Expert answer:Essay on International Business
Solved by verified expert:Essay Questions1. Explain what is meant by the: (i) Globalization of markets, and (ii) Globalization of production. (16 points)2. (a) Describe translation exposure. How can translation exposure be minimized? (b) How can a firm minimize its foreign exchange exposure? (16 points)3. (a) What are the implications of cultural differences for international businesses? (b) Discuss the relationship between culture and national competitive advantage. (16 points)4. According to experts, a decision is acceptable on ethical grounds if a businessperson can answer yes to each of these three questions; list and briefly discuss each of these questions [Hint: lecture notes on Ethics in International Business] (16 points)5. What is a Greenfield investment? Why would a firm choose this form of FDI? How does it compare to an acquisition? Explain you answer. (16 points)Requirements:8 pagesFont, Times New RomanFont size, 12Doubled spaceI attached the slides that related to the essay questionsAlso this is a brief answer for question number 2(There are several strategies a firm can follow to minimize foreign exchange exposure. First, centralcontrol of exposure is needed to protect resources and ensure that each subunit adopts the correctmix of tactics and strategies. Second, firms should distinguish between transaction and translationexposure as compared to economic exposure. Third, the firm needs to forecast future exchange ratemovements. Fourth, the firm needs to establish a good reporting system to monitor the firm’s exposurepositions. Finally, the firm should produce monthly foreign exchange exposure report forms.)Thank you in advanced
1.pptx
3.ppt
4.ppt
5.ppt
Unformatted Attachment Preview
Chapter 1
Globalization
What Is Globalization?
➢Globalization – the shift toward a more
integrated and interdependent world
economy
➢The world is moving away from selfcontained national economies toward an
interdependent, integrated global
economic system
What Is The
Globalization of Markets?
➢ Historically distinct and separate national
markets are merging
➢ It no longer makes sense to talk about the
“German market” or the “American market”
➢ Instead, there is the “global market”
➢ falling trade barriers make it easier to sell globally
➢ consumers’ tastes and preferences are converging on
some global norm
➢ firms promote the trend by offering the same basic
products worldwide
What Is The
Globalization of Production?
➢Firms source goods and services from
locations around the globe to capitalize on
national differences in the cost and quality
of factors of production like land, labor,
energy, and capital
➢Companies can
➢ lower their overall cost structure
➢ improve the quality or functionality of their
product offering
Global Institutions?
➢ Examples include
➢ 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 G20
What Do Global
Institutions Do?
➢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
➢ promotes lower barriers to trade and
investment
What Do Global
Institutions Do?
➢The International Monetary Fund (1944)
➢ maintains order in the international monetary
system
➢ lender of last resort for countries in crisis
➢ Argentina, Indonesia, Mexico, Russia, South
Korea, Thailand, Turkey, Ireland, and Greece
➢The World Bank (1944)
➢ promotes economic development via low
interest loans for infrastructure projects
What Do Global
Institutions Do?
➢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
➢The G20
➢ forum through which major nations tried to
launch a coordinated policy response to the
2008-2009 global financial crisis
What Is Driving
Globalization?
➢ Declining barriers to the free flow of goods,
services, and capital
➢ average tariffs are now at just 4%
➢ more favorable environment for FDI
➢ global stock of FDI was $20.4 trillion in 2011
➢ facilitates global production
➢ Technological change
➢ microprocessors and telecommunications
➢ Internet: information backbone of the global economy
➢ transportation technology
What Does Globalization
Mean For Firms?
➢Lower barriers to trade and investment
mean firms can
➢ view the world, rather than a single country,
as their market
➢ base production in the optimal location for that
activity
➢But, firms may also find their home
markets under attack by foreign firms
What Does Globalization
Mean For Firms?
➢ Technological change means
➢ lower transportation costs
➢ help create global markets and allow firms to
disperse production to economical, geographically
separate locations
➢ low cost information processing and communication
➢ firms can create and manage globally dispersed
production
➢ low cost global communications networks
➢ help create an electronic global marketplace
➢ global communication networks and global media
➢ create a worldwide culture and a global consumer
product market
The Changing Demographics
Of The Global Economy
➢ Four trends are important:
1. The changing world output and world
trade picture
2. The changing foreign direct investment
picture
3. The changing nature of the
multinational enterprise
4. The changing world order
How Has World Output And
World Trade Changed?
➢In 1960, the U.S. accounted for almost
40% of world economic activity, but by
2012, the U.S. accounted for just 23%
➢ a similar trend occurred in other developed
countries
➢In contrast, the share of world output
accounted for by developing nations is
rising
➢ expected to account for more than 60% of
world economic activity by 2020
How Has Foreign Direct
Investment Changed Over Time?
➢In the 1960s, U.S. firms accounted for
about two-thirds of worldwide FDI flows
➢ Today, the United States accounts for less
than one-fifth of worldwide FDI flows
➢ Other developed countries have followed a
similar pattern
➢In contrast, the share of FDI accounted for
by developing countries has risen
➢ Developing countries, especially China, have
also become popular destinations for FDI
What Is A
Multinational Enterprise?
➢Multinational enterprise (MNE) – any
business that has productive activities in
two or more countries
➢Since the 1960s
➢ the number of non-U.S. multinationals has
risen
➢ the number of mini-multinationals has risen
The Changing World Order
➢ Many former Communist nations in Europe and
Asia are now committed to democratic politics
and free market economies
➢ creates new opportunities for international businesses
➢ but, there are signs of growing unrest and totalitarian
tendencies in some countries
➢ China and Latin America are also moving toward
greater free market reforms
➢ between 1983 and 2010, FDI in China increased from
less than $2 billion to $100 billion annually
➢ but, China also has many new strong companies that
could threaten Western firms
How Will The Global Economy
Of The 21st Century Look?
➢ The world is moving toward a more global
economic system…
➢ But globalization is not inevitable
➢ there are signs of a retreat from liberal economic
ideology in Russia
➢ Globalization brings risks
➢ the financial crisis that swept through South East Asia
in the late 1990s
➢ the recent financial crisis that started in the U.S. in
2008-2009, and moved around the world
Is An Interdependent Global
Economy A Good Thing?
➢ Supporters believe that increased trade and
cross-border investment mean
➢ lower prices for goods and services
➢ greater economic growth
➢ higher consumer income, and more jobs
➢ Critics worry that globalization will cause
➢ job losses
➢ environmental degradation
➢ the cultural imperialism of global media and MNEs
➢ Anti-globalization protesters now regularly show
up at most major meetings of global institutions
How Does Globalization
Affect 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
How Does Globalization Affect Labor
Policies And The Environment?
➢ Critics argue that firms avoid the cost of
adhering 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
How Does Globalization
Affect National Sovereignty?
➢ Is today’s 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
How Is Globalization
Affecting The World’s Poor?
➢ Is the gap between rich nations and poor nations
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
How Does The Global
Marketplace Affect Managers?
➢ Managing an international business differs from
managing a domestic business because
➢ countries are different
➢ the range of problems confronted in an international
business is wider and the problems more complex
than those in a domestic business
➢ firms have to find ways to work within the limits
imposed by government intervention in the
international trade and investment system
➢ international transactions involve converting money
into different currencies
International Business
Differences in Culture
1
What is Culture?
Culture:
the specific learned norms of a society that reflect
attitudes, values, and beliefs
–
–
Norms: social rules and guidelines that prescribe
appropriate behavior in particular situations
Values: abstract ideas about what a society believes to be
good, right, and desirable
Cultures consist of societies, i.e., relatively
homogeneous groups of people, who share attitudes,
values, beliefs, and customs.
2
Cultural Dynamics
Culture is not a constant; it evolves over time
– Since 1960s American values toward the role of
women have changed
– Japan moved toward greater individualism in the
workplace
Cultural value systems may change because of:
-choice or imposition
-contact with other cultures.
Globalization will continue to have impacts on cultures
around the world
3
Culture, Society, and the Nation State
A society is a group of people bound together by a
common culture
There is not a strict one-to-one correspondence
between a society and a nation state
Nation State:
– Is a political creation
– May contain a single culture or several
cultures
4
Cross-Cultural Risk
A situation or event where a cultural
miscommunication puts some human value
at stake
Cross-cultural risk arises when we step into
different environments characterized by
unfamiliar languages and unique value
systems, beliefs, and behaviors
It is one of the four major risks in
international business
5
Manifestations of Cross-Cultural Risk
Ethnocentric orientation: using our own culture as
the standard for judging other cultures
Polycentric orientation: a host country mindset
where the manager develops a greater affinity with
the country in which she/he conducts business
Geocentric orientation: a global mindset where the
manager is able to understand a business or market
without regard to country boundaries
–
Managers should strive to adopt a geocentric
orientation.
6
Low-Context Cultures
Low-context cultures rely on elaborate verbal
explanations, putting much emphasis on spoken
words.
–
–
place central importance on the efficient delivery of
verbal messages; speech should express one’s ideas and
thoughts as clearly, logically, and convincingly as
possible.
Communication is direct and explicit, meaning is
straightforward, i.e. no “beating around the bush,” and
agreements are concluded with specific, legal contracts.
7
High Context Cultures
A high-context culture emphasizes nonverbal
messages and use communication as a means to
promote smooth, harmonious relationships.
–
–
–
–
–
Prefer an indirect, polite, “face-saving” style that emphasizes a
mutual sense of care and respect for others; careful not to embarrass
or offend others.
It is difficult for Japanese people to say “no” when expressing
disagreement. Much more likely to say “it is different” — an
ambiguous response.
In East Asian cultures, showing impatience, frustration, irritation, or
anger disrupts harmony and is considered rude and offensive.
In Japan, superiors are given favored seating as a show of respect,
i.e., farthest away from the entrance to the room.
To succeed in Asian cultures, it is critical to notice nonverbal signs
and body language.
8
9
Classifications of National Culture
1.
2.
3.
4.
Individualism versus collectivism refers to
whether a person primarily functions as an
individual or within a group.
Power distance describes how a society deals
with inequalities in power that exist among
people.
Uncertainty avoidance refers to the extent to
which people can tolerate risk and uncertainty in
their lives.
Masculinity versus femininity refers to a
society’s orientation based on traditional male and
female values.
10
Individualistic vs. Collective Societies
Individualistic societies: ties among people are relatively
loose; each person tends to focus on his or her own selfinterest; competition for resources is the norm; those who
compete best are rewarded financially.
–
Examples- Australia, Canada, the UK, and the U.S. tend to be
strongly individualistic societies.
Collectivist societies: ties among individuals are more
important than individualism; business is conducted in the
context of a group where everyone’s views are strongly
considered; group is all-important, as life is fundamentally a
cooperative experience; conformity and compromise help
maintain group harmony.
–
Examples-China, Panama, and South Korea tend to be strongly
collectivist societies.
11
High vs. Low Power Distance
High power distance societies have substantial gaps between the
powerful and the weak; are relatively indifferent to inequalities and allow
them to grow.
–
Examples- Guatemala, Malaysia, the Philippines and several Middle
East countries
Low-power distance societies have minimal gaps between the
powerful and weak.
–
Examples- Denmark and Sweden, governments instituted tax and social
welfare systems that ensure their nationals are relatively equal in terms
of income and power. The United States scores relatively low on power
distance.
Social stratification affects power distance- in Japan almost
everybody belongs to the middle class, while in India the upper
stratum controls decision-making and buying power.
In high-distance firms, autocratic management styles focus power at
the top and grant little autonomy to lower-level employees.
12
High vs. Low Uncertainty Avoidance Societies
High uncertainty avoidance societies create institutions that
minimize risk and ensure financial security; companies
emphasize stable careers and produce many rules to regulate
worker actions and minimize ambiguity; decisions are made
slowly because alternatives are examined for potential
outcomes.
– Belgium, France, and Japan
Low uncertainty avoidance societies socialize their members
to accept and become accustomed to uncertainty; managers are
entrepreneurial and comfortable with taking risks; decisions are
made quickly; people accept each day as it comes and take
their jobs in stride; they tend to tolerate behavior and opinions
different from their own because they do not feel threatened by
them.
– India, Ireland, Jamaica, and the U.S.
13
Masculine vs. Feminine Cultures
Masculine cultures value competitiveness, assertiveness,
ambition, and the accumulation of wealth; both men and
women are assertive, focused on career and earning money,
and may care little for others.
–
Examples- Australia, Japan. The U.S. is a moderately masculine
society; as are Hispanic cultures that display a zest for action, daring,
and competitiveness.
In business, the masculinity dimension manifests as selfconfidence, proactiveness and leadership.
Feminine cultures emphasize nurturing roles,
interdependence among people, and caring for less fortunate
people- for both men and women.
–
Examples-Scandinavian countries- welfare systems are highly
developed, and education is subsidized.
14
Was Hofstede Right?
Hofstede later expanded added a fifth dimension called
Confucian dynamism
–
captures attitudes toward time, persistence, ordering by status,
protection of face, respect for tradition, and reciprocation of gifts and
favors
Hofstede’s work has been criticized because
–
–
–
–
made the assumption there is a one-to-one relationship between
culture and the nation-state
study may have been culturally bound [the research team was made
up of Europeans and Americans, and the questions asked and their
analysis of the answers may have been shaped by their own cultural
biases and concerns
used IBM as sole source of information
culture is not static – it evolves
But, it is a starting point for understanding how cultures
differ, and the implications of those differences for managers
15
Perceptions of Time
Time dictates expectations about planning, scheduling,
profit streams, and what constitutes tardiness in arriving
for work and meetings.
– Longer planning horizon- Japan- prepare strategic
plans for the decade.
– Shorter planning horizon- Western companiesstrategic plans-several years.
Orientation- past, present and future- past-oriented
cultures believe that plans should be evaluated in terms of
their fit with established traditions, thus innovation and
change are infrequent.
– Examples- Europeans tend to be past-oriented;
Australia, Canada, and the U.S. are more focused on
the present.
16
Monochronic vs. Polychronic Orientation
Monochronic – rigid orientation to time in which the individual is
focused on schedules, punctuality, time as a resource, time is linear, “time
is money.”
– Investors are impatient, and want quick returns. Managers have a
relatively short-term perspective; performance is measured on a
quarterly basis.
– Example- the U.S. has acquired a reputation for being hurried and
impatient
Polychronic- A flexible, non-linear orientation to time in which the
individual takes a long-term perspective and is capable of multi-tasking;
time is elastic, long delays are tolerated before taking action.
– Punctuality per se is relatively unimportant, time commitments are
flexible, relationships are valued, future-oriented performance targets10 years, lifetime employment.
– Examples- Africa, Asia, Latin America, China, Japan and the Middle
East
17
Perceptions of (Physical) Space
Conversational distance is closer in Latin America than in
Northern Europe or the U.S.
Those who live in crowded Japan and Belgium have smaller
personal space requirements than those who live in Russia or
the U.S.
In Japan, it is common for employee workspaces to be
crowded together in the same room- one large office space
might be used for 50 employees.
North American firms partition individual workspaces and
provide private offices for more important employees.
In Islamic countries, close proximity may be discouraged
between a man and a woman who are not married.
18
The Determinants of Culture
19
Social Stratification Systems
Ascribed group memberships
Acquired group memberships
Social stratification affects both business
strategy and operational practices.
20
Religious and Ethical Systems
Religion: a system of shared beliefs and rituals that
are concerned with the realm of the sacred
Ethical systems: a set of moral principles, or
values, that are used to guide and shape behavior
– Most of the world’s ethical systems are the
product of religions
21
Language
Spoken
–
–
Verbal cues
Language structures perception of world
Unspoken
–
–
Body language
Personal space
22
Education
Formal education plays a key role in a society
– Formal education: the medium through which individuals
learn many of the language, conceptual, and mathematical
skills that are indispensable in a modern society
– Also supplements the family’s role in socializing the young into
the values and norms of a society
– Schools teach basic facts about the social and political nature
of a society, as well as focusing on the fundamental obligations
of citizenship
– …
Purchase answer to see full
attachment
How it works
- Paste your instructions in the instructions box. You can also attach an instructions file
- Select the writer category, deadline, education level and review the instructions
- Make a payment for the order to be assignment to a writer
- Download the paper after the writer uploads it
Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.
Is this service safe?
All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades