Course Introduction/

Course syllabus
 Course overview

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

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

• Present a thorough view of the economics and politics of international trade and investment
and examine the various cultural and political issues that impact international business
Present activities.

• Examine the strategies and structures of international businesses.

Examine
Textbooks
and
References
 Class attendance: 5%

Examination,
Homework/Quiz: 5%
assessment
and grading Group presentation: 15%

Mid-term exam: 15%

Final exam: 60%

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

Part 3: Competing in a Global marketplace

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

Chapter 6: Entry strategy and Strategic Logistics
Alliances Chapter 9: Global marketing and R&D
Chapter 7: Exporting, Importing and Chapter 10: Global human resources management
Countertrade
Chapter 1:
Globalization
 Learning objectives

Understand what is meant by the term Globalisation

Recognize the main drivers of globalization

Describe the changing natural of global economy

Explain the main argument in the debate over the impact of

globalization.

Understand how the process of globalization is creating

opportunities and challenges for business managers.
What is the meaning of “Globalization”

Definition: Globalization refers to the shift toward a

more integrated and interdependent world economy
Hill (2015, tr.15)

Two facets of globalization:

• Globalisation of market
• Globalisation of production
 Globalization of Market

 Moving away from an economic system in which national markets are distinct
entities, isolated by trade barriers of distance, time, and culture, and toward a
system in which national markets are merging into one global market.

 Reasons for Globalization of market:

Consumers’ tastes Firms promote the

Falling trade barriers
and preferences are trend by offering the
make it easier to sell
converging on some same basic products
globally
global norm worldwide
 Globalization of Production

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

processes to different locations around the globe to take advantage of
national differences in the cost and quality of factor of production like
land, labor and capital.
Companies can:
 Lower their overall cost structure
 Improve the quality or functionally of their product offering
 Example of globalization of production: Video: “Story of an iPhone - Analytics in Supply
Chain Decisions”
Link Youtube : https://www.youtube.com/watch?v=YbM_LydRlnM&t=2s
 Global Institutions

• help manage, regulate, and police the

global marketplace
The emergence • promote the establishment of multinational
treaties to govern the global business
system
of Global
Examples include

Institutions • the General Agreement on Tariffs and

Trade (GATT)
• the World Trade Organization (WTO)
• the International Monetary Fund (IMF)
• the World Bank
• the United Nations (UN)
 The World Trade Organization (like its predecessor
GATT)
•polices the world trading system
•makes sure that nation-states adhere to the rules laid down
in trade treaties
The emergence •promotes lower barriers to trade and investment

The International Monetary Fund (1944) maintains

order in the international monetary system
of Global
The World Bank (1944) promotes economic
development
Institutions
The United Nations (1945)

•maintains international peace and security

•develops friendly relations among nations
•cooperates in solving international problems and in
promoting respect for human rights
•is a center for harmonizing the actions of nations
 Drivers of globalization
Two macro factors underlie the trend toward greater globalization

(1) Declining trade and

investment barriers

(2) Technological change

(1) Declining trade and Investment barriers

International Trade: Occurs when Foreign Direct Investment (FDI):

a firm exports good or services to direct investment in business
consumers in another country. operations in foreign country.
 Route of declining trade and investment barriers

1920s – 1930s: Trade and

investment barriers were
very high in order to Under GATT, more than
protect domestic 100 countries agreed to
industries from foreign lower trade and
competition investment barriers

After WWII, the The WTO launched to

advanced industrial aim for further liberalizing
nations of the West the global trade and
committed themselves investment framework.
to removing barriers to
the free flow of goods,
services and capitals.
Average Tariff Rates on Manufactured Products as Percent of Value

(1) Declining trade and investment barriers

Tariff and
non-tariff
barriers
from 1995
to 2015
 For globalization of market:

(+) Firms can view the world, rather

Implications of than a single country, as their market
declining trade (-) Domestic firms face with intense
and investment
competition from foreign competitors.
barriers for
globalization For globalization of production:

- Firm can base production in the

optimal location for that activity
CLASS DISCUSSION
Find an example of a Vietnamese enterprise that has failed against a foreign competitor
 (2) Technological Change

1. Microprocessor and Telecommunications:

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

 For globalization of production:

Technological  Low-cost global communications
networks - help create an electronic
Change for global marketplace
 low-cost transportation - help create
globalization global markets
 global communication networks and
global media - create a worldwide
culture, and a global market for
consumer products
 Before 1960s:

3. The changing • US dominance in the world economy and

trade picture
of • US dominance in world foreign direct
investment
demographics • The dominance of large multinational US firms
of the Global on the international business
• Half the globe is communist.
Economy
After 1960s

All four of these qualities either have

changed or are now changing rapidly
(1) The changing world output and world trade picture
Hill (2015, tr.34)
(2) The changing foreign direct investment picture
Percentage Share of Total FDI Stock 1980-2007
(2) The changing foreign direct investment picture
FDI Inflows 1988-2008
 100%
90%
80%
70%
TRIỆU USD

60%
50%
40%
30%
20%
10%
0%
1994

1999

2004

2009

2014
1990
1991
1992
1993

1995
1996
1997
1998

2000
2001
2002
2003

2005
2006
2007
2008

2010
2011
2012
2013

2015
2016
2017
2018
Developed economies Developing economies Transition economies

Global FDI inflows 1990-2018

(Unit: million USD)
30
 (3) The changing nature of the multinational
enterprise
A multinational enterprise (MNE) is any business that
has productive activities in two or more countries

There has been a

The growth of mini –
rise in non – US
multinationals.
multinationals.
There has been a rise in non – US multinationals
(4) The changing world order

Between 1989 and 1991, a

series of democratic revolutions
Before, many former communist swept the Communist World.
nations were essentially closed Many of the former Communist
to Western international nations of Europe and Asia
business. seem to share a commitment
to democratic politics and free
market economics.
THE GLOBAL ECONOMY OF THE 21ST CENTURY
- The US is no longer be the dominant
in the global economy like before

- The world is moving toward a more

global economic system

- The world witness rapid change in

developing countries like China, South
Korea and Taiwan
 THE GLOBALIZATION DEBATE

Viewpoint of Viewpoint of
Thomas Friedman Pankaj Ghemawat
 Is the shift toward a more
integrated and interdependent
global economy a good thing?
 The globalization debate
4. The
focus on 4 main aspects:
globalization
debate •Jobs and income

•Labor policies and the environment

•National sovereignty

•The world’s poor

(1) Jobs And Income

Critics argue that falling barriers to trade are destroying

manufacturing jobs in advanced countries

Supporters contend that the benefits of this trend

outweigh the costs
• countries will specialize in what they do most efficiently and trade for
other goods—and all countries will benefit.
(2) Labor Policies And The Environment

Critics argue that firms avoid costly efforts to adhere to labor and
environmental regulations by moving production to countries where such
regulations do not exist, or are not enforced

Supporters claim that tougher environmental and labor standards are

associated with economic progress
• as countries get richer from free trade, they implement tougher environmental and labor
regulations.
(3) National Sovereignty

 Is today’s interdependent global economy shifting economic power

away from national governments toward supranational organizations like
the WTO, the EU, and the UN?
 Critics argue that unelected bureaucrats have the power to impose
policies on the democratically elected governments of nation-states
 Supporters claim that the power of these organizations is limited to what
nation-states agree to grant
 the power of the organizations lies in their ability to get countries to agree to
follow certain actions.
(4) The World’s Poor

Is the gap between rich nations and poor nations is getting wider?

Critics believe that if globalization was beneficial there should not be a divergence
between rich and poor nations

Supporters claim that the best way for the poor nations to improve their situation is
to
• reduce barriers to trade and investment
• implement economic policies based on free market economies
• receive debt forgiveness for debts incurred under totalitarian regimes
  Managing an international business
differs from managing a domestic
business because
 countries are different
 the range of problems confronted in
Managing in an international business is wider and
the problems more complex than
the global those in a domestic business
 firms have to find ways to work within
marketplace the limits imposed by government
intervention in the international trade
and investment system
 international transactions involve
converting money into different
currencies
 Understand Understand what is meant by the term
Globalisation

Summarize Recognize Recognize the main drivers of globalization

chapter 1
Describe Describe the changing natural of global
economy

Explain Explain the main arguments in the debate

over the impact of globalization.

Understand Understand how the process of

globalization is creating opportunities and
challenges for business managers.
Review Question

The shift toward a more integrated and interdependent world

economy is referred to as?

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

The merging of historically distinct and separate national markets into

one huge global marketplace is known as?

a) global market facilitation

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

Firms that are involved in international business tend to be

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

Which is not a factor of production?

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

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

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

Which organization is responsible for policing the world trading

system?

a) the International Monetary Fund

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

What is the single most important innovation to the globalization of

markets and production?
a) advances in transportation technology
b) the development of the microprocessor
c) advances in communication
d) the Internet
Review Question

Which of the following trends is true?

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

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

a) globalization raises consumer income

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