Transcript 国际商务培训演讲纲2

An Introduction to International
Business
By Cindy Yu
2005/12/9
My impression on the course:
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The thickest one among all the courses as far
as the book is referred.
The top number of the teachers.---Five
teachers gave lessons to us on the course.
The most comprehensive course.----It covers
international politics, economy, culture and
international trade and business.
My impression on the course:
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Time spent in the course:
One month with 11 lectures and
seminars .
My impression on the course:
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About examination on the course
Three parts:
1.Group work, written paper and oral
presentation ---- 20%
2.Examination without books ---- 60%
3.Case study with books and other materials ---20%
The plan of lectures on the course
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The introduction to the course will be given by
Eddie and I together.
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Cindy----be responsible for the first nine chapters
Eddie----be responsible for the rest chapters
I was told to give two lectures respectively on
Dec. 9th and Dec. 14th. I would like to take the
advantage of the two lectures to give a brief
introduction to the first 9 chapters one by one.
Part 1 Introduction
Chapter 1
Globalization
----introduce the
background of
modern
international
business
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GLOBALIZATION
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With the decline of trade and investment
barriers and the help of the technological
change, globalization comes to us.
Understand globalization: globalization refers
to the shift toward a more integrated and
interdependent world economy instead of
isolated and dependent economies.
GLOBALIZATION
promote > International
business
GLOBALIZATION
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TAKE A CAR AS AN EXAMPLE:
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Designed
in
Germany—assembled
in
Mexico—with components from Japan—the
material of steel from Korean and rubber from
Malaysian—the worker working in the rubber
factory from China .
GLOBALIZATION
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----globalization of markets: the merging of
historically distinct an separate national
markets into one huge marketplace  one
market;
---- globalization of products: the sourcing of
goods and services from locations around the
globe to take advantage of national differences
in the cost and quality of factors of production
 one factory.
GLOBALIZATION
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Is GLOBALIZATION welcome
countries in the world?
–
–
–
to
all
the
globalization debate among businessmen,
economists and politicians. Focus on jobs, wages,
the environment, working conditions, national
sovereignty.
some followothers against
Part 2 National differences
Every country is different.
All these differences have
major implications for the
practice of international
business.
Political systems
Political systems: collectivism and individualism
collectivism: refer to a political system that stresses the
primacy of collective goals over individual goals; Plato ,
e.g. socialism
individualism: a philosophy that an individual should
have freedom in his or her economic and political
pursuits; Aristotle
democracy : citizens should be directly or indirectly
involved in decision making process
totalitarianism: on the contrary, the citizens are denied
to have the right to freedom of expression, organization,
regular elections
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political systems
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4 major forms of totalitarianism mentioned in the book.
That is,
– communist totalitarianism: e.g. China,Vietnam, Laos,
North Korea and Cuba,
– theocratic totalitarianism: Islam, Iran and Saudi
Arabia, the laws of the state are based on Islamic
principles.
– Tribal totalitarianism: in African states, Zimbabwe,
Uganda and Kenya
– Right-wing
totalitarianism: permits economic
freedom but restrict individual political freedom
Economic systems
Economic systems:
market economy: all productive activities are privately
owned, as opposed to being owned by the state,
production is determined by the interaction of supply
and demand and signaled to producers through the
price system.
command economy: quantity and price are planned by
the government, lack of dynamism and innovation.
mixed economy: private ownership and free market
mechanism, state ownership and government planning
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Legal systems
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Legal systems: be of immense importance to
international business
It regulates business practice, defines how the
transactions be executed, sets down the rights and
obligations of those involved in business transactions.
Rules, or laws that regulate behavior along with the
process by which the laws are enforced and through
which redress for grievances is obtained.
Legal systems
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3 main types of legal systems:
– common law习惯法—Great Britain, and its former
colonies, give the judge the power to interpret the
law, a degree of flexibility
– civil law大陆法――based on a very detailed set of
laws organized into codes, Germany, France, Japan,
Russia, apply the law, less flexibility
– theocratic law教规---the law is based on religious
teachings, Islam law, Hindu an Jewish law
Legal systems
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Contract disputes, differences in contract law
Property rights：refers to the bundle of legal
rights over the use to which a resource is put
and over the use made of any income that may
be derived from that resource, including the
protection of intellectual property.
Culture
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Culture, a system of values and norms that are shared
among a group of people and that when taken together
constitute a design for living
values and norms
Values include a society’s attitudes toward individual
freedom, democracy, truth, justice, honesty, loyalty, etc.
Norms are the social rules that govern people’s actions
toward one another.
Culture
* Religious and ethical system, 宗教和民族制度
e.g. Islam, Buddhism, Confucianism,
Hinduism—倡导物质上的苦行生活及精神上的丰富，相
信因果报应
Protestant---emphasis on the wealth creation,
entrepreneurial behavior,
Confucianism---three central value, loyalty (to one’s
superiors)减少上下级之间的冲突, reciprocal obligations,
and honesty in dealings with others---lower the cost
* Language----spoken and unspoken language
* Education----national competitive advantage
SUMMARY
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All these will have impact on the benefits, costs
and risks associated with doing business in
different countries; the way in which the
operations should be managed; the strategy
the international firms should pursue.
Part 3
 The
global trade
and investment
environment
 Chapter4--8
Trade theories
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Mercantilism
Absolute advantage
Comparative advantage
Heckscher-ohlin theory
The Leontief Paradox
The product life-cycle
theory
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New trade theory
National competitive
advantage: Porter’s
Diamond
Mercantilism
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Mercantilism: emerged in England, in the mid16th century. The theory asserts that gold and
silver were the mainstays of national wealth
and essential to vigorous commerce. And it
advocates government intervention to achieve
a surplus in the balance of trade. It viewed the
trade as a zero-sum game. That is, one
country’s benefit comes from the other
country’s loss.
Absolute advantage
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Absolute advantage: Adam smith, the wealth of
nations, in 1776. The theory holds that a
country should export those products and
services that it has absolute advantage and
import those that other countries have absolute
advantages. By exchanging goods and service,
the world output of products increased. It is a
positive-sum game, it produces net gains for all
involved.
Comparative advantage
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Comparative advantage: David Ricardo, to explain the
phenomena that those countries with absolute
advantages also can benefit from exporting. It
advocates that a country may specialize in producing
those goods that it can produce most efficiently, while
buying those that it can produce relatively less
efficiently from other countries—even if that means
buying goods from other countries that it could produce
more efficiently itself. –differences in productivity
Heckscher-ohlin theory
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Heckscher-ohlin theory赫克歇夫－俄林理论: two
Swedish economists, different explanation to the
comparative advantages, it argues that the
comparative advantage arises from the differences in
national factor endowments instead of labor
productivity. The factor endowment means the extent
to which a country is endowed with such resources as
land, labor and capital. The theory predicts that
countries will export those goods that make
extensive use of the locally abundant factors, while
importing goods that make intensive use of factors
that are locally scarce. A key assumption in the
Heckscher-Ohlin theory is that technologies are the
The Leontief Paradox
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The Leontief Paradox:里昂惕夫悖论It is used to test the
validity of the Heckscher-Ohlin theory. Using the
Heckscher-Ohlin theory, Leontief postulated that since
the United States was relatively abundant in capital
compared to other nations, it would be an exporter of
capital-intensive goods and an importer of laborintensive goods. To his surprise, however, he found
that USA exports less capital intensive than US imports.
Since the result was at variance with the predictions of
the theory, it has become known as the Leontief
paradox.
The product life-cycle theory
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The product life-cycle theory:产品寿命周期理论
Raymond Vernon in the mid-1960s. –explanation to
international trade pattern the theory underlie that the
new products are generally first produced in the
western and developed countries, however, that is not
the necessary case in the practice of international
business. So, it is useful for explaining the pattern of
international trade during the brief period of American
dominance. The theory suggests that trade patterns
are influenced by where a new product is introduced.
New trade theory
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New trade theory: emerge in 1970s, the theory
suggests that trade allows a nation to specialize in the
production of certain goods, attaining scale economies
and lowering the costs of producing those goods, while
buying goods that it does not produce from other
countries that are similarly specialized. By this
mechanism, the goods available to consumers are
increased. The limited market demand may lead to the
first mover advantages which may devote to the first
mover advantage instead of the factor endowments. It
generates the reasons for the government intervention
and strategic trade policy. It also states that in those
industries where the existence of substantial
National competitive advantage
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National competitive advantage: Porter’s Diamond.国
家 竞 争 优 势 ， 波 特 理 论 In 1990, the competitive
advantages of nations factor endowments, demand
conditions—home demand, relating and supporting
industries, firm strategy, structure and rivalry,
basic factors――natural resources , climate, location
and demographics,
advanced
factors—communication
infrastructure,
sophisticated skilled labor, research facilities and
technological know-how.
National competitive advantage
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Porter theorizes that four broad attributes of a nation
shape the environment in which local firms compete.
That is factor endowments, demand conditions,
relating and supporting industry and firm
stratey\structure and rivalry. The firms are most likely to
succeed in industries or industry segments where the
diamond is most favorable. The diamond is a mutually
reinforcing system. ---two additional variables --chance and government can influence the national
diamond.
The political economy of
international trade
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Political reality of international trade: While
many countries are nominally committed to
free trade, they tend to intervene in
international trade to protect the interests of
politically important groups.
e.g. the politicians in U.S.A lavished subsidies
on farmers to win votes.
Instruments of trade policy-----贸易
政策的手段
-----7 main instruments,
 Tariff 关税
 Subsidies补贴
 Import quota 进口配额
 Voluntary export restraints,自愿出口限制
 Local content requirements 本地成分要求
 Administrative policies, 管理政策
 Dumping倾销
Tariff
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Tariff is a tax levied on imports. Specific tariff--fixed charge for each unit, ad valorem tariff---a
proportion of the value of goods. A tariff is a
kind of duties imposed by an importing country
on the import products so as to raise the cost
of the products and reduce the competitive
advantages of the products in domestic market.
It is the oldest and simplest instrument of trade
policy.
Subsidies
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Subsidies补贴 is a kind of funds that given to
the producers by government. It is a
government payment to domestic producer,
taking many forms of cash grants, low-interest
loans, tax breaks and government equity
participation in domestic firms. It helps the
domestic companies to compete against
foreign imports and gain foreign exports market.
Import quota
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Import quota 进口配额 is a direct restriction
on the quantity of some goods that may be
imported into a country. The restriction is
usually enforced by issuing import licenses to a
group of individuals or firms.
Voluntary export restraints
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Voluntary export restraints,自愿出口限制 a
variant on the import quota is the voluntary
export restraint, is a quota on trade imposed by
the exporting countries, typically at the request
of the import country’s government.
Local content requirements
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Local content requirements 本地成分要求
are requirements that some specific fraction of
a good be produced domestically. It can be
expressed either in physical terms or in value
terms.
Administrative policies
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Administrative policies, 管理政策an informal
instrument to restrict imports and boost exports,
are bureaucratic rules that are designed to
make it difficult for imports to enter a country.
Dumping
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Dumping倾销 is defined as selling goods in a
foreign market at below their costs of
production, or as selling goods at below their
“fair” market value.
Dumping is viewed as a method by which firms
unload excess production in foreign market.
Political arguments for intervention
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Protecting jobs and industries 保护就业机会和
重要行业
National security国家安全
Retaliation报复
Protecting consumers保护消费者利益
Furthering foreign policy objectives外交政策目
标的延伸
Protecting human rights保护人权
Economic arguments for
intervention
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The infant industry argument保护幼稚工业
Strategic trade policy战略性贸易政策
Development of the world trading
system
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From Smith to the great depression:
Free trade policy in England in 19th century
the first world war  increase tariff in
U.S.AGreat depression (world economy)
Development of the world trading
system
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1947-1979: GATT, Trade liberalization, and economic
growth. 关贸总协定，贸易自由化和经济增长
The GATT is multilateral agreement whose objective
was to liberalize trade by eliminating tariffs, subsidies ,
import quotas, and the like.
1980-1993: disturbing trends令人不安的发展趋势—贸
易保护主义日渐加剧great protectionism
the Uruguay Round and the World Trade Organization
乌拉圭回合谈判和世界贸易组织
Foreign Direct Investment外国直接
投资
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Question: Why do so many firms prefer FDI
over either exporting or licensing?
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Try to understand the conditions under
which firms prefer FDI to exporting or
licensing.
FDI
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Conception: Foreign direct investment
occurs when a firm invests directly in
facilities to produce or market a product in
a foreign country.
It also occurs when a firm buys an existing
company in a foreign country. (one of the
patterns of trade between countries)
FDI
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Horizontal FDI is investment in the same
industry abroad as a firm operates at home.
Vertical FDI is investment in an industry abroad
that provides inputs for a firm’s domestic
operations, or it may be FDI in an industry
abroad that sells the outputs of a firm’s
domestic operations.
Theories to explain FDI
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Transportation costs
for products of low value-to-weight ratio,
the transportation costs account for a lot in
the cost of the products, the attractiveness
of exporting decreases relative to either FDI
or licensing.
Theories to explain FDI
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Market imperfections (internalization
theory):
market imperfections are factors that inhibit
markets from working perfectly. When there
are impediments to the free flow of
products between nations or when there
are impediments to the sale of know-how,
the market imperfections arise and FDI is
preferred.
Theories to explain FDI
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Strategic behavior: 跟随竞争者
it suggests that FDI flows are a reflection of
strategic rivalry between firms in the global
marketplace. This theory explains the
imitative FDI behavior by firms in
oligopolistic industries.
Theories to explain FDI
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The product life cycle:
Vernon’s view is that firms undertake FDI at
particular stages in the life cycle of a product they
have pioneered. When local demand in those
countries grows large enough to support local
production, or when product standardization and
market saturation give rise to price competition
and cost pressures, investment in developing
countries where labor costs are lower is seen as
the best way to reduce cost.
Theories to explain FDI

Location-specific advantages:兼收并蓄理论、特定地
点优势理论 John Dunning—British economist
Location-specific advantages are those advantages
that arise from using resource endowments or assets
that are tied to a particular foreign location and that a
firm finds valuable to combine with its own unique
assets. Firms undertake FDI to exploit resource
endowments or assets that are location-specific. A
good combination of local resource advantages and
own unique technology advantages.
E.g, invest in oil exploitation.
The Political Economy of FDI

This chapter discusses the role of government
in FDI. Through their choice of policies and
their statements and actions, governments can
both encourage and restrict FDI.
相关术语
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国际收支帐目(balance-of-payment accounts)
资本项目(capital account)
往来项目(current account)
兼收并蓄理论(eclectic paradigm)
出口( e x p o r t i n g )
外在性( e x t e r n a l i t i e s )
外国直接投资流动(flow of foreign direct investment)
外国直接投资(foreign direct investment)
母国(home country)
东道国(host country)
相关术语
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外国直接投资的流入(inflows of foreign direct
investment)
国际化理论(internationalization theory)
许可( l i c e n s i n g )
地点优势(location-specific advantages)
跨国企业(multinational enterprise)
寡头垄断行业( o l i g o p o l y )
外国直接投资的流出(outflows of foreign direct
investment)
外国直接投资的存量(stock of foreign direct investment)
Summary
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understand under the condition which the
companies should choose to export or license
or FDI.
Regional Economic Integration 区域
经济一体化
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Conception: Regional economic
integration--a number of levels of economic
integration include a free trade area, a
customs union, a common market, an
economic union, and full political union.
The types of Regional Economic
Integration
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Free trade area
Customs union
Common market
An economic union
A political union
Free trade area
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In a free trade area, all barriers to the trade of
goods and services among member countries
are removed. But each country is allowed to
determine its own trade policies with regard to
nonmembers. Eg, European Free Trade
Association (EFTA), 4 countries, North
American Free Trade Agreement, ASEAN,
APEC
Customs union
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The customs union is one step further along
the road to full economic and political
integration. A customs union eliminates trade
barriers between member countries and adopts
a common external trade policy.
Eg,
Andean Pact
Common market
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The next level of economic integration, a common
market has no barriers to trade between member
countries, includes a common external trade policy,
and allows factors of production to move freely
between members. A common market demands a
significant degree of harmony and cooperation on
fiscal, monetary and employment policies. E.g,
MERCOSUR, the south American grouping hopes
to establish itself as a common market. CARICOM
加勒比委员会
An economic union
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An economic union entails even closer economic
integration and cooperation than a common market.
It involves the free flow of products and factors of
production between member countries and
adoption of common external trade policy, but it
also requires a common currency, harmonization
of members’ tax rates and a common monetary
policy, fiscal policy. The EU is an economic union.
A political union
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A political union is a central political
apparatus coordinates the economic, social
and foreign policy of the member states.
The EU is on the road toward at least partial
political union. Canada and the United
States provide examples of even closer
degrees of political union.
了解世界各地目前区域经济一体化的具
体形式
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欧洲的区域经济一体化，如欧盟EU，
美洲的区域经济一体化，北美自由贸易协定
(THE NORTH AMERICAN FREE TRADE
AGREEMENT)、安易斯集团(The Andean Pact)，
拉美南方共同市场(MERCOSUR)，加勒比委员
会（CARICOM）
其它地区的区域经济一体化 ,东南亚国家联盟
ASEAN、亚太经合组织（APEC）。
Part 4 The Global Monetary System
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the first of three that
deal with the
international monetary
system
The Foreign Exchange Market
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how the foreign exchange market works
examine the forces that determine exchange
rates
map the implications for international business
of exchange rate movements and the foreign
exchange market.
The role of foreign exchange
market:
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to convert the currency of one country into the
currency of another.
to provide some insurance against foreign
exchange risk.
Economic theories of exchange
rate determination(决定汇率的因素)
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Prices and exchange rates: 价格与汇率
Interest rates and exchange rates 利率和汇率
Investor psychology and bandwagon effects:投
资心理和马戏团彩车效应
Prices and exchange rates: 价格与
汇率
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The law of One Price:同物同价原则：In competitive markets free
of transportation costs and barriers to trade , identical products
sold in different countries must sell for the same price when their
price is expressed in terms of the same currency.
指如果不考虑运输成本和贸易壁垒（比如关税）等因素，在存在竞
争的市场内，以同一种货币定价的同一种商品在不同国家的售价应
该相同。
Purchasing power parity theory(PPP theory)购买力平价理论
PPP theory predicts that exchange rates are determined by
relative prices, and that changes in relative prices will result in a
change in exchange rates.
Interest rates and exchange rates
利率和汇率
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International Fisher Effect 国际费希尔效应
The International Fisher Effect states that for
any two countries, the spot exchange rate
should change in an equal amount but in the
opposite direction to the difference in nominal
interest rates between the two countries.
Investor psychology and
bandwagon effects:投资心理和马戏
团彩车效应
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Various psychological factors play an important
role in determining the expectations of market
traders as to likely future exchange, especially
short-run exchange rate movements.
SUMMARY
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汇率关系到国际贸易与投资的利润，如果汇率发
生了不利的变化，本可以获利的交易会一下变得
无利可图。由汇率带给国际商务活动的风险被称
为外汇风险。
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THANK YOU!