REVISION CLASS DIB 5018 INTRODUCTION TO INTERNATIONAL BUSINESS

February 18, 2017

Jianzhi

Section A: MCQ 50%

Section B: T/F 10%
Section C: Case Study 10%
Section D: Short Essay 30% (3 Questions)

Chapter 1: The Emerging Global Economy

Definition of IB
How Domestic Business Diff with IB (Boundaries, Currencies, Cultures, Legal
Systems, Availability of resources & Skills and Knowledge)
5 IB Activities (Import Export, International Investment, International Licensing,
International Management Contract)
Definition of Globalization
Causes of Globalization (Strategic Imperative & Environment Causes)
Emerging Market (BRIC, BIG 10, NHI Countries)
Global Marketplace during cold war (1st World, 2nd World & 3rd World)(know
what is 1st, 2nd, and 3rd World Countries and example for each)

Export/Import:

Servic
Goods
es
Tangible intangible

UK:
US: SVC
Merchandi
imp/exp
se exp/imp

British: UK:
Visible Invisible
Trade Trade
Chapter 2: Global Marketplaces and Business Centers
North America: [Canada, U.S, Mexico NAFTA], Central America, [Caribbean
Island because of offshore banking]
Western Europe(VERY IMPORTANT): Members of EU (27), Most influential:
German (Economy) & France (Leadership), High Income Countries, Middle
Income countries & Eastern Europe: Russia & Khazastan, Uzbekistan, Tajikistan,
Turkmenistan & Kyrgyzstan (Characteristic of Russia) (Common Characteristic
of stan countries)
Asia: Japan, Australia, New Zealand, 4 Tigers, China, India, Thailand, Malaysia,
Indonesia
Africa: Middle East Cradle of Civilization Place where everything start:
religion, languages
South America: E.g.: Brazil, Argentina (famous because of football and
entertainment)
Chaebol
Chapter 3: Legal, Technological, Accounting & Political Environments
Legal Systems: Common Law, Civil Law, Religious Law & Bureaucratic Law
Laws Affecting IB: Sanctions, Embargos, Export Control & Extraterritoriality
Laws Affecting Foreign Firms: Nationalism (money/without money),
Expropriation, Confiscation, Privatization & Repatriation
Impacts MNCs on Host Countries: +ve, -ve
Technology: Technology Transfer & Intellectual Property Rights
Accounting: The Roots Of National Differences: Sources of Capital, Legal
Systems, Cultural Values & Attitudes, International Political Ties & Economic
System
Political Risk: Ownership Risk, Transfer Risk, Operating Risk
Categories Political Risk: Macro & Micro
Chapter 4: Culture
Definition: norms and the belief of the society
Characteristics of Culture: Learned Behavior, Interrelated, Adaptive, Shared
Elements of culture: Social Structure, Language, Communications, Religion,
Values and Attitudes
Cultural Management: Low Context (Fact Oriented) High Context (Emotion)
Culture, Cultural Cluster (10) & Hofstedes Five Dimension (Social Orientation,
Power Orientation Uncertainty Orientation, Goal Orientation and Time
Orientation) (elements of orientation: frequently comes out in MCQ)
Lingua Franca, Back Translation, Non-verbal Communication
Chapter 5: International Trade and Investment
Def trade & Int trade
Classical Country Based Theories: Mercantilism, Absolute Advantage,
Comparative Advantage, Relative Factor Endowment
Modern Firm Based Theories: Product Life Cycle Theory, Linders Country
Similarity, New Trade, National Competitive Advantage
International Investment: Definition, FDI & FPI
International investments Theories: Ownership Advantage, Internalization Theory
and Dunning Electric Theory
Chapter 6: Formulation of National Trade Policies
Two principals: Protect Domestic Firms & Help Domestic Firms Increase Foreign
Sales
Rational for Trade Intervention Industry-Level Arguments: National Defense,
Infant Industry, Maintenance of Existing Jobs & Strategic Trade Theory
Barriers to International Trade: Tariff & [Non-Tariff Barriers: difficult to eliminate
because it relate to legal systems and laws]
Tariff: Export Tariff, Transit Tariff & [Import Tariff: Ad Valorem Tariff, Specific
Tariff and Compound Tariff]
Nontariff Barriers: Quotas, Numerical Export Controls (VER & Embargos) &
Other NTBs (7)
Chapter 8: Foreign Exchange and International Financial Market
Def Foreign Exchange: exchange currencies with one or more countries
Foreign exchange rate quotes: Direct & Indirect
The role of banks: Major Player (International banks, corporate treasurers,
pension funds, hedge funds, insurance companies, central banks & treasury
departments)
Clients of FX dept. of banks: commercial customers, exchange-rate
speculators & currency arbitrageurs
Types of Currencies: Convertible and Inconvertible
Arbitrage & Currency market
Forms of International Bank: Correspondent Relationship, Branch Bank,
Subsidiary Bank & Affiliated Bank
Transaction currency

Correspondent relationship: a financial institution that provides services on behalf

of another (agent), equal or unequal financial institution (e.g.: MEPS RM1.06)
Branch bank: it is not separately incorporated
Subsidiary bank: it is separately incorporated from the parent (e.g.: CIMB
GroupCIMB Commerce, CIMB investment, CIMB Islamic
Affiliate Bank: an overseas operation in which it takes part ownership in
conjunction with a local or foreign partner
Chapter 9: International Strategic Management (ISM)
o Int Strategic Management Def (remember the definition)
o Challenges of ISM: Global Efficiencies, Multinational Flexibility & Worldwide
Learning
o Strategic Alternatives: Home Replication, Multidomestic Strategy, Global
Strategy & Transitional Strategy
o Developing International Strategies: 2 stages [Strategy Formulation & Strategy
Implementation] and 5 steps [Develop mission statement, SWOT Analysis, Set
Strategic Goals, Develop Tactical Goals, and Plans & Develop Control
Framework: Levels of International Strategy CS, BS, & FS]
Chapter 10a
o Foreign Market Analysis: 3 steps Assess alternative markets. Evaluate the
respective costs, benefits and risks of entering each one and Select those with the
most potential for entry expansion
o Choosing Entry Mode: Decision Factors Ownership Advantage, Location
Advantage, Internalization Advantage and Other Factors
o Entry Mode #1: Exporting to Foreign Market
Adv & Disadv. Types of exporting, 3 forms of exporting &
Export intermediaries
o Entry Mode #2: International Licensing
Def, Issues, Adv & Disadv
o Entry Mode #3: International Franchising
Def, Issues, Adv & Disadv
o Entry Mode #4: Specialized (Contract Manufacturing, Management Contract,
Turnkey Projects)
o Entry Mode #5: FDI (Greenfield Strategy, Acquisition Strategy & Joint Ventures
Chapter 10b
International Corporate Cooperation: Strategic Alliances & Joint Venture
Benefits of Strategic Alliances: Ease of market entry, Shared Risk, Shared
Knowledge & Expertise and Synergy & Competitive Advantage
Functional Alliances: Production Alliances, Marketing Alliances, Financial
Alliances and R&D Alliances
Implementation of Strategic Alliances: Selection of Partners, Forms of Ownership
& Joint Management Considerations
Pitfalls of Strategic Alliances: 5