Agenda

Personal Introductions
Course description
Schedule
Group formation
Break time
Lecture 1
Course Description
Students should have a good understanding of English and an interest in
global business
The purpose of this course is to give student a broad understanding of the
global business environment. This will include:
 the context of economic and financial globalization
 the context of political globalization and international relations
The context of international cultural exchange and cultural clash
Students will also be introduced to general ideas about global business
strategy and how to enter foreign markets
Grading 50% final exam, 30% Group work, 10% attendance 10% midterm
assignment
Global Business
Today
by Charles W.L. Hill
Krishna Udayasankar
Global Edition Chow-Hou Wee

Required Readings: Chapters 1-4, 6-8, 12

Schedule (Class Dates)
Class held on Wednesday from January 6 to April 7
Class will start at 1pm
No class on Jan 20 + Tet holidays
Course Material
1. Economics of Global Trade & Investment
• What forces are driving economic globalization?
• Growth of International Trade
• Foreign Direct Investment
• Financial Flows
• Economic Trends in developed and developing economies
Course Material Continued
2. Global Political Economy
Market vs Command vs Mixed Economies
The role of WTO and Free Trade Agreements (FTAs)
Differences in Legal Systems (Common vs Civil Law)
The concept of Political Risk

3. Culture in international business

Cultural convergence
Culture clash
Low context vs high context
Continued
• 4: Introduction to Global Business Strategy and Market Entry
• Why enter foreign markets?
• 3 basic market entry questions: where, how and on what scale?
• Strategic templates: local, international, global and transnational
• When to export/license
• When to produce locally
• Entry options for foreign investors: wholly owned subsidiary vs JV, greenfield
vs brownfield
 Group Work
 Students will work in Groups of 4-5 people
 Each group will be given around 30-45 minutes to make a power point presentation
Additional time will be devoted to Q&A/comments

• Group presentation : There are two options for this presentation.

• Describe and analyze (not advertise!) the internationalization activity of a Vietnamese
company. How is the company attempting to access global opportunities expands their
markets? (exporting, FDI, M&A, etc.).

• Describe and analyze the activity and strategy of one multinational company with
business operations in Vietnam. How is the firm exploring opportunities in this country
and how does Vietnam fit into their global strategy?
 Globalization: Basic Questions

Q: What is economic globalization?

A: The transition from fragmented and localized economies towards
a more integrated global system
Q: What are the main forces that are allowing this process
to occur and accelerate?
A:
1. Declining trade and investment barriers
2. Improving transport equipment and infrastructure
3. IT Revolution
Globalization: Basic Questions
Q: What motivates firms to expand overseas
A:
1. Increased sales
2. Cut costs
3. Learn new things
Q: What questions do firms need to answer about
international expansion
A:
4. Where?
5. How?
6. On what scale?
Key Aspects of Economic Globalization
• The globalization of finance
• Foreign bank lending
• Foreign capital flows into stock and bond markets (FII, “hot money”)
• The globalization of production
• Spread of global supply chains
• FDI “greenfield” and “brownfield”
• The globalization of markets
• Convergence of consumer tastes and rise of global brands
Globalization of Finance
Globalization of Production
globalization of Markets
Growth of International Trade
Foreign Investment Types

FDI:
Company establishes direct
business interest in the market
via JV, Greenfield or Brownfield
projects
FII:
Institution enters market
indirectly via purchase of
financial assets
 Composition of
Institutional
Investment
• Assets in 2015: more than $100 trillion
• North America (especially US) accounts
for largest share
• Largest II in the US are pension funds
• In Europe and Asia, Insurance is larger,
while SWF are also significant

Source: Goldman Sachs

Structure of Global Trade and Investment
Flows
• Key Determinants include
1. Population Size
2. Geography
3. Economic Growth Rates
4. Institutions and Political Stability
5. Policy Orientation
6. Economic development level and per capita GDP
GDP Per Capita Around the World

20
Annual Per Capita GDP Growth
Attractive vs Unattractive markets
• Attractive
• Stable and prosperous developed markets
• High growth developing markets
• Unattractive
• Unstable economies
• Lower and middle income economies with slow growth
 Developed vs
• Higher consumer purchasing
power
• Strong institutions
• More transparent legal systems
• Educated/skilled Workforce
• Less competitive wages
• Aging Populations
• High Government Debt
• Lower economic growth
Developing Economies
• Lower consumer purchasing
power
• More Corruption
• More opaque regulations
• Less skilled workforce
• Competitive Wages
• Younger and growing populations
• Less government debt
• Higher economic growth
 Middle Income Trap

In 1960, the World Bank classified 101 economies as “middle income”

By 2016, only 11 of those countries had entered and retained high income status

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