MGMT 378 International Business

House Rules 1. The back row of students will clean up the classroom and straighten chairs/tables after each session. 2. No electronic distractions—if you violate this rule you will stand and sing a Justin Bieber or Jonas Brothers song of my choice.

House Rules 3. Cheating brings pain. Failing to confess cheating brings pain. Failing to report cheating brings pain. Reporting (and, when possible, documenting) cheating brings rewards.

This course can help you Understand our world better Get better jobs Get internationally oriented jobs Be more comfortable with people from other countries See the world with new eyes Make your life more interesting

We’ll talk about Globalization, internationalization Role of technology, cost advantages Culture Entry methods/business forms Importing/exporting how-to A variety of cases/examples

Think High participation Cross-functional, integrated view of business Trust, honesty, integrity, high standards AND Sufficient time and energy Shared goals to start with

Symptoms: Lousy papers Not keeping up Can’t answer questions or contribute to discussion Absence, tardiness, sleepiness Difficulty with midterm exam Causes: Conflicting priorities Excessive course load Juggling a job and too many courses Typical Workload Problems

A 5 % B15 % C55 % D/F25 % A typical semester might look like this…

Syllabus and schedule highlights Grading Preparation/participation—see syllabus Ten-point scale, no pluses/minuses Papers: part of prep/part, follow the format, due on time.

Section 1: Globalization and International Linkages Implications of globalization for countries, industries, firms, and communities. Major trends in global and regional integration. Changes in economic power, trade and investment flows. Major economic systems and recent developments.

International Management International management: Managing in a multinational company; Adapting management practices to different economic, political, and cultural environments. Multinational corporation (MNC): Operations in more than one country International sales Managers and owners from a mix of countries

Globalization and Internationalization Globalization: process of integration among countries with a vision of a single market entity: Social Economic Political Technological Cultural Internationalization: when a business crosses national and cultural borders.

Globalization: Pros and Cons Pros: economic growth, jobs, technology, lower prices. Cons: losing jobs to lower-wage countries; losing jobs to lower-wage countries; trade deficits; trade deficits; slow wage growth; slow wage growth; environmental and social impacts. environmental and social impacts.

Global and Regional Integration: Global Agreements: WTO World Trade Organization GATT General Agreement on Tariffs and Trade Regional Agreements: NAFTA North American Free Trade Agreement CAFTA U.S.-Central American Free Trade Agreement EU European Union ASEAN Association of Southeast Asian Nations FTAA Free Trade Agreement of the Americas

International Economic Power in the Global Economy: World is changing due to Economic integration Growth of emerging markets

The World’s Largest Economies 2005 and 2020 (Projected) Measured by GDP at Market Exchange Rates:

Most Populous Countries in 1980, 2000, and 2050 (Projected):

Trends in International Investments and Trade Investment: 80% of foreign direct investment (FDI) from developed countries Continuing rise, inc from new investors (e.g. China) Trade: >50% world trade is United States, European Union and Japan Continuing growth

Economic Systems of the World Market Economy Command Economy Mixed Economy

Economic Performance by Region North America South America Europe (EU, Central and Eastern Europe) Asia (Japan, China, emerging markets of Asia) Other developing and emerging countries (India, Middle East, Central Asia, Africa) Remember: History Matters!!

North America North America: Generally free market economies United States: Good market for foreign MNC Foreign investment welcomed U.S. firms dominate many European markets; gaining in Asia

Canada: Biggest U.S. trade partner Big US investment in Canada Canada legal/business environment similar to US Mexico: Biggest Latin American economy Very strong maquiladora industry w/ US markets Rising trade with Europe, Asia Competes with Asia for US market

South America History of high foreign debt and high inflation Brazil, Chile, Argentina—strongest economies History of trade barriers now declining

European Union EU has emerged as a functional economic union Links/spread into Central, Eastern, Southeastern Europe Substantial FDI in EU: M&A, alliances, etc.

Central and Eastern Europe Big examples: Russia, Czech Rep., Hungary, Poland Dismantling of price controls and state ownership 1990s/2000s: Perestroika—economic and political restructuring, Privatization Inflation, crime, corruption, wealth disparities. Western Europe/China investing Membership in International Monetary Fund (IMF), some in EU, Political uncertainty, old habits/relationships die hard

Asia Japan Phenomenal success 1970s/1980s Ministry of International Trade and Industry (MITI) Keiretsus Vertically integrated industries Ten year recession in 1990s Bad bank loans for real estate—billions of dollars Now: International competition—China, SE Asia Ageing population Ageing population

China Annual growth 8-11% Foreign investors interested despite political risk, trade piracy, restrictions Trends: Income disparities, pollution, political unrest

The Four Tigers South Korea Chaebols (large family-held Korean conglomerates) Relationship issues: China, North Korea Hong Kong Now part of People’s Republic of China Wealthy free market system/tension with ChinaSingapore Highly educated, high-tech island Highly educated, high-tech islandTaiwan Tension with China, which claims it Tension with China, which claims it High-tech and industrial High-tech and industrial

Southeast Asia Baby Tigers (Thailand, Malaysia, Indonesia): Large population Cheap labor Natural resources Attractive to outside investors Corruption

Developing and Emerging India Huge poor population, big middle class Growth in software, IT Attractive to West (educated, English speaking, technologically sophisticated) Middle East and Central Asia Oil and natural resources Unemployment, politics, religion

Africa Natural resources Generally poor, weak infrastructure 1,000 languages and dialects Poverty, starvation, war, illiteracy, corruption, overcrowding in various parts Developing and Emerging

Some questions for you 1.What are pros and cons for globalization in different parts of the world? 2.How has NAFTA affected North America and the EU affected Europe? What importance do these economic pacts have for international managers in North America, Europe and Asia? 3.Why would MNCs be interested in South America, India, the Middle East, Central Asia, and Africa, the less developed and emerging countries of the world?

What we just did Section 1: Globalization and International Linkages Implications of globalization for countries, industries, firms, and communities. Major trends in global and regional integration. Changes in economic power, trade and investment flows. Major economic systems and recent developments.