio investment portfolio investment
arbitrage arbitration
economies of scale
GATT

Raid, takeover bid

general average general average

investment incentives, support investment incentives / attract foreign investment
road transport
hedge
speculator
market segmentation
conversional marketing
commodities
assets employed
remit

agent/ broker

maturity/ differentiate
product withdrawal
shareholders

liabilities

assets
depreciation
inventory
takeover/ acquisition takeover a raid
management buyout friendly takeover bid
to diversify
balance of payment
gold standard
points of sale
maturity
countermarketing
autarky
investment incentive, support
investors
multinational strategy
stabilizes
remarketing
trade surplus

dishonours
synchromarketing
awareness
global strategy

draw
absolute advantage
Maturity maturity date?
economies of scale
liabilities liability
bill of lading
regulate
protectionism
invisible trade

overdraft
merger and acquisition
subsidiaries

glocalization
central banks
tariffs
balance of payment
marine

word of mouth
remarketing
Name recognition
bid
promoting
satisfy/ image/ design
GATT
open account
arbitrators speculators
Clause A
self sufficient
bill of lading
economies of scale
balance of trade
Globalisation

comparative advantage ?

incentive ? export financing

selling concept
place
lading
middleman
customer
skimming pricing
penetration pricing
import and export/ imports/ export
Wholesalers/ retailers
advance payment
saturation
tariffs/ quotas
all risks
gold
what is the foreign exchange market

What are investment incentives

What are the risks faced by exporters in the 4
common payment methods

what factors are needed considering when

choosing the mode of transportation
what are the key reasons for the failure of M&A

what are the main functions of central bank?

what are the reasons behind a horizontal merger?

reasons behind vertical mergers

reasons behind diversification mergers

why would government impede free trade?

what is the best form of advertising? why?

what should companies do to lengthen the
product's lifecycle?

why do exchange rate fluctuate?

are low prices always good? why?

name five activities that any state bank or central

bank of any country in the world always does

briefly describe spot and forward transactions.

give an example of each

what are some financial considerations in making a

FDI

what are objectives of FDI

why is LC the popular method of payment in
international trade
what are the advantages of arbitration over
litigation

when is a foreign project said to be viable? what is

nonviable project?

briefly describe the importance of gold standard

distinguish need, want and demand

what are the reasons for companies look for

foreign market?

at which stage in the product life cycle would

manufacturers differentiate their products? why?
what are 3 main business areas which have
traditionally been resolved by arbitration?
what are the differences between FDI and FPI?
Why do poor and developing countries sometimes
criticize MNCs?

How do central banks intervene in the foreign

exchange markets?
Why do agricultural workers in the third world
find their conditions worse by the actions of
MNCs?
what can give a country an absolute advantage or
comparative advantage in goods and services over
other countries?

How many ways of acquiring a company are

there? what are they?
Why do economist generally believe in free
trade?
What are the reason for buying and selling foreign
currency
What market is bigger, the producer market or
consumer market? Why?

why would an exporter ask for a confirmed letter

of credit?

What are the harmful effects of a large trade

deficit?

What do businesses look for in arbitration

What makes a country more attractive for FDI

than others?
What is the difference between selling concept
and marketing concept?

Insurance premium depends on?

answers
The foreign exchange market is the mechanism through which foreign currencies are
traded. it is not an actual marketplace but a system of telephone of telex
communications between banks, customers, and middlemen (foreign exchange
brokers, acting for a client vis-à-vis the bank).

benefits such as cash grants, tax credits, accelerated depreciation, and low interest-
bearing loans, which are sponsored by national or local authorities to attract foreign
investment

- open account: loses all control of the goods, trusting that payment will be made
by the importer in accordance with the original sales contract
- documentary credit: very few risks arise for the exporter because the potential
problem areas of the buyer risk and country risk can be eliminated. However, the
exporter must present the correct documents and comply fully with the terms and
conditions of the credit. Failure to do so could result in the exporter losing the
protection of the credit
- bills for collection: the risks that exporter has to face are that the importer fails to
accept the bill of exchange or dishonours an an accepted bill upon marturity.
- Advance payment: the exporter has no risks associated with non-payment

1/ the nature of the goods:

- dimensions: bulk/shape/limits for air, road, rail
- weight: lifting gear available? limits for air
- value: higher valued can be charge "ad valorem"
- fragility: special packaging, special stowage.
- perishability: refrigerated containers/ships, speed
- pilferability: secure packing. few intermediate handlings.
2/ the time factor: fast transport usually:
- reduces distribution costs
- requires less insurance cover
- reduces the cost of finance tied up in transit
- means earlier use/resale of the goods
3/ freight rates:
- liner rates
- charter rates
- voyage charter
-time charter
1/ differences in culture: cultural barriers, clash of cultures (culture clash). If one
organization values winning at all costs and the other organization values collaboration
and consensus, it simply won’t work
2/ over-optimism: managers are just too optimistic about prospects for the enlarged
group; they have unrealistic expectations about the future success of the new company.
3/ the way the two companies are combined.

- Implementing monetary policy

- Controlling the nation’s entire money supply
- the government’s banker and the bankers’ bank (lender of last resort)
- Managing the country’s foreign exchange and gold reserves and the government’s
stock register
- Regulating and supervising the banking industry
- Setting the official interest rate – used to manage both inflation and the country’s
exchange rate – and ensuring that this rate takes effect via a variety of policy
mechanisms.

- to reduce competition
- to increase market share
- to acquire additional plants and equipment
- to achieve synergy and economies of scales

- to guarantee the supply and cost of raw material and components

- to be closer to the customers, by cutting out the wholesaler for example and dealing
directly with the retail trade

- to move into a sector which promises greater growth or profits

1/ cultural motives: ... slowly altered by exposure to other country's cultures
2/ political motives: protect domestic producers, preserve the national security, gain
influence, respond to unfair trade
3/ economics: infant industry, pursue strategic trade policy

word of mouth: it is cheap, effective, trust-worthy

Find new customer by innovating product
- Find new market to continue selling the goods
- Change packaging

- Monetary Policy, Rate of Inflation, Political and Economic Conditions

not always
● pros:
- attract customer
- launch new product line
- reduce production cost (cost to stored for a long time)
- people with low salary can afford the goods
● cons:
- price may not play an important role in the purchasing decision in some situation.
- anger past customer
- affect the brand

1/ implementing monetary policy

2/ controlling an entire nation's money supply
3/ managing foreign exchanges and gold reserves of a country and government's stocks
registers
4/ regulating and supervising commercial banks
5/ government's banker and bankers' bank (lender of last resort)
6/ setting interest rates and ensuring that these interest rate take effect via a variety of
mechanisms

1/ spot exchange: currency sold and bought with payment within 2 business days
2/ forward exchange: buy or sell currency with payment and delivery at a later date in
the future

1/ what is the expected rate of return on investment

2/ what are sources for working capital
3/ what are interest rates
4/ what is the cash flow projection

resources seeking, markets seeking, efficiency seeking, strategic assets/ capabilities

seeking
protect both the buyer and the seller, because it is more secure, the bank must pay
even if the importer defaults on payment.
- because it is safer for exporter as it makes sure he will get his money for the goods
sole provided that he presents the correct docuent
- ensure the importer that he will get the goods bought as long as he pay for them or
agreed to pay in a fixed date in the future
=> protect both exporter and importer
=> used when importer’s creadit rating is unquestionable and 2 parties are unfamiliar to
each other
4 aspects:
(1) speed
(2) cost effectiveness
(3) confidentiality
(4) reliability

a viable project is project where reliable access to outside financing is available. A

nonviable project is when the rate of return/profit is lower than the comparable
investment in the host country

advantages of the gold standard, unit 3

(1) reduce exchange rate risk
(2) impose strict monetary policies
(3) correct trade imbalances

needs are basic human requirements: air, food, water, clothing, shelter, recreation,
entertainment, education. these needs become wants when they are directed to
specific objects that can satisfy the need. Demand are wants for specific objects backed
by an ability to pay

~reasons go int'l
(1) saturated national market
(2) some countries set up trade barriers such as tariffs and quotas against company's
product
(3) expand sales
(4) diversify sales
(5) gain experience
(6) cheap labour, raw material, esp. in developing countries

maturity because at this phase, sales growth slows and then stablilizes; therefore, in
order to capture a big share of market, each producer needs to differentiate its
products
construction, shipping, commodities

method, aim, liquidity, limitation of capital

MNCs not the major suppliers of capital
the technology brought by MNCs is often unsuitable, expensive and complicated, might
reduce jobs

by buying and selling its own currency in the foreign exchange market so that the
currency will keep a certain value
Bigger farms are using imported machinery to increase production but employing fewer
and fewer workers
factors of production
climate
division of labour
economies of scale

2 ways, a raid or a takeover bid

to make transactioins and to make profit, secure risk

producer market is bigger/ larger than consumer market.

because it contains all the raw materials (1), manufactured parts (2) and components
(3) that go into consumer goods, plus (4) capital equipment such as buildings and
machines, (5) supplies such as energy and pens and paper, and services (6) ranging from
cleaning to management consulting

A confirmed L/C is a lettter of credit in which the exporter has payment guarantee from
a second bank or a confirming bank. In case first bank fails to pay then the payment will
be done by the second bank.
- A confirmed L/C is used when the issuing bank of the first letter of credit may have
questionable creditworthiness and the exporter seeks to get a second guarantee to
assure payment.

- a trade deficit can cause more outsourcing of jobs to other countries. As a country
imports more goods than it buys domestically, then the home country may create fewer
jobs in certain industries. At the same time, foreign companies will likely hire new
workers to keep up with the demand for their exports.
- a persistent trade deficit can often have adverse effects on the interest rates in
that country. A downward pressure on a country's currency devalues it, making the
prices of goods denominated in that currency more expensive - in other words it can
lead to inflation.
- Foreign Direct Investment: By definition, the balance of payments must always net
out to zero. As a result, a trade deficit must be offset by a surplus in the country's
capital and current account. This means that deficit nations experience a greater degree
of foreign direct investment and foreign ownership of government debt.

speed, confidentiality, cost effectiveness and realibility and the award by

arbitrators (legally binding)

location, ownership and internalizing advantage

Selling concept
an approach to emphasize on persuading customers to buy the product that you've
already had rather than producing a new one
Marketing concept
a theory holding that a company should concentrate on finding out what kind of
products that customers want and then produce them

(1) nature of cargo

(2) scope of cover
(3) packing
(4) mode of conveyance
(5) distance and past claims experience
risks of non payment/ late payment
risks of force majeur

nature of goods:(FDVPPW)
- fragility
- dimension
- value
- perishablitity
- pilferability
- weight
the time
- reduce distribution cost
- reduce cost of finance tied up in transit
- require less insurance cover
- measn earlier use/ resale of goods
freight rates:
- sea freight rates
- air freight rates
flexibility
regularity of services
● Speed: social media and online communication have
definitely sped the diffusion of information. But WOM still
moves from person to person in a much slower manner.
Advertising seems to be more simultaneous. Admittedly,
advertising is less persuasive than WOM; however, if the
goal is to quickly increase the broad awareness, advertising
can be better way to go.
● Lack of control: limited control over the messages. If a
customer has a very negative experience with the product,
he will likely to share it with others.
"litigation before the court is internationally the least
attractive:
- it is public
- it is expensive
- it is time-consuming
- the results are often legalistic rather than business like"
"- quick
- costs are predictable
- decisions are business-oriented
- secret"

plus DISADVANTAGES OF MNCS TO HOST COUNTRIES

unit 8 mncs
definitions words
unit 9
the purchsse of a company's shares in which the acquiring party
gains controlling interest of the targeted firm buyout
adding new and different products or services diversify
a company's sales expressed as a percentage of the total sales in
a market market share
reductions in costs resulting from increased production economies of scale
money paid to investment banks for work done advising fee
all the individuals or organizations that regularly or occasionally
purchase goods or services from a company customers
best, perfect or idea (adj) optimum
combined production or productivity that is greater than the sum of
the separated parts synergy
people or companies that try to buy and sell other companies to
make a profit corporate
large corporation or groups of companies offering a number of
different products and or services conglomerate
buying a company in order to sell its most valuable assets at a
profit asset stripping
when a company's own managers buy its stocks management buyout of MBO

1/ increase market power 2/ overcome entry barriers -> 3/

increased diversification 4/ lower risk of new products 5/ avoid
excessive competition
reasons for M&A
1/ cultural clashes 2/ the way firms merge together 3/ over-
optimistic/ unrealistic expectations of future success of new
companies reasons for failure
1/ integration difficulties 2/ large or extraordinary debt 3/ inability to
achieve synergy 4/ too much diversification 5/ too large problems with M&A

2 companies making the same product combined. aims:

- reduce competition and increase market share
- to gain access to new markets
- acquire additional plants and equipment
- achieve synergy and economies of scale horizontal merger
a company either acquires or merges with another company in an
immediately-related stage of production and distribution.
Aims:
- guarantee the supply and cost of raw materials and components
- to be closer to customers, cutting out the wholesaler for example,
and dealng directly with the retail trade vertical merger
a company acquires another company in an entirely different
sphere
- to move into a sector which promises greater growth of profits diversification
buying as many stocks of a company as possible on stock's market a raid
public offer to a company's stockholders to buy their shares at a
price during a limited time a takeover bid
unit 5
collecting, analysing and reporting data relevant to a specific
market situation (such as a proposed new product) or use a
questionnaire to carry out survey market research
the basic human requirements. people need air, food, water,
clothing and shelter to survive. people also have strong needs for
recreation, education, and entertainment need
needs become wants when they are directed to specific objects
that might satisfy the need want
demands are wants for specific products backed by an ability to
pay demand
dividing a market into instinct group of buyers who have different
requirements or buying habits market segmentation
a name, symbol, design (or some combination) that identify a
product brand
a name or symbol that cannot be used by another producer trademark
reflects the sum of the perceived tangible and intangible
benefits and costs to customers. It's primarily a combination of
quality, service and price (qsq) called the customer value triad value

reflects a person's judgements of a product's perceived

performance in relationship to expectations. if the performance
falls short of expectations, the customer is dissatisfied and
disappointed. If it matches expectations, the customer is satisfied.
If it exceeds them, the customer is delighted satisfaction
brand awareness -> brand reference -> brand insistence brand loyalty stages

1/ communication channels: deliver and receive messages from

target buyers: newspapers, magazines, radio, television
2/ distribution channels: display, sell, deliver the physical
products or service to the buyer or user: distributors, wholesalers,
retailers, agents
3/ service channels: carry out transactions with potential
buyers: warehouses, transportation companies, banks, insurance
companies marketing channels
introduce a new product into the market to launch a product
possibilities of filling unsatisfied needs in sectors in which a
company can profitably produce goods or services market opportunities
wrappers and containers in which products are sold packaging
places where goods are sold to the public shops, stores, kiosks,
market, stalls points of sale
an idea for a new product, which is tested with target customers
before the actual product is developed product concept
attributes or characteristics of a product: quality, price, reliability product feature
someone who contacts existing or potential customers and tries to
persuade them to buy goods or services sales representative
market penetration pricing chiến lược giá thâm nhâp thị trường
market skimming chiên lược định giá hớt váng
chiến lược định giá nhằm tối đa doanh thu
current revenue pricing trong ngắn hạn
loss leader pricing chính sách bán hạ giá trước
mark-up/cost-plus pricing chính sách định giá dựa trên tổng chi phí
is the difficult task of reversing negative demand conversional marketing
when there's no demand stimulational marketing
involves developing a product or service for which there is clearly
a talent demand developmental marketing
involves revitalizing falling demand remarketing
involves altering the times pattern of irregular demand synchromarketing
is a matter of retaining a current (may be full) level of demand maintenance marketing
is the attempt (by governments rather than private businesses) to
reduce overfull demand, permanently or temporarily demarketing
is the attempt to destroy wholesome demand for products that are
considered undesirable countermarketing

- the product is promoted to create awareness.

- it has low sales and will still be making a loss.
- if the product has few competitors, a skimming price strategy
will be used (a high price for early adopters which is then
gradually lowered) intro

- sales are rising rapidly and profits are high

- competitors are attracted to the market with similar offerings
- the market is characterized by alliances, joint ventures and
takeovers.
- advertising budgets are large and focus on building the brand growth

- sales growth slows and then stabilizes.

- producers attempt to differentiate products and brands are key
to this.
-price wars and competition occur as the market reaches
saturation. maturity

-there is a downturn in the market.

- the product is starting to look old-fashioned or consumer tastes
have changed.
- there is intense price cutting and many products are withdrawn
from the market decline

unit 4

1/ active role: when the banks get involved in the payment process
supporting both the exporter and the importer to complete their
obligations so that the contract is carried out as agreed
2/ passive role: when the banks only do things as requested. for
example, just tranferring money to the account of the seller/
exporter. roles of bank in international trade
1/ risks of not being paid 2/ risks of not receiving the goods 3/ risk
of receiving the goods which are different from those ordered or of
lower quality or in a damaged condition 4/ risk of force majeure risks involved in trading internationally
1/ the applicant (the buyer) completes a contract with the seller
2/ the buyer fills in a L/C application form and sends it to his or her
bank for approval
3/ the issuing bank (the buyer's bank) approves the application and
sends the L/C details to the seller's bank ( the advising bank)
4/ the advising bank authenticates the L/C and sends the
beneficiary (the seller) the details. The seller examines the details
of the L/C to make sure that he or she can meet all the conditions.
If necessary, he or she contacts the buyer and asks for
amendments to be made issuing L/C
5/ if the exporter is satisfied with the L/C details he will ship the
goods
6/ t presenting L/C

7 documentary collection
list of goods sold as request for payment invoice
payment by bill of exchange to which document are not attached clean collection
payment by bill of exchange to which commercial documents (and
sometimes a document of title) are attached documentary collection
signed document that orders a person or organization to pay a
fixed sum of money on demand or on a specified date bill of exchange
document that shows details of goods being transported, it entitles
the receiver to collect the goods on arrival bill of lading
document allowing someone to claim ownership of goods document of title
bank that issues a letter of credit ( the importer's bank) issuing bank
bank that receives payment of bills, etc for their customer's account
(the exporter's bank) collecting bank
bank that confirms they will pay the exporter on evidence of
shipment of goods confirming bank
method of financing overseas trade where payment is made by a
bank in return for delivery of commercial documents, provided that
the terms and conditions of the contract are met. letter of credit
unit 1
purchase of physical assets or a significant amount of ownership
of a company in another country to gain a measure of
management control FDI
investment that does not involve obtaining a degree of control in
a company FPI
the relative prices of a country's export to import terms of trade
the difference in value between imports and exports of goods over
a particular period balance of trade

a detailed record of all financial and economic transactions

between the residents of two countries. the balance of payments
comprises the current account, the capital account and the
financial account. "together these accounts balance in the sense
that the sum of the entries is conceptually zero." -> balance of
payments equilibrium balance of payments

1/ cultural motives: the cultures of countries are slowly altered by

exposure to the people and products of other countries.
2/ political motives: protect jobs, preserve natioanal security,
respond to unfair trade, gain influence
3/ economic motives: protect infant industries, pursue strategic reasons for governmental intervention in
trade policy trade

the economic policy of restraining trade between nations through

methods such as tariffs on imported goods, restrictive quotas, and
a variety of other restrictive government regulations desgined to
discourage imports, and prevent foreign take over of local
markets and companies protectionism
is a type of protectionist trade restriction that sets a physical
limit on the quantity of a good that can be imported into a
country in a given period of time an import quota
is a tax imposed on goods when they moved across a political
boundary a tariff

1/ tariffs
2/ quotas: restriction on the amount ( in units or weight) of a good
that can enter or leave a country during a certain period of time
3/ embargoes: complete ban on trade (imports or exports) in one
or more products with a particular country
4/ local content requirements: laws stipulating that a specified
amount of a good or service be supplied by producers in the
domestic market
5/ administrative delay: regulatory control or bureaucratic rules
designed to impair the rapid flow of imports into a country
6/ currency controls: restrictions on the convertability of a
currency into other currencies. methods of restricting trade (6)
the (impossible) situation in which a country is completely self-
sufficient and has no foreign trade autarky
selling goods abroad at or below cost price dumping
direct exchanges of goods without the use of money barter/ counter trade
a recently developed one that has not yet grown to the point where
it benefits from the economies of scale and can be internationally
completive infant industry

unit 2
the purchase of shares and long term debt obligations from a
foreign entity. portfolio investors do not aim to take control of a
corporation. They can liquidate their investment at market value
any time. foreign portfolio investment

the establishment of a plant or distribution network abroad.

investors can acquire part or all of the equity of an existing
foreign corporation either to control or share control over sales,
production and research and development foreign direct investment
benefits such as cash grants, tax credits, accelerated depreciation,
and low interest-bearing loans, which are sponsored by national or
local authorities to attract foreign investment investment incentives
foreign direct investment decisions based on business
strategies. investors seek access to raw materials, markets,
product efficiency, and knowhow strategic approach

resource seeking FDI

marketing seeking FDI
efficiency seeking FDI objectives of FDI: why companies expand
strategic asset/ capabilities seeking FDI their subsidiaries?

1/ horizontal FDI: when a firm duplicates its home country-based

activities at the same value chain stage in a host country through
FDI
2/ vertical FDI: takes place when a firm thorough FDI moves
upstream or downstream in different value chains i.e., when firm
perform value-adding activities stage by stage in a vertical fashion
in a host country
3/ platform FDI: FDI from a source country into a destination
country for the purpose of exporting to a third country types of FDI
the total amount of cash that remains in a company after it has
paid taxes and other cash expenses. cash flows

a viable project is by which reliable access to outside financing is

available
non-viable project is one where the expect ROR/profits is lower
than from a comparable investment in the host country viable and nonviable projects

1/ what is the expected return on an investment

2/ what are the sources of working capital
3/ what are interest rates financial considerations when making FDI
4/ what is the cash flow projection investment
is often measured in terms of profits realized on assets employed rate of return

-exclusive distributor: an independent sales agent who is given the

sole right, under contract, to sell a foregin manufacturer's product
- multiple distributor: a sales agent who represents more than one
manufacturer distributor
the payments made by a foreign manufacturer to a company that
has licensed the the manufacturer to produce its product royalty payments
a subsidiary formed by two or more corporations joint ventures
when foreign direct investors acquire a
company, what do they normally seek to
research and development, production and sales control?
 when a corporation starts to export for the
engage distributors who receive a commission on products sold first time, how will it organize its sales
the original manufacturer gives up control over the product, hence what is a drawback of licensing or authorizing
standing a chance of jeopardising its reputation foreign distributors

unit 3

a monetary system used in the 19th and early 20 centuries

whereby the value of currencies could, on request of the owner
(holder), be converted in to gold at a country's central bank. As all
currencies had a gold value, they also had a certain value in
relation to each other. This was the beginning of a foreign
exchange system gold standard

1/ implementing monetary policy

2/ controlling the nation's entire money supply
3/ the government's banker and the banker's bank (the lender of
last resort)
4/ managing the country's foreign exchange and gold reserves and
the government's stock register
5/ regulating and supervising the banking industry
6/ setting the official interest rate - used to manage both inflation
and the country's exchange rate - and ensureing that this rate
takes effect via a variety of mechanisms functions of central bank

a system whereby central banks are required by international

agreement to maintain their currency at a relatively fixed value.
this is achieve by buying the currency when it reaches its low point
and by selling when it reaches its high point fixed exchange rate
a system whereby currencies have no specific par value; value is
normally determined by supply and demand. central banks are not
required to intervene, but they often do to avoid wild fluctuations floating exchange rate
is the deliberate downward adjustment of the value of a
country's money relative to another currency, making its currency
worth less in terms of other currency devaluation
is the deliberate rise of the exchange rate revaluation

1/ LONG: if traders buy currency forward without selling forward at

the same time
2/ SHORT: if they sell currency forward without buying forward at
the same time long, short
way of making money in foreign exchange
market

a country's chief bank, which is government owned. it regulates

commerical banks and holds gold and foreign currency reserves. it
actively intervenes by buying and selling its own currency in the
foreign exchange market so that the currency will keep a certain
value central bank
to offset a buy contract with a sell contract and vice versa,
matching the amounts and the time span exactly hedging
when dealers do not offset a buy contract with a sell contract. this
means that their positions is left open speculation
the transfer of funds from one currency to another to benefit from
currency differentials or disparities in interest rates. In arbitraging,
at least two market are enter. arbitrage

unit 6

pros:
- no transshipment - providing door to door service: delicate goods:
chinaware, glassware
- flexibility in regular and special deliveries: routes and timings can
be adjusted to special requirements without much inconvenience.
cons:
- security problem: theft of vehicles or cargo, road accidents.
- low capacity of load
- often return empty to the point of departure road transport

pros:
- high speed delivery: fresh flowers, fashion goods, urgently
required spare parts or medical supplier
- cheap insurance: lower premium because the goods are at lesser
risks for a shorter period
cons:
- high freight rates
- restrictions on weight and size: not suitable for bulky goods
- delays to due bad weather air transport

pros:
- low freight rates: cheapest mode of transport: 75% of all goods in
the world are carried by sea
- very high capacity of load
cons:
-heavier packaging
- low speed
- risky: because of high time involvement
- suitable handling facilities required sea transport

pros:
- rarely affected by weather conditions
- quicker and cheaper for distances over 200 km
cons:
- transshipment to other forms of transport essential
- inflexible timetabling rail transport
1/ the nature of the goods:
- dimensions: bulk/shape/limits for air, road, rail
-weight: lifting gear available, limits for air
-value: higher valued can be charge ad valorem
- fragility: special packaging, special stowage
- perishability: refrigerated ships/containers, speed
- pilferability: secure packaging, few intermediate handlings.
2/ the time factor: fast transport usually:
- reduces distribution costs
- requires lower insurance cover
- reduces cost of financing tied up in transit
- means earlier use/resale of the goods factors considering mode of transport

unit 7

1/ clause A, B, and C specifies the which risks are covered and

excluded under cargo insurance. A has the widest cover and C has
the most restricted.
2/ example:
- all clause A, B, and C cover risks of fire and explosion.
- only clause A and B cover risks of earthquake, volcanic eruption
or lighting; risk of washing overboard.
- only clause A covers risk of rough handling and risk of
contamination compare clause A, B, C

unit 8
a corporation in which over 50 percent of the capital belongs to a
multinational corporation subsidiary
a system in which foreign subsidiaries have a significant voice in
making crucial decisions. decentralization
a system whereby a parent company retains decision making
power, maintains direct and tight control over subsidiaries and
establishes nearly all policies. centralization

A strategy of adapting products and their marketing strategies in

each national market to suit local preferences.
-> closely monitor buyer preferences in each local market and
respond quickly and effectively as new buyer preference emerges.
-> not able to exploit economies of scale multinational strategy

A strategy of offering the same products using the same

marketing strategy in all national markets.
-> main benefit: cost saving due to product and marketing
standardization.
-> share lessons learned
-> overlook important differences in buyer preference from one
market to another. global strategy
1/ their national market become saturated
2/ some countries set up trade barriers - usually tariffs or quotas -
against a company's products
3/ cheap labour and natural resources abroad, esp in developing
countries
4/ expand sales
5/ diversify sales
6/ gain experiene reasons for going internationally

with large gaps in wealth and technology between countries firms

expand to take advantage of the gaps.
FIRST STAGE: firm develops new product for sophisticated market
- saturates it. this stage requires big invesment.
SECOND STAGE: product developed, home market created - then
export to other similar (high income) markets.
THIRD STAGE: technology standardized, less costly - MNC move
to middle income country for production.
-> technology and nature of the market matters. product cycle theory
unit 10
settling disagreements dispute resolution
something that makes profits for everyone a money spinner
make use of the legal system have recourse to the courts
benefit from being local or on home ground home team advantage
unfair treatment local bias
serious money problem financial crisis
way of making things take a long time delaying tactics
accelerate speed things up
meddle or get involved with interfere
reverse something already decided overturn decisions
institute action take steps
become operational come into force
1/ speed 2/ cost effectiveness 3/ confidentiality 4/ reliability why people choose arbitration

pros: 1/ faster than litigation

2/ cheaper than litigation
3/ less formal than litigation
4/ the arbitrators are usually more sophisticated and
knowledgeable a than juries
CONS:
1/ if you get a bad decision from the arbitrator, there usually is
nothing you can do about if ( no appeals are allowed in the
arbitration)
2/ you may get stuck with a bad arbitrator
3/ you have less chance to investigate your case (through
discovery, which is typically broader in litigation) pros and cons of arbitration
1/ placed ocurred 2/ time 3/ cost 4/ fairness. distinguish arbitration vs litigation
main characteristics of arbitration
london, newyork, paris, geneva, stockholm, singapore, hongkong main centers for international arbitration
east-west trade disputes stockholm
shipping and commodities london
is a form of alternative dispute resolution, is a legal technique for
the resolution of disputes outside the courts, wherein the parties
to a dispute refer it to one or more person (arbitrators) by whose
decision they agree to be bound arbitration
the third party reviewing the case and imposing a decision that is
legally binding for both sides arbitrator
an arbitrator appointed by both parties neutral arbitrator
there are 3 arbitrators, each party appoints one the two parties
appoint the third panel of arbitrator
SETTLE THE DILEMMA
DISPUTE ARISE
ARBITRATE AN AGREEMENT
AGREE TO THE TERMS
DISAGREE ON THE INTERPRETATION
plaintiff/ defendant
collecting, analysing, and reporting data relevant to a specific market
situation (a proposed new product) or use questionnaire to carry out
surveys

the basic human requirements: air, food, water, clothing, shelter,

entertainment, recreation, education
these needs become wants when they are directed to specific objects that
can satisfy the need

wants for specific objects backed by by an ability to pay

4 basic methods of segmenting a market: product related, demographic,
psychographic, geographic dividing market into instinct groups of buyer having

the name, symbol, design that identify a product

~ that cannot be used by other producers
reflects the sum of intangible and tangible costs and benefits to the buyer.
It's primarily a combination of price, service, quality called the consumer
value triad

reflects a person's judgement of the perceived performance of a product in

relationship with the expectations.
awareness -> reference -> insistence

communication channels, distribution channels: distributors, agents,

wholdsalers, retailers, service channels: carry out transactions with
potential buyers
introduce new product into the market
the possibilities to fill the unsatisfied needs in sector where the company
con profitably produce goods and services
wrappers and containers in which the goods are sold

the places where goods are sold the public shops, ....
an idea of a new product, which is tested with target consumers, before an
actual product is developed
attributes or characteristics of a product: price, quality, reliability

someone who contacts ....

market penetration pricing
skimming pricing

current revenue pricing

loss leader pricing
markup/cost plus pricing
a difficult task of reversing negative demand (dental work, hiring...)
new products and services necessary when there is a new product

non-polluting and fuel-efficient car involves developing a product for which there is cle
churces, inner city areas, ageing film stars involves revitalizing falling demand
public transport between rush hours, ski resorts in the summer involes altering times pattern of irregular demand
in the face of competition or changing tastes is a matter of retaining the current (may be full) leve

road and bridges during rush hours is the attempt (usually by the governments rather th

cigarettes, handguns is the attempt to destroy unwholesome demand for

- awareness
- sales: low, making a loss
- few competitiors: skimming pricing -> high for early adopters

- sales: rising rapidly and profits: high

- many producers are ... to the market with similar offerings
- characterized by alliances, takeover, joint venture.
- advertising budgets are large and focus on bulding the brand

- sales growth: slows and then stabilizes.

- price war, competition occur _> reach saturation
- differentiate products and branding is the key to this

- downturn in the market

- old fasshioned and consumer tastes are changing
- intense price cutitng and a lot of products are withdrawn from the marke
1/ the first step the exporter takes is to ask his or her bank to draw a bill of
exchange on the overseas buyer.
2/ the bank forwards the bill of exchange, together with other commercial
documents, to the importer's bank.
3/ at the same time, the exporter dispatches the goods.
4/ the exporter must take care to present correct documents to his or her
bank.
5/ when the buyer accepts the bill, the bank will release the document of
title to the goods.
6/ if the buyer dishonours the bill, the exporter may have to find an
alternative buyer and ship the goods back again.
7/ in some parts of the world, the bank may be slow the remit payment to
the exporter's bank.

khong hoc hai dinh nghia nay

the purchase of shares and long term debt obligations of a foreign entity.
Portfolio investors do not aim to take control of the corporation. they can
liquidate their investment at market value any time

the establishment of plant or distribution network abroad. investors can

acquire all or part of equity of an existing foreing corporation either to
control or share control of production, sales, research and development

rmpk:

resou
pros: no transshipment: provice door to door service, flexibility. ... without
much inconvenience
cons: security problem: theft of vehicles or cargoes, road accidents ; low
capacity of load, return empty to the point of departure.

pros: high speed delivery, cheap insurance

cons: high freight rates, restrictions on weight and size, delays due to bad
weather

pros: low freight rates: 75% of goods in the world, very high capacity of
load cons: heavier packaginglow speed,risky, handling facilities required

pros: rarely affected by weather conditions, quicker and cheaper for

distance over 200 km
cons: transshipment to other modes of transport essential, inflexibile
timetabling
set up subsidiaries, bring out laws
nct groups of buyer having different requirements and buying habits
 a new product

oduct for which there is clearly a talent demand for

ttern of irregular demand

he current (may be full) level of demand

y the governments rather than the private businesses) to reduce overfull demand, temporarily or permanently

unwholesome demand for the product which is considered undesirable

Lý thuyết
FDI purchase of physical assets or a significant amount of ownership of a
company in another country to gain a measure of management control
FPI investment that does not involve obtaining a degree of control in a
company
terms of trade the relative prices of a country's export to import
balance of trade the difference in value between imports and exports of goods over a
particular period
balance of payments a detailed record of all financial and economic transactions between the
residents of two countries. the balance of payments comprises the current
account, the capital account and the financial account. "together these
accounts balance in the sense that the sum of the entries is conceptually
zero." -> balance of payments equilibrium

reasons for governmental
intervention in trade
1/ cultural motives: the cultures of countries are slowly altered by exposure
to the people and products of other countries.
2/ political motives: protect jobs, preserve national security, respond to
unfair trade, gain influence
- protect jobs: avoid unemployment in short and long term
- preserve national security
- respond to unfair trade: (1) protections agaisnt dumping, (2) retalitate
against restrictions imposed by other countries
- gain influence
3/ economic motives:
make imports more expensive than home-produced substitutes ---> to
reduce balance of payment deficit ;
protect strategic and infant industries,
pursue strategic trade policy

protectionism the economic policy of restraining trade between nations through methods
such as tariffs on imported goods, restrictive quotas, and a variety of other
restrictive government regulations desgined to discourage imports, and
prevent foreign take over of local markets and companies

an import quota is a type of protectionist trade restriction that sets a physical limit on the
quantity of a good that can be imported into a country in a given period of
time
a tariff is a tax imposed on goods when they moved across a political boundary
methods of restricting trade (6) 1/ tariffs
2/ quotas: restriction on the amount ( in units or weight) of a good that can
enter or leave a country during a certain period of time
3/ embargoes: complete ban on trade (imports or exports) in one or more
products with a particular country
4/ local content requirements: laws stipulating that a specified amount of a
good or service be supplied by producers in the domestic market
5/ administrative delay: regulatory control or bureaucratic rules designed
to impair the rapid flow of imports into a country
6/ currency controls: restrictions on the convertability of a currency into
other currencies.

autarky the (impossible) situation in which a country is completely self-sufficient and

has no foreign trade
dumping selling goods abroad at or below cost price
barter/ counter trade direct exchanges of goods without the use of money
infant industry a recently developed one that has not yet grown to the point where it
benefits from the economies of scale and can be internationally completive
Câu hỏi (3) liquidity
Compare FDI vs FPI (4) limitation of capital
Compare BOT vs BOP?
Benefits to businesses
engaging in In'l trade? (3)
3 main parts of Int'l trade int'l trade, FDI, FPI
(1) colonialism
Which conditions to accumulate (2) government intervention
Mercantilism? (3) trade surplus: import cheap raw material and export expensive items
what is zero sum game one country becomes richer at the expense of the other country
(2) climate
Conditions to achieve absolute/ (3) division of labour
comparative advantage? (4) (4) economies of scale
4 stages of Int'l product life
cycle?
How many ways to promote In'l
trade? (4)

- make imports more expensive than home-produced substitues=> reduce a

balance of payments deficit
- protection against dumping
- retaliate against restrictions imposed by other countries
Reasons for governmental - protect infant industries until they are large enough to achieve economies
intervention in trade/ impose of scale and to compete internationally
tariffs - set a limit to imports
How many ways to restrict In'l
trade? (6)
How many types of Monopoly?
(4) Natural/ State/ Legal/ illegal
Why do tariffs and quota have tariff: increase cost
different effects on the market? quota: restrict supply
Difference bwt tariffs and Tariff: produce revenue
quota? Quota: know the maximum quantity of goods that will be imported
why majority of economists
believe in the comparative
cost principle - all nations will raise their living standards and real income

- only explains why there is international trade btw North and South
- it does not explain the fact that a majority of exports of advanced insudtrial
countries go to other similar advanced nations with similar resources, wage
limit of comparative theory rate, levels of technology, education, capital
why democratic government - protect what they se as strategic industries- notable agriculture- without
impose tariffs and quotas which the country could be in danger
 - make imports more expensive than home-produced substitues=> reduce a
balance of payments deficit
- protection against dumping
- retaliate against restrictions imposed by other countries
- protect infant industries until they are large enough to achieve economies
of scale and to compete internationally
more reason to impose tariff - set a limit to imports
before 1980, why most - to industrialize to counteract what they rightly saw as an inevitable fall in
developing countries commodity price
opposed free trade - protect infant industries

- decline in trade barrier

(2) the economic opening of countries that have traditionally been a minor
reasons for boom in export player
and import - falling cost of getting goods to market

-fight against unfair competition or protect infant industries…

-protect strategic industries because they are important to the economy,
Why would governments national security
impede free trade? -be less dependence on foreign imports because their economies need
developing
so sánh FDI và FPI
foreign portfolio investment

foreign direct investment

investment incentives

strategic approach

objectives of FDI: why companies

expand their subsidiaries?

types of FDI

cash flows

viable and nonviable projects

financial considerations when making

FDI investment

rate of return
distributor

royalty payments

joint ventures
when foreign direct investors acquire a
company, what do they normally seek
to control?
when a corporation starts to export
for the first time, how will it
organize its sales
what is a drawback of licensing or
authorizing foreign distributors
aim of strategic appoach
what are objectives of FDI derived
from OLI approach

factor to consider when choosing

FDI decisions
financial consideration

What are investors influenced by?

Reasons to put tradehold

What kind of investment foreign

company share production
How many theory relating to FDI?

How can FPI be done?

What prevent /prohibit corporations
from cornering the market?
Which organization protect workers
from being treated badly?
What can help a company dictate the
price?
When are investment incentives
offered?
What allows local company to use
origional manufacture brand name?
Why do Exporter prefer license?
What is the money paid for the right to
use the property of others?
Disadvantages of licensing? (4)
Advantages of joint venture? (3)

Disadvantages of joint venture?

Why certain countries attracts FDI

more than others?
Reasons to intervene FDI

Reasons for Horizontal FDI

Reasons of Platform FDI

the purchase of shares and long term debt obligations from a foreign entity.
portfolio investors do not aim to take control of a corporation. They can
liquidate their investment at market value any time.
the establishment of a plant or distribution network abroad. investors can
acquire part or all of the equity of an existing foreign corporation either to
control or share control over sales, production and research and
development
benefits such as cash grants, tax credits, accelerated depreciation, and low
interest-bearing loans, which are sponsored by national or local authorities to
attract foreign investment
foreign direct investment decisions based on business strategies. investors
seek access to raw materials, markets, product efficiency, and knowhow
resource seeking FDI
marketing seeking FDI
efficiency seeking FDI
strategic asset/ capabilities seeking FDI

1/ horizontal FDI: when a firm duplicates its home country-based activities at

the same value chain stage in a host country through FDI
2/ vertical FDI: takes place when a firm thorough FDI moves upstream or
downstream in different value chains i.e., when firm perform value-adding
activities stage by stage in a vertical fashion in a host country
3/ platform FDI: FDI from a source country into a destination country for the
purpose of exporting to a third country

the total amount of cash that remains in a company after it has paid taxes and
other cash expenses.
a viable project is by which reliable access to outside financing is available
non-viable project is one where the expect ROR/profits is lower than from a
comparable investment in the host country
1/ what is the expected return on an investment
2/ what are the sources of working capital
3/ what are interest rates
4/ what is the cash flow projection

is often measured in terms of profits realized on assets employed

-exclusive distributor: an independent sales agent who is given the sole right,
under contract, to sell a foregin manufacturer's product
- multiple distributor: a sales agent who represents more than one manufacturer
the payments made by a foreign manufacturer to a company that has licensed
the the manufacturer to produce its product
a subsidiary formed by two or more corporations
research and development, production and sales

engage distributors who receive a commission on products sold

the original manufacturer gives up control over the product, hence standing a
chance of jeopardising its reputation
- locate or creat markets for its present and future product
- achieve the highest possible efficiency and obtain the maximum return on
investment
- investment overseas to seek "know-how"
resources seeking,
markets seeking,
efficiency seeking,
strategic assets/ capabilities seeking

- strategic approach
- financial consideration
- local regulation/legislation
- labor law, labor union
- investment incentives
-
- what is the expected return on an investment
- what are the sources of working capital
- what are interest rate
- what is the cash flow projection
rate of return/ profit realized on assets emplyed
If a country does not have tradehold, the foreign company may dominate the
entire market, which means the domestic market will depend on outsiders. This
could threaten national security
Joint venture

(4)
- int'l product life cycle
- market imperfection
- electic theory
- market power

Through int'l investment broker or banking institution the purchase of shares or long term debt obli
Antitrust legislation

Labor Union

Market power (theory)

Incentives differ from country to country and are always highest in depressed
area or in the regions that experienced long periods of unemployment
License

Bc building up a dealer network is complicated and expensive

Insurance premium depends on?

(1) the original manufacturer gives up control over the product

(2) If the licensed product lacks quality, the exporter's reputation will suffer
(3) It may be very difficult to correct a distributor's marketing mistakes if the
exporter eventually decided to handle the distribution
(4) When the contract comes to an end, there will be potential competitors
(1) Share the risk
(2) Share the capital
(3) easier to communicate with local workers
bc in the long run, it is often unsatisfactory relationship because partners find it
increasingly hard to share control
Wholly owned subsidiary/ Affiliate
Explained by eclectic theory

1. host country
- reason to intervene: (3)
(1) improve BoP: the less a country imports, the less dependent it shall be
(2) obtain resources and benefits: access to technology/ management
skills and employment
---> improve human resources
(3) protect local jobs

2. home country
- reason to intervene:
+ outgoing FDI may ultimatey damage a nation's balance of payment by taking
place of its exports
+ investing in other nations sends resources out of the home country
+ jobs resulting from outgoing investment may replace jobs at home
+ Home market is becoming saturated => look for another market to consume
their products
+ Look for destination of cheap natural resources and labor => reduce per unit
cost
+ Technology becomes obsolete => transfer it to less developed countries (due
to technology gap between nations)

Exploit cheap natural resources and labor in host countries=> produce cost-
effective products to export to another country
rchase of shares or long term debt obligation of a foreign companies
what is the foreign exchange
market

gold standard

functions of central bank

fixed exchange rate

floating exchange rate

devaluation (fixed exchange rate)

revaluation
appreciation (floating exchange
rate)
depreciation
bid vs offer

premium vs discount
long, short

way of making money in foreign

exchange market
central bank

hedging

speculation

arbitrage

Name 3 activities on foreign

exchange market?
Risks for participants in the
market?
Why without foreign exchange
trading, international trade cannot
exist?

4 functions of money
what did the GS system
determine?
Why managed floating exchange
rate is the most popular?
What are the reason for buying
and selling foreign currency
How do central banks intervene in
the foreign exchange markets?
briefly describe the importance of
gold standard
why do exchange rate fluctuate?

Why opportunities to realize big

profit do not exist in exchange
rate disparity arbitrage?

Interest rate arbitrage

The foreign exchange market is the mechanism through which foreign currencies are traded. it is not
an actual marketplace but a system of telephone of telex communications between banks,
customers, and middlemen (foreign exchange brokers, acting for a client vis-à-vis the bank).
a monetary system used in the 19th and early 20 centuries whereby the value of currencies could,
on request of the owner (holder), be converted in to gold at a country's central bank.
As all currencies had a gold value, they also had a certain value in relation to each other.
This was the beginning of a foreign exchange system

1/ implementing monetary policy

2/ controlling the nation's entire money supply
3/ the government's banker and the banker's bank (the lender of last resort)
4/ managing the country's foreign exchange and gold reserves and the government's stock register
5/ regulating and supervising the banking industry
6/ setting the official interest rate - used to manage both inflation and the country's exchange rate -
and ensureing that this rate takes effect via a variety of mechanisms

a system whereby central banks are required by international agreement to maintain their currency
at a relatively fixed value. this is achieve by buying the currency when it reaches its low point and by
selling when it reaches its high point
a system whereby currencies have no specific par value; value is normally determined by supply
and demand. central banks are not required to intervene, but they often do to avoid wild fluctuations
is the deliberate downward adjustment of the value of a country's money relative to another
currency, making its currency worth less in terms of other currency
is the deliberate rise of the exchange rate

When the value of the currency goes up as compared to other currency

When the value of currency falls as compared to other currency
A bid is the price dealers will pay to acquire a currency
An offer is the price dealers will sell a currency for
additional amount/ lesser amount
1/ LONG: if traders buy currency forward without selling forward at the same time
2/ SHORT: if they sell currency forward without buying forward at the same time

a country's chief bank, which is government owned. it regulates commerical banks and holds gold and
foreign currency reserves. it actively intervenes by buying and selling its own currency in the foreign
exchange market so that the currency will keep a certain value
to offset a buy contract with a sell contract and vice versa, matching the amounts and the time span
exactly
when dealers do not offset a buy contract with a sell contract. this means that their positions is left
open
the transfer of funds from one currency to another to benefit from currency differentials or disparities in
interest rates. In arbitraging, at least two market are enter.

(1) Speculating
(2) abitraging
(3) hedging
(1) Leverage risks
(2) Transaction risks
(3) interest risks
(4) Country risks (unstable political, chaos,... -> impacts on interest rate)
Market forces such as companies, government, investors needs to buy goods from other country,
therefore, they need foreign currency to make transactions. Without a mean of exchange, no trading
activities could happen.

(1) the unit of account

(2) the store of value
(3) the medium of exchange
(4) the standard of payment deffered

value of all currencies based on gold

bc central bank can intervene by buy and sell foreign exchange/ gold
to make transactioins and to make profit, secure risk

by buying and selling its own currency in the foreign exchange market so that the currency will keep a
certain value
the beginning of foreign exchange system

because communication today make the price, and therefore profit opportunities available to everyone
conditions to realize
- in the absence of foreign exchange regulations, such as capital transfer limitation, which are
sometimes imposed by governments
the currency becomes worth less in term of gold

increase the par value of the currency in terms of gold

roles of bank in 1/ active role:
international trade when the banks get involved in the payment process
supporting both the exporter and the importer to complete their
obligations
so that the contract is carried out as agreed
2/ passive role:
when the banks only do things as requested. for example, just
tranferring money to the account of the seller/ exporter.

risks involved in 1/ risks of not being paid

trading internationally 2/ risks of not receiving the goods
3/ risk of receiving the goods which are different from
those ordered or of lower quality or in a damaged
condition
4/ risk of force majeure

issuing L/C 1/ the applicant (the buyer) completes a contract with

the seller
2/ the buyer fills in a L/C application form and sends it
to his or her bank for approval
3/ the issuing bank (the buyer's bank) approves the
application and sends the L/C details to the seller's
bank ( the advising bank)
4/ the advising bank authenticates the L/C and sends
the beneficiary (the seller) the details. The seller
examines the details of the L/C to make sure that he
or she can meet all the conditions. If necessary, he or
she contacts the buyer and asks for amendments to
be made
presenting L/C 5/ if the exporter is satisfied with the L/C details he will
ship the goods
6/ the seller presents the documents to his or her
advising bank. the advising bank then examines these
documents against the details of the LC and the In'l
Chamber of Commerce rules
7/ If the document are in order, the advising bank send
them to issuing bank for payment or acceptance. If the
details are not correct, the advising bank tells the
seller and waits for corrected documents or further
instructions
8/ The issuing bank examines the documents from the
advising bank. If they are in order, the bank releases
the documents to the buyer, pays the money promised
or agrees to pay it in the future and advises the buyer
about the payment
If the details are not correct, the issuing bank contacts
the buyer for authorization to pay or accept the
documents). The Buyer collects the goods.
9/ The issuing bank advises the advising/confirming
bank that the payment has been made
10/ the advising/ confirming bank pays the seller and
notifies him/her that payment has been made

6 steps in isssuing a bill sgk 53

of exchange
invoice list of goods sold as request for payment
clean collection payment by bill of exchange to which document are not
attached
documentary collection payment by bill of exchange to which commercial documents
(and sometimes a document of title) are attached

bill of exchange signed document that orders a person or organization to pay a

fixed sum of money on demand or on a specified date
bill of lading document that shows details of goods being transported, it
entitles the receiver to collect the goods on arrival

document of title document allowing someone to claim ownership of goods

issuing bank bank that issues a letter of credit ( the importer's bank)
collecting bank bank that receives payment of bills, etc for their customer's
account (the exporter's bank)
confirming bank bank that confirms they will pay the exporter on evidence of
shipment of goods
letter of credit method of financing overseas trade where payment is made by a
bank in return for delivery of commercial documents, provided
that the terms and conditions of the contract are met.

Open account export/ import financing in which the exporter ship merchandise
and later bills the importer for its value
advance payment export/ import financing in which the importer pay the exporter for
the merchandise before it is shipped
When are the 4 payment methods made?

open account E&I know one another

established long term, trust worthy business relationship

bill for collection E&I have ongoing business relationship

Documentary letter of New partners, unfamiliar with one another

credit The importer's creditworthiness is questionable
The exporter need LC to obtain financing
The market regulations require it

Advance Payment There is more demand than supply

Unfamiliar with one another

Why the bank won't lose 1/ (when the importer ask the bank to open an LC), the Bank
all his money to the make the I to make a deposit equal 100% of the value of the
Importer in LC payment? goods
Why would the Exporter to make sure that they will get the payment.
ask for a confirmed letter if the importer goes out of business, the confirming bank will pay
of credit
How does a documentary Documentary collection
collection differ from The Bank
letter of credit as mean of 1/ Passive role in payment process
financing int'l trade? 2/ Doing what is required and receive collection fee in return
3/ Act as an intermediary, not accepting the financial risk, not
responsible for paying the E if I defaults

How many types of LC? 11 types

1/ revocable
2/ irrevocable
3/ red clause
4/ green clause
5/ deffered payment
6/ transferable
7/ revolving
8/ back to back
9/ standby
10/ advised
11/ confirmed
reasons for non-payment
1/ discrepancies
2/ importer is unwilling to make payment
3/ importer's bankruptcy

issuing an LC:
1/ exporter and buyer sign a contract;
2/ the buyer asks a local bank to open a letter of
credit;
3/ the issuing bank asks a bank in the exporter's
country (advising bank) to advise the exporter that the
letter of credit has been opened;
4/ the advising bank advises the exporter that the
letter of credit has been opened.
presenting an LC:
1/ seller ship the goods;
2/ and gets shipping documents;
3/ the exporter presents the shipping
documents to the advising bank;
4/ the advising bank checks the
documentts and (if appropriate) pays the
exporter;
5/ the advising bank notifies the issuing
bank that the credit has been presented
and forwards the shipping documents;
6/ the issuing bank transfer funds to the
advising bank

a negotiable instrument presented for collection with

no document attached
export/ import financing in which a bank acts as an
a collection item with title document that accompany intermediary without accepting financial risk
the draft. the documents are released to the drawee,
upon payment of the draft
document ordering the importer pays an exporter a
specified sum of money at a specified time
contract between the exporter and the shipper that
specifies merchandise destination and shipping
costs
export/ import financing in which the importer's bank
issues a document stating that the bank will pay the
exporter when the exporter fulfills the terms of the
document

Advantages Disadvantages

Saving time, as the E n I deal directly to one another Hard to keep a long term rela/ complete trust
Not much involvement of the bank between the Buyer and the Seller
Only use for small quantity contract

Most common payment method/ Being used Time consuming

worldwide High banking fee
- Safer for the E ...
- Ensure the I ....

- Safest for the E ...

- Still safe for the I ... in part in advance
- Time saving

2/ the Bank keep the goods and sell them at highest

possible value to make up for the loss
In documentary collection, banks act as an agent.
They don’t provide financing or substitute its credit for
that of the buyer as in a LC. All the banks have to do
is to follow the instructions of the buyer and the seller
and get the collection fees in return. They are not
responsible for paying the exporter in case the
importer fails to do so.
What are the Risks for E in 4 payments method? What is the Role of the bank in 4
payment method?
The E gives up his control over the goods, trusting that the
payment shall be made by I in accordance with the
contract
---> (1) non-payment, (2) late payment, (3) it takes long
time to processs payment in some countries

Not much involvement of the bank

1/ Documentary collection safer than > Clean collection, Passive role of the bank, the bank only do
because what is required and receive collection fee
Clean collection: the I can use Document of title to receive
the goods only by promising to pay at a fixed date in the
future
Documentary collection: the I has to pay for the draft in
return of the document of title to receive the goods
2/ If the Importer fails to accept the bill of exchange or
dishounors the accepted bills upon maturity, the E has to
find an alternative buyer
send the goods back to the home country
abandon the consignment,
all of which are very costly
3/ (1) non-payment, (2) late payment, (3) it takes long time
to processs payment in some countries

Very few risks Greatly support of the bank in the

1/ However, failure either to present correct documents or payment process
fully comply with the terms of the credit will result in the
exporter's losing the protection of the credit
2/ High banking fee

No risk associated with non-payment - No roles, there is not much bank’s

involvement( no transferring money)
- The exporter and importer have
direct"transaction
market research

needs

want

demand

market segmentation

brand

trademark
value

satisfaction

brand loyalty stages

marketing channels

to launch a product
market opportunities

packaging
points of sale

product concept

product feature
sales representative

chiến lược giá thâm nhâp thị trường

chiên lược định giá hớt váng
chiến lược định giá nhằm tối đa doanh thu
trong ngắn hạn
chính sách bán hạ giá trước
chính sách định giá dựa trên tổng chi phí
Types of marketing
conversional marketing

stimulational marketing

developmental marketing

remarketing

synchromarketing

maintenance marketing

demarketing

countermarketing

intro

growth

maturity
decline

Selling concept vs Marketing concept

What market is bigger, the producer market or

consumer market? Why?

at which stage in the product life cycle would

manufacturers differentiate their products?
why?

4 ways to differentiate the product

what is the best form of advertising? why?

what should companies do to lengthen the
product's lifecycle?

Difference between direct cost and indirect cost

What does marketing involve? (4)

Marketing mix

Middleman (Đại lý, trung gian)/ intermediary

collecting, analysing and reporting data relevant to a specific
market situation (such as a proposed new product) or use a
questionnaire to carry out survey

the basic human requirements. people need air, food, water, clothing and
shelter to survive. people also have strong needs for recreation, education,
and entertainment

needs become wants when they are directed to specific objects that
might satisfy the need
demands are wants for specific products backed by an ability to
pay
dividing a market into instinct group of buyers who have different
requirements or buying habits
a name, symbol, design (or some combination) that identify a
product
a name or symbol that cannot be used by another producer
reflects the sum of the perceived tangible and intangible benefits and
costs to customers. It's primarily a combination of quality, service and price
(qsp) called the customer value triad

reflects a person's judgements of a product's perceived performance

in relationship to expectations. if the performance falls short of
expectations, the customer is dissatisfied and disappointed. If it matches
expectations, the customer is satisfied. If it exceeds them, the customer is
delighted
brand awareness -> brand reference -> brand insistence
1/ communication channels: deliver and receive messages from target
buyers: newspapers, magazines, radio, television
2/ distribution channels: display, sell, deliver the physical products or
service to the buyer or user: distributors, wholesalers, retailers, agents
3/ service channels: carry out transactions with potential buyers:
warehouses, transportation companies, banks, insurance companies

introduce a new product into the market

possibilities of filling unsatisfied needs in sectors in which a company can
profitably produce goods or services
wrappers and containers in which products are sold
places where goods are sold to the public shops, stores, kiosks,
market, stalls
an idea for a new product, which is tested with target customers before the
actual product is developed
attributes or characteristics of a product: quality, price, reliability
someone who contacts existing or potential customers and tries
to persuade them to buy goods or services
market penetration pricing
market skimming pricing
current revenue pricing

loss leader pricing

mark-up/cost-plus pricing

is the difficult task of reversing negative demand

when there's no demand

involves developing a product or service for which there is clearly a talent

demand

involves revitalizing falling demand

involves altering the times pattern of irregular demand

is a matter of retaining a current (may be full) level of demand

is the attempt (by governments rather than private businesses) to reduce

overfull demand, permanently or temporarily

is the attempt to destroy unwholesome demand for products that are

considered undesirable

- the product is promoted to create awareness.

- it has low sales and will still be making a loss.
- if the product has few competitors, a skimming price strategy will be used
(a high price for early adopters which is then gradually lowered)

- sales are rising rapidly and profits are high

- competitors are attracted to the market with similar offerings
- the market is characterized by alliances, joint ventures and takeovers.
- advertising budgets are large and focus on building the brand

- sales growth slows and then stabilizes.

- producers attempt to differentiate products and brands are key to this.
-price wars and competition occur as the market reaches saturation.
-there is a downturn in the market.
- the product is starting to look old-fashioned or consumer tastes have
changed.
- there is intense price cutting and many products are withdrawn from the
market

Selling concept
an approach to emphasize on persuading customers to buy the product
that you've already had rather than producing a new one that customers may
want

producer market is bigger/ larger than consumer market.

because it contains
all the raw materials (1), manufactured parts (2) and
components (3) that go into consumer goods,
plus (4) capital equipment such as buildings and machines,
(5) supplies such as energy and pens and paper,
and services (6) ranging from cleaning to management consulting

maturity because at this phase, sales growth slows and then

stablilizes;
other competitors making similar offerings
price war and competition occur
therefore, in order to capture a big share of market, each
producer needs to differentiate its products

1/ attractive packaging
2/ competitive pricing
3/ custormer incentive offer: voucher, buy 1 get 1
4/ interest advertising

word of mouth: it is cheap, effective, trust-worthy

- Find new customer by innovating product
- Find new market to continue selling the goods
- Change packaging

Direct cost
Cost for production~ variable
Depends on the number of products produced
Such as wages for blue collar workers, raw materials
1/ Find out what customers want: market research(product
policy, prices at which customers willing to pay)
2/ Help to produce the right product at the right price
3/ Persuading customers to buy the products by means of
advertising and packaging
4/ Get the products to the customer in an effective and
convenient distribution

1/ Product (variation, differentation, innovation, elimination)

2/ Price (cost recovery, skimming, penetration)
3/ Place (Distribution, direct sales, indirect sale, e-commerce)
4/ Promotion (individual promotion, mass communication, brand
management, corporate identity)

Collect products from different producers, divide them into amount

needed by customers, and transport them to the end users. 
Functions of middle man?
1/ Collect products from manufacturers
2/ Divide the products by the amount
needed by customers
3/ Transport/ Delivery to end users
Find out why people dislike the product
Redesign it
Lower prices
Use more positive promotion

Connect the benefits of the product with

people's needs and interests
Measure the size of potential market
Develop the goods/ service that will satisfy
it
Find new target market
Change product features
Develop more effective communication

Alter the pattern of demand through

flexible pricing, promotion and other
incentives
Keep up/ improve quality
Continually measure consumer satisfaction
Raise prices
Reduce promotion and level of services
Increase prices
Reduce availability
Make ppl scared

Roles of advertising in 4 stages of PLC

Stage 1: create awareness
Stage 2: build the brand
Stage 3: differentiate the product
Stage 4: no need for advertising
Marketing concept
a theory holding that a company should
concentrate on finding out what kind of
products that customers want and then produce
them rather than produce something and then
try to persuade the customers to buy it.

Indirect cost
Remain the same ~fixed cost~overhead
Not depend on the number of products
produced
Such as rental, electricity, salary for white
collar workers
sea transport

air transport

road transport

rail transport

factors considering mode of transport

Why do some buyers prefer FOB terms?

why is it necessary to take transport costs
into consideration?
what is the difference between bulk and
general cargoes?
what do we call man-made waterway?
what are tankers used for?
 why do fragile goods need special packing?
why is weight important for air transport?
which mode of transport offers door to door
delivery?
 what is the most popular means of transport
between countries?

what are factors considered when choosing

the modes of transport?
 Pros
pros:
- low freight rates: cheapest mode of transport: 75% of all goods in the world are carried by
sea
- very high capacity of load: suitable for high volumne and low value goods
- worldwide transport operation
- Continuous operations on 24 hour basis

pros:
- high speed delivery: fresh flowers, fashion goods, urgently required spare parts or
medical supplier
- cheap insurance: lower premium because the goods are at lesser risks of loss or damage,
for a shorter period
- worldwide transport operation

pros:
- Low freight rates
- Continuous operations on 24 hour basis
- no transshipment, providing door to door service: delicate goods: chinaware, glassware
- flexibility in regular and special deliveries: routes and timings can be adjusted to special
requirements without much inconvenience.

pros:
- rarely affected by weather conditions
- quicker and cheaper for distances over 200 km
1/ the nature of the goods:
- dimensions: bulk/shape/limits for air, road, rail
-weight: lifting gear available, limits for air
-value: higher valued can be charge ad valorem
- fragility: special packaging, special stowage
- perishability: refrigerated ships/containers, speed
- pilferability: secure packaging, few intermediate handlings.
2/ the time factor: fast transport usually:
- reduces distribution costs
- requires lower insurance cover
- reduces cost of financing tied up in transit
- means earlier use/resale of the goods

He has the option of handling the transport himself or of instructing an agent to arrange
things on his behalf
Because transport costs represent a large proportion of the total costs of imported goods.
Bulk cargoes are loose, unpackaged and require special carriers by sea, road and rail, but
general cargoes can be packed variously. 
Canal
they are used for transporting or storing liquids or gases in bulk.

Because of very high freight rates. 

road transportation

Sea transportation
Cost of Service

Speed of Transport
Flexibility
Regularity of Service
Safety
Nature of Commodity
Other Considerations
 Cons
cons:
-heavier packaging
- low speed
- risky: because of high time involvement
- suitable handling facilities required
---> Transshipment to other forms of transport essential
- Inflexible timetabling
- Delays due to bad weather
- High capacity means disproportionate increase in transit time
- Low speech over long distance
- Less frequent services

cons:
- high freight rates
- restrictions on weight and size: not suitable for bulky goods
- delays to due bad weather
- transhipment to other forms of transport is essential
- Operating and maintenance costs are high
- Inflexible timetabling

cons: Ro-ro vessels

- security problem: theft of vehicles or cargo, road accidents. Roll on, roll off
- low capacity of load, restriction on weight and size
- delays due to bad weather
- often return empty to the point of departure

cons: Ra-ra ferries LASH Ship

- transshipment to other forms of transport essential rail on, rail off lighter abroad
- inflexible timetabling ship
1/ nature of goods:(FDVPPW)
- fragility
- dimension
- value
- perishablitity
- pilferability
- weight
2/ the time
- reduce distribution cost
- reduce cost of finance tied up in transit
- require less insurance cover
- measn earlier use/ resale of goods
3/ freight rates:
- sea freight rates
- air freight rates
4/ flexibility
5/ regularity of services
compare clause A, B, C

Risks in marine cargo insurance

FM, HOSTF

Marine insurance, how many types of marine insurance?

? Ways to reduce damage of risks 5

Total loss, partial loss
General average vs Partial average
Parties involved (4) 4C

Insurance premium, depends on (5)

what agreement is made in an insurance contract?

The person who go between the one who want the insurance and the one who
underwrite the insurance?

what is the basic purpose of insurance?

what risk is faced by everyone happens everywhere at any time?
what is the difference between insurance and assurance?
what are the principles of insurance?

what is the agreed amount of money to give insurance cover?

what means to compensate for the loss?
 who makes transactions between the traders and the underwriters?
What is the amount of money received by the insurance broker?

what do insurance contracts for transport by land and by air follow?

Free of Particular Average (FPA) is an insurance contract clause that eliminates
an insurer’s liability for partial losses. FPA clauses are most commonly found in
marine insurance policies.
 what is the most complete cover of insurance?
Does the buyer or seller insure the cargoes?
what is a loss by one shipper, but it is shared by all the shippers with
cargoes on the same carrying vessel?
what is a flexible type of insurance for 12 months and at agreed rates?
what is a partial loss of a consignment, which may not affect other
consignments
what clause hasonthethewidest
same cover?
carryingAnd
vessel?
what has the most restricted
cover?
1/ clause A, B, and C specifies the which risks are covered and
excluded under cargo insurance. A has the widest cover and C has
the most restricted.
2/ example:
- all clause A, B, and C cover risks of fire and explosion.
- only clause A and B cover risks of earthquake, volcanic eruption
or lighting; risk of washing overboard.
- only clause A covers risk of rough handling and risk of
contamination

1/ Force majeur
2/ operational
3/ hazards
4/ Strategic
5/ Risks faced by Buyer and Seller in transit
6/ Financial risk

1/ Hull insurance: vessel and fixtures, loss n damage at sea

2/ Cargo insurance: cargo in transit
3/ Freight insurance: shipowner, failure to deliver
4/ Shipowner's liability insurance: possible liabilities

1/ take out on insurance policy

2/ diversification
3/ retained profit
4/ risk management
5/ preparations for risks

charter carrrier consignor consignee

financial cost of obtaining insurance cover

nature of the cargo
scope of cover
packing
mode of conveyance
distance and past claim experience

In an insurance agreement, one party, usually the insurance

company, undertakes to indemnify the other party if loss or damage
is suffered due to a specified event. In return, the insured pays an
agreed amount of money (premium). The terms of agreement define
what risks have been insured against
Broker_brokerage fee_insurance arrangements_paid by insurance
company

The primary function of insurance is to provide protection to insured in

case of any uncertain event.
Moreover it is used to restore a person who has suffered a loss to the
position he was in immediately before the loss
force majeure
It is based on “Utmost good faith”
-I.e: both the insured and the insurer’s must disclosed:
Everything which is in their knowledge and
Can affect the contract of insurance
It is a contract of indemnity
Insurable interest
Proximate cause

Premium
Indemnify
Brokers
Brokerage fee
Marine insurance. Because Insurance for goods by sea has been
largely standardized.

All risks insurance

It depends on the terms of trade

General average
Open cover

Particular average
A-C
subsidiary

decentralization

centralization

multinational strategy

global strategy

reasons for going internationally

product cycle theory

How big are MNEs?

MNEs are also called …

one thing that can help multinational
companies apply global strategy
successfully?
 why do poor and developing countries
sometimes criticize multinational
companies?

what benefits do multinational companies

bring to the poorer and developing
countries?
why do car companies need to have
global strategy?
which way of entering a foreign market is
through independent middlemen such as
agents, dealers?
What is the simplest way for a
manufacturer to produce his goods in the
foreign market?
which way of entering a foreign market
helps foreign companies take full control
of investment and marketing?

Ways to go international

Licensing

Franchising

Management Contract

Turnkey projects

Wholly-owned subsidiaries

Joint venture
 Strategic alliance

1) Create future competitor

2) Reduce risk
3) Strengthen power
4) Access to others' distribution network
5) Obtain knowledge
a corporation in which over 50 percent of the capital belongs to a multinational
corporation
a system in which foreign subsidiaries have a significant voice in making crucial
decisions.
a system whereby a parent company retains decision making power, maintains
direct and tight control over subsidiaries and establishes nearly all policies.
A strategy of adapting products and their marketing strategies in each national
market to suit local preferences.
-> closely monitor buyer preferences in each local market and respond quickly and
effectively as new buyer preference emerges.
-> not able to exploit economies of scale

A strategy of offering the same products using the same marketing strategy in
all national markets.
-> main benefit: cost saving due to product and marketing standardization.
-> share lessons learned
-> overlook important differences in buyer preference from one market to another.

1/ their national market become saturated

2/ some countries set up trade barriers - usually tariffs or quotas - against a
company's products
3/ cheap labour and natural resources abroad, esp in developing countries
4/ expand sales
5/ diversify sales
6/ gain experiene

with large gaps in wealth and technology between countries firms expand to take
advantage of the gaps.
FIRST STAGE: firm develops new product for sophisticated market - saturates it.
this stage requires big invesment.
SECOND STAGE: product developed, home market created - then export to other
similar (high income) markets.
THIRD STAGE: technology standardized, less costly - MNC move to middle
income country for production.
-> technology and nature of the market matters.

Multinational companies are very big. Their turnover is huge, being greater in
some cases than the national income of countries such as Switzerland or the
Netherlands.
TNCs: Transnational Corporation
economies of scale

 Because multinational companies have mostly used capital provided by

local banks and investors./ technology applied to production is unsuitable
for developing countries./ it’s too expensive and complicated, and
especially makes workers unemployed or employing fewer and fewer
workers.
they provide capital/ they introduce their scientific and technical methods to
production increasing the productivity of their workers. / they produce a
variety of goods./ they pay good wages (salaries) in order to raise living
standards. 
Because of rising costs and the worldwide spread of shared tastes in car styling. 

 Indirect exporting

Licensing

Wholly-owned subsidiaries

Advantages
-Licensors can use licensing to finance their international expansion.
-Licensing can be a less risky method of international expansion for a licensor.
Licensing helps shield the licensor from the increased risk of operating its own
local production facilities in unstable or hard-to-assess markets.
-Licensing can help reduce the likelihood that a licensor’s product will appear
on the black market.
-Licensees can also benefit from licensing by using it as a method of upgrading
existing production technologies.

-Franchisers can use franchising as a low-cost, low-risk mode of entry into new
markets. It allows them to maintain consistency by replicating the process for
standardized products.
-It allows for rapid geographic expansion. Firms often gain a competitive
advantage by being first in seizing a market opportunities.
-Franchisers can profit from the cultural knowledge and know-how of local
managers.

-A firm can exploit an international business opportunities without having to

place a great deal of its own physical assets at risk.
-Governments can award companies management contracts to operate and
upgrade public utilities, particularly when a nation is short of investment
financing.
-Governments can use management contracts to develop the skills of local
workers and managers

-Turnkey projects permit firms to specialize in their core competencies and to

exploit opportunities that they could not undertake alone.
-Turnkey projects allow governments to obtain designs for infrastructure
projects from the world.

Managers have complete control over day-to-day operations in the target

market and over access to valuable technology, processes, and other intangible
properties within the subsidiary.
-Companies rely on joint ventures to reduce risks.
-Companies can joint use venture to strengthen power and penetrate
international markets that are otherwise off-limit.
-Companies can gain access to another company’s distribution network.
-Companies form international joint venture for defensive reasons, avoiding the
government interference
 -Companies share the cost of an international investment projects.
-Companies use strategic alliances to tap into competitors’ specific strength.
-Some companies can gain access to a partner’s channels of distribution in a
target market. Other companies can reduce exposure to the same kind of risks
from which joint ventures provide protection
s in car styling. 

Disadvantages
-Licensing can restrict a licensor’s future activities.
-Licensing might reduce the global consistency of the quality and marketing
of a licensor’s product in different national markets.
-Licensing might amount to a company ‘lending’ strategically important
property to its future competitors. This is an especially dangerous situation
when a company licenses assets on which its competitive advantage is based

-Franchisers may find it cumbersome to manage a large numbers of

franchisees in a variety of national markets.
-Franchisees can experience a loss of organizational flexibility in franchising
agreements.

- Management Contracts require that company managers relocate for given

periods of time. In nations undergoing political or social turmoil, lives can be
placed in significant danger.
-Expertise suppliers may end up nurturing a formidable new competitor in the
local market.

-A company may be awarded a project for political reasons rather than for
technological know-how.
-They can create future competitors.

-They can be expensive undertakings.

-Risk exposure is high because a wholly owned subsidiary requires substantial
company resources.
-Conflict is most common when management is shared equally.
-Loss of control over a joint venture’s operations can also result when the local
government is a partner.
 -They can create a future local or even global competitor.
-Conflict can arise and eventually undermine cooperation
buyout

diversify
market share
economies of scale
advising fee
customers

optimum
synergy

corporate
conglomerate

asset stripping
management buyout of MBO
what are the key reasons for the failure of M&A

reasons for M&A

reasons for failure

problems with M&A

horizontal merger
vertical merger

diversification

a raid (gom cổ phiếu từ các cổ đông lớn hoặc

mua trên thị trường chứng khoán)
a takeover bid (mua cổ phiếu từ các cổ đông
với giá cố định)
terms can be used interchangeably
differences between Mergers and Acquisitions

are there often mergers of equals?

how many types of acquisitions are there? What
are they?
how many types of mergers are there? What are
they?
what type of conglomerate mergers involves firms
with nothing in common?
how many types of takeover bids are there?

what are ways to be against a hostile takeover bid?

Types of vertical merger

What is buying another company’s shares on the

stock exchange hoping to persuade other
shareholders to sell to take control of the company?

what do raiders do to buy conglomerates?

what is this when Telecom Italia look for a rescue it
from a hostile takeover by rival Olivetti?
what is this when Hotel Chains buy Furniture
manufacturer to supply its new hotels.
what is this when Coca Cola acquired Colombia
Pictures for 700m USD?
what integration helps cut out wholesalers to sell
directly to end users?
what means combined production or productivity
that is greater the sum of separate part?
The CEO is fighting a ..... ..... by encouraging
shareholders not to sell.
Nokia ..... into telecommunications at the right
moment.
the purchsse of a company's shares in which the acquiring party gains controlling
interest of the targeted firm
adding new and different products or services
a company's sales expressed as a percentage of the total sales in a market
reductions in costs resulting from increased production
money paid to investment banks for work done
all the individuals or organizations that regularly or occasionally purchase goods
or services from a company
best, perfect or idea (adj)
combined production or productivity that is greater than the sum of the separated
parts
people or companies that try to buy and sell other companies to make a profit
large corporation or groups of companies offering a number of different products
and or services
buying a company in order to sell its most valuable assets at a profit
when a company's own managers buy its stocks
1/ differences in culture: cultural barriers, clash of cultures (culture clash). If one
organization values winning at all costs and the other organization values
collaboration and consensus, it simply won’t work
2/ over-optimism: managers are just too optimistic about prospects for the
enlarged group; they have unrealistic expectations about the future success of
the new company.
3/ the way the two companies are combined.

1/ increase market power

5/ avoid excessive competition
2/ overcome entry barriers ->
3/ increased diversification
4/ lower risk of new products

1/ cultural clashes
2/ the way firms merge together
3/ over-optimistic/ unrealistic expectations of future success of new
companies

1/ integration difficulties
2/ large or extraordinary debt
3/ inability to achieve synergy
4/ too much diversification
5/ too large
6/ Inadequate evaluation of target
7/ Managers overly focused on acquisitions

2 companies making the same product combined. aims:

- reduce competition and increase market share
- to gain access to new markets
- acquire additional plants and equipment
- achieve synergy and economies of scale
a company either acquires or merges with another company in an immediately-
related stage of production and distribution. Aims:
- guarantee the supply and cut the cost of raw materials and components
- to be closer to customers, cutting out the wholesaler for example, and dealing
directly with the retail trade

a company acquires another company in an entirely different sphere

- to move into a sector which promises greater growth of profits
buying as many stocks of a company as possible on stock's market

public offer to a company's stockholders to buy their shares at a price during a

limited time
a takeover/ an acquisition
A merger occurs when two separate entities combine forces to create a new, joint
organization. Meanwhile, an acquisition refers to the takeover of one entity by
another
No. Usually, a merger of equals will increase shareholder value
2 types, they are: A Raid and a takeover bid

3. Vertical/ Horizontal/ Diversification

Pure conglomerate

2.
A friendly bid: If a company’s board of directors agrees to a takeover.
A hostile bid: If the company does not want to be taken over.
Stock repurchase.
Poison pill
Staggered board.
Shark repellants.
Golden parachutes.
Greenmail.
Standstill agreement.
Leveraged recapitalization.

forward integration/ backward integration

Backward integration involves buying part of the supply chain that occurs prior to
the company's manufacturing process, while forward integration involves buying
part of the process that occurs after the company's manufacturing process.

A raid

Raiders restructure them, split them up, and resell the pieces at a profit.
A white knight

A backward integration

Diversification
vertical backward integration

Synergy merge

hostile takeover

diversified
dispute resolution
a money spinner
have recourse to the courts
home team advantage
local bias
financial crisis
delaying tactics
speed things up
interfere
overturn decisions
take steps
come into force
award

why people choose arbitration

pros and cons of arbitration

distinguish arbitration vs litigation

main characteristics of arbitration
main centers for international arbitration
stockholm
london
what is name recognition for arbitration like?

arbitration

arbitrator
neutral arbitrator
panel of arbitrator
How many ways of dealing with disputes are there? What
are they?
What is the main difference between arbitration and
litigation?
Why is it the best way not to go court?
what are the advantages of arbitration over court
adjudication?
what are 3 main business areas which have traditionally
been resolved by arbitration?

how is a forum made up for a neutral arbitration?

what is the role of a neutral forum?

how many types of arbitration are there? What are they?

settling disagreements
something that makes profits for everyone
make use of the legal system
benefit from being local or on home ground
unfair treatment
serious money problem
way of making things take a long time
accelerate
meddle or get involved with
reverse something already decided
institute action
become operational
the binding decision (phan quyet)

1/ speed
2/ cost effectiveness
3/ confidentiality
4/ reliability

pros: 1/ faster than litigation

2/ cheaper than litigation
3/ less formal than litigation
4/ the arbitrators are usually more sophisticated and knowledgeable a than juries
CONS:
1/ if you get a bad decision from the arbitrator, there usually is nothing you can do about if
( no appeals are allowed in the arbitration)
2/ you may get stuck with a bad arbitrator
3/ you have less chance to investigate your case (through discovery, which is typically
broader in litigation)

1/ placed ocurred
2/ time
3/ cost private - court
4/ fairness.

london, newyork, paris, geneva, stockholm, singapore, hongkong

east-west trade disputes
shipping and commodities
Name recognition for arbitration is brand awareness for consumer goods.
is a form of alternative dispute resolution, is a legal technique for the resolution of disputes
outside the courts, wherein the parties to a dispute refer it to one or more person
(arbitrators) by whose decision they agree to be bound
the third party reviewing the case and imposing a decision that is legally binding for both
sides
an arbitrator appointed by both parties
there are 3 arbitrators, each party appoints one the two parties appoint the third
Three.
- Mediation
- Arbitration
- Litigation
arbitration takes place in private, litigation takes places in public.

The advantages: speed; cost effectiveness; confidentiality; reliability of arbitrators; their

decisions. 
Shipping
Commodities, and
Construction

A neutral forum with a panel of three arbitrators:

One chosen by one party
One chosen by the other party
One chosen either by the parties or the two party-appointed arbitrators.
A neutral forum has a balanced composition to ensure fairness and transparency to both
parties
2 types. Institutional arbitration and Ad hoc arbitration