Académique Documents
Professionnel Documents
Culture Documents
Global Business
Dr. Mona Bahl
Youngstown State University
Welcome Question
Which country has the highest percentage of internet
users
US
Japan
Iceland
UK
84.2% (21)
86.3% (17)
96.5% (1)
89.8 (14)
http://data.worldbank.org/indicator/IT.NET.USER.P2/countries?
order=wbapi_data_value_2013+wbapi_data_value+wbapi_data_value-last&sort=desc
http://www.youtube.com/watch?v=IfBtZOuq_vI
https://www.youtube.com/watch?v=9LI2MOd6aKM
Learning goals
I.
Politico - Legal
II.
Cultural
III. Economic
Institutional Environment
Widely known & accepted systems of practice,
technologies & rules of social interaction, which
are normatively recognized & established in a
society. Behaviors contrary to them are met with
social disapprobation and even costly sanctions.
(Lawrence, et.al. 2002)
Fundamental political, social and legal ground
rules which establish the basis of all economic
activities, and organizations are expected to
conform to them in order to be accorded
legitimacy and support.
(North, 1990)
8
structure of
2. Normative Institutions
- standards & commercial conventions, e.g., those
established by professional & trade associations
(Binding expectations)
3. Cognitive Institutions
- axiomatic beliefs about expected standards of
behavior specific to a culture (Taken for granted
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understandings)
Formal Institutions
Formal Institutions: A legal and regulatory framework
of courts, police, lawyers, regulators, and other
mechanisms that create and enforce laws and
regulations to facilitate the widening of markets
Benefits of Formal Institutions
Lower costs
Support arms-length transactions by bringing
distant parties (strangers) together.
Foster rule-based transactions that attract new
players into a global economy that cannot operate
on informal institutions alone.
Facilitate economic expansion and growth
NOT all business transactions need formal institutions.
12
Political Ideologies
Totalitarianism
Anarchism
Pluralism
13
Legal Systems
Common Law
Tradition
Nations legal history
Precedent
Past cases before the courts
Usage
How laws are applied
Civil Law
Dates to Roman times in the
fifth century B.C.
Rules and statutes constitute a
legal code
Theocratic Law
Legal tradition based on religious teachings
Islamic law
Jewish law
Hindu law
15
Civil law
Common law
Bi-juridical/mixed (civil and common law)
Islamic law (Sharia)
16
Economic Differences
Economic Systems
Capitalist versus Socialist (Communist)
Financial Markets
Capital Markets (Trading and hedging securities)
Forex Markets (Trading and hedging currencies)
http://www.doingbusiness.org/rankings
17
Capital Market
System that allocates financial resources
according to their most efficient uses
Debt: Repay principal plus interest
18
19
UK: $1.33
trillion
US: $0.62
trillion
Japan: $0.24
trillion
Source: */Kyodo/Newscom
20
21
22
23
Relative ability of
two countries
currencies to buy
the same basket
of goods in those
two countries
http://www.federalreserve.gov/releases/h10/current/default.htm
24
PPP Estimate of
GDP per Capita
GDP per Capita
(U.S. $)
(U.S. = 100)
United States
39,700
Switzerland
47,900
Australia
32,400
Canada
30,600
United Kingdom
35,600
Japan
36,500
Czech Republic
10,600
Hungary
10,000
Mexico
6,600
Turkey
4,200
39,700
34,700
32,400
31,800
30,800
29,600
18,600
15,900
10,200
7,600
25
24-Hour Trading
26
Definition
Exchange Rate: Rate at which one countrys
currency can be traded for another countrys
currency.
27
Forward Rate
Rate at which two parties will exchange
currencies on a specified future date
Forward Contracts
Reduce exchange-rate risk
30, 90, 180 days or custom lengths
28
Currency option
Option to exchange a specified amount of currency on a
specified date at a specified rate
29
Informal Institutions
Constraints on socially sanctioned norms of
behavior.
Professional norms do not have the force of law,
but are obeyed by those in a profession.
Physicians, professors, lawyers, and
accountants
Commercial norms are adhered to by most
persons in a modern economy.
In developing nations, personal relations
substitute for formal institutions when
commercial and professional norms are not
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well established.
CAGE FRAMEWORK
35
CAGE FRAMEWORK
36
2.
3.
4.
Demand
Conditions
Related and
Supporting
Industries
Source: Porter, 1990
38
Determinants of Competitiveness
1.
2.
Factor Conditions:
-
Demand Conditions:
-
4.
2.
3.
4.
5.
6.
41
http://business.blogs.cnn.com/2013/08/28/the-worlds-most-innovative-companies/