International BusinessInternational Business

For MBA Class, Grade 2001, For MBA Class, Grade 2001, SWUFESWUFE

Teacher & P.P.Writer:

Associate-Prof. Shuai Jianlin

April 6, 2002 –

International BusinessInternational Business

Part 1: Environment for International Business

Part 2: Decision Making Part 2: Decision Making Part 3: Aspects and Practice of Part 3: Aspects and Practice of

International BusinessInternational Business

Part 1 Environment for InterPart 1 Environment for International Businessnational Business

Chapter 1 Economical Description of the World (Economic Map)

Chapter 8 More about Globalization

Chapter 2 Economic & Cultural Foundation of the Western Market Economy

Chapter 3 Theory & Policy for International Business (Trade & Investment)

Teacher’s Words Teacher’s Words

To Think Globally, to Act Locally.

1.1 Chapter 1 Economical 1.1 Chapter 1 Economical Description of the WorldDescription of the World

Bird-eye View,

or Tiger-eye View ?

11.1.1 Bird-eye View,.1.1 Bird-eye View,

– World Economy– Globalization (Oxford Analytica & Case )– Regional Integration

Free Trade Area Customs Union Common Market Economic Union Complete Economic Integration

1.1.2 Tiger-eye View ?1.1.2 Tiger-eye View ?

– Regulatory Framework International Law WTO (& Official Sayings, Packages) IMF The World Bank ADB ICC FIDIC

CaseCase

US Meets the Challenge of Globalization

Refer to “the Written Papers” for Language Test

Keys to the Test

1.2 Chapter 2 Economic & 1.2 Chapter 2 Economic & Cultural Foundation of the WeCultural Foundation of the We

stern Market Economystern Market Economy

1.2.1 Environment of Political & Economic System of West Market Economy

1.2.2 Cultural Backdrop 1.2.3 A Few Useful Economic Analytical

Tools

1.2.1 Environment of Political & 1.2.1 Environment of Political & Economic System of West Market Economic System of West Market

EconomyEconomy

What business are we to do?

Property Rights

Government Ownership & Planning

Special Role of Money, Banking System & the Central Bank

Foreign Trade & Investment

Attachment 1 to 1.2.1Attachment 1 to 1.2.1

The expanding horizon of the typical Chinese enterprise:– International Purchasing;– International Finance;– International Technology Transfer;– International Production Partnerships;– International Marketing

Attachment 2 to 1.2.1Attachment 2 to 1.2.1

Attributes of the Market Economy (cf. Centralized Planned Economy)– Well Defined & Well-protected Property Rights for Indivi

dual;– A Varying but Relatively Low Proportion of Government

Ownership Enterprises;– A Special Role for Money as A Means of Payment & a St

andard of Deferred Payment;– Foreign Trade & Investment Follow the

Comparative Advantage of a Country; Balance of Payment Necessary for the Acceptance of its Currency Convertibility;

Attachment 3 to 1.2.1 Attachment 3 to 1.2.1

Attributes of the Centralized Planned Economy: – Refer to the Book in Chinese

1.2.2 Cultural Backdrop1.2.2 Cultural Backdrop

Culture Shock

Understanding Cultural Differences

Customs Etiquette & Protocol

Non-verbal Communication

Cultural Landmines for Women

Religions & The Impacts on Business

Cross-cultural Marketing

Attachment 1 to 1.2.2 Attachment 1 to 1.2.2

Customs Etiquette & Protocol

Attachment 2 to 1.2.2Attachment 2 to 1.2.2

Non-verbal Communication– Gestures around the world

Attachment 3 to 1.2.2 Attachment 3 to 1.2.2

Cultural Landmines for Women

Attachment 4 to 1.2.2Attachment 4 to 1.2.2

Religions & the Impacts on International Business– Bible & Christianity ---what does the Root tell us?– Alcoran (Gulan) & Islamism

Case: Platonic ( 唯心 )& Realism （实在论） -- Premier Li Peng’s visit with 5 million to President Assad with a cold face //Barkley Hydro-power Project & Government Loan—My money is mine; yours is also mine.

Case: Key Role of the VIP – “Beifang”, Liu Laosan & Assad//SCMEC & Mr.Wali//Zhongxing Co.

Case: So many uncertainties– changing contract, promise; Visa application at Jordan Embassy at Damascus, etc.

Case: Pious & Brave fighter for Muhanmurd---telling a lie?

– Buddhism In Singapore, Vietnam, Laos, Nepal, etc.

Attachment 5 to 1.2.2 Attachment 5 to 1.2.2

Cross-cultural Marketing

1.2.3 A Few Economic Analyt1.2.3 A Few Economic Analytical Toolsical Tools

Opportunity CostsMarginal AnalysisEconomic Incentive

Opportunity Cost in Roma Empire Opportunity Cost in Roma Empire (Roma Empire’s PPF)(Roma Empire’s PPF)

X: Cars (Millions per year);

Y: Grain (Billion of bushels per year)

A: Opportunity Cost of 1 car is 2000 bushels of grain.

B: opportunity cost of 1 car is 9000 bushels of grain.

1.3 Chapter 3 Theory & Polic1.3 Chapter 3 Theory & Policy for International Business (Ty for International Business (T

rade & Investment)rade & Investment)

1.3.1 International 1.3.1 International Trade Theory 1.3.2 Foreign Direct Investment (1.3.2 Foreign Direct Investment (FDI)) 1.3.3 1.3.3 Government Influence on Trade and Investon Trade and Invest

ment ment 1.3.4 China’s Comparative Advantage (for self-st1.3.4 China’s Comparative Advantage (for self-st

udy)udy) 1.3.5 Implications---to trade, or to invest? That’s 1.3.5 Implications---to trade, or to invest? That’s

a question.a question.

1.3.1 International Trade 1.3.1 International Trade TheoryTheory

Comparative Advantage TheorySurvey of International TradeBenefits of International TradeBarrier to International Trade & Causes to

FDI (Government Influence)Case Study

Attachment to 1.3.1 Attachment to 1.3.1 Benefits of International TradeBenefits of International Trade

Flow of GoodsFlow of GoodsBalance of Trade and Balance of PaymentsBalance of Trade and Balance of Payments

Attachment to 1.3.1 Attachment to 1.3.1 Barrier to International Trade Barrier to International Trade

&& Causes to FDI

Culture BarrierCulture BarrierEconomic BarrierEconomic BarrierArtificial BarrierArtificial Barrier

1.3.2 Foreign Direct 1.3.2 Foreign Direct Investment / International Investment / International

Direct InvestmentDirect Investment What’s that? What’s that? FDI . The Relationship of The Relationship of Trade & Factor Mobility Motivations for Handling International Business through Direct Investment Market-Expansion: Investments vs. Trade Resource-Acquisition Investments Diversification-Oriented Investments Competitive Risk Competitive Risk Minimization Political Motives Buy vs. Build Decision

1.3.21 What’s that? 1.3.21 What’s that? FDI.

The Core of FDI: The Core of FDI: Control 控制控制 --FDI--FDI 的核的核心心

The The Concern about Control about Control 对于控制的观对于控制的观点点

Methods of Methods of Acquisition 收购的途径收购的途径

1.3.22 The 1.3.22 The RelationshipRelationship of Tr of Trade and Factor Mobility ade and Factor Mobility 贸易与要素流动的关系贸易与要素流动的关系

The Trade and Factor Mobility Theory贸易理论与要素流动理论

Substitution 替代Complementarities of Trade and Direct Inve

stment 贸易与直接投资的互补行

1.3.23 1.3.23 MotivationsMotivations for Handling Inter for Handling International Business through Direct Invenational Business through Direct Investment stment 通过直接投资进行国际商通过直接投资进行国际商

务的动机务的动机

To Expand Their Sales 扩大销售 To Acquire Resources 获取资源 To Diversify Their Sources of Sales & Supplies

销售或供给的多样化 To Minimize Competitive Risk 竞争风险的最小

化 To Attain Political Advantage 获取政治优势

1.3.24 1.3.24 Market-ExpansionMarket-Expansion: : Investments vs. TradeInvestments vs. Trade

Attachment to 1.3.24 Attachment to 1.3.24 Trade Barrier Causes Flow of Capital; Trade Barrier Causes Flow of Capital;

Capital Flow Barrier Causes TradeCapital Flow Barrier Causes Trade Transportation Lack of Domestic Capacity Scale Economy Trade Restriction Country-of-Origin Effects Nationalism Product Image Delivery Risk Changes in Comparative Costs

1.3.25 Resource-Acquisition Inv1.3.25 Resource-Acquisition Investments estments 为了获取资源的投资为了获取资源的投资

Vertical Integration Vertical Integration 垂直一体化垂直一体化Rationalized Production Rationalized Production 合理化生产合理化生产Access to Production Factors Access to Production Factors 获取生产要素获取生产要素The Product Life Cycle Theory The Product Life Cycle Theory 产品生产周产品生产周

期理论期理论Government Investment Incentives Government Investment Incentives 政府对投政府对投

资的刺激 资的刺激

1.3.26 1.3.26 Diversification-Oriented InveDiversification-Oriented Investments stments 以多元化为导向的投资以多元化为导向的投资

Diversification

Cyclical Swings

1.3.27 Competitive Risk Minim1.3.27 Competitive Risk Minimization ization 竞争风险最小化 竞争风险最小化

Following Customers 追随顾客Preventing Competitor’s Advantage 阻止竞

争者的优势

1.3.28 Political Motives1.3.28 Political Motives

1.3.29 Buy vs. Build Decision 1.3.29 Buy vs. Build Decision 购买—创建决策购买—创建决策

Reasons for BuyingReasons for Building