International Business
For MBA Class, Grade 2001,
SWUFE
Teacher & P.P.Writer:
Associate-Prof. Shuai Jianlin
April 6, 2002 –
International Business

Part 1: Environment for International
Business
 Part 2: Decision Making
 Part 3: Aspects and Practice of
International Business
Part 1 Environment for
International Business

Chapter 1 Economical Description of the
World (Economic Map)


Chapter 8 More about Globalization
Chapter 2 Economic & Cultural
Foundation of the Western Market Economy
 Chapter 3 Theory & Policy for International
Business (Trade & Investment)
Teacher’s Words

To Think Globally, to Act Locally.
1.1 Chapter 1 Economical
Description of the World
Bird-eye View,
or Tiger-eye View ?
1.1.1 Bird-eye View,
– World Economy
– Globalization (Oxford Analytica & Case )
– Regional Integration
 Free Trade Area
 Customs Union
 Common Market
 Economic Union
 Complete Economic Integration
1.1.2 Tiger-eye View ?
– Regulatory Framework
 International Law
 WTO (& Official Sayings, Packages)
 IMF
 The World Bank
 ADB
 ICC
 FIDIC
Case

US Meets the Challenge of Globalization
Refer to “the Written Papers” for Language Test
Keys to the Test
1.2 Chapter 2 Economic &
Cultural Foundation of the
Western Market Economy

1.2.1 Environment of Political & Economic
System of West Market Economy
 1.2.2 Cultural Backdrop
 1.2.3 A Few Useful Economic Analytical
Tools
1.2.1 Environment of Political &
Economic System of West Market
Economy
What business are we to do?
Property Rights
Government Ownership & Planning
Special Role of Money, Banking System &
the Central Bank
Foreign Trade & Investment
Attachment 1 to 1.2.1

The expanding horizon of the typical
Chinese enterprise:
– International Purchasing;
– International Finance;
– International Technology Transfer;
– International Production Partnerships;
– International Marketing
Attachment 2 to 1.2.1

Attributes of the Market Economy (cf. Centralized
Planned Economy)
– Well Defined & Well-protected Property Rights for
Individual;
– A Varying but Relatively Low Proportion of
Government Ownership Enterprises;
– A Special Role for Money as A Means of Payment & a
Standard of Deferred Payment;
– Foreign Trade & Investment Follow the Comparative
Advantage of a Country; Balance of Payment
Necessary for the Acceptance of its Currency
Convertibility;
Attachment 3 to 1.2.1

Attributes of the Centralized Planned
Economy:
– Refer to the Book in Chinese
1.2.2 Cultural Backdrop
Culture Shock
Understanding Cultural Differences
Customs Etiquette & Protocol
Non-verbal Communication
Cultural Landmines for Women
Religions & The Impacts on Business
Cross-cultural Marketing
Attachment 1 to 1.2.2

Customs Etiquette & Protocol
Attachment 2 to 1.2.2

Non-verbal Communication
– Gestures around the world
Attachment 3 to 1.2.2

Cultural Landmines for Women
Attachment 4 to 1.2.2

Religions & the Impacts on International Business
– Bible & Christianity ---what does the Root tell us?
– Alcoran (Gulan) & Islamism

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Case: Platonic (唯心)& Realism（实在论）-- Premier Li
Peng’s visit with 5 million to President Assad with a cold face
//Barkley Hydro-power Project & Government Loan—My
money is mine; yours is also mine.
Case: Key Role of the VIP – “Beifang”, Liu Laosan &
Assad//SCMEC & Mr.Wali//Zhongxing Co.
Case: So many uncertainties– changing contract, promise; Visa
application at Jordan Embassy at Damascus, etc.
Case: Pious & Brave fighter for Muhanmurd---telling a lie?
– Buddhism

In Singapore, Vietnam, Laos, Nepal, etc.
Attachment 5 to 1.2.2

Cross-cultural Marketing
1.2.3 A Few Economic
Analytical Tools

Opportunity Costs
 Marginal Analysis
 Economic Incentive
Opportunity Cost in Roma Empire
(Roma Empire’s PPF)

X: Cars (Millions per
year);
 Y: Grain (Billion of
bushels per year)
 A: Opportunity Cost of
1 car is 2000 bushels of
grain.
 B: opportunity cost of 1
car is 9000 bushels of
grain.
1.3 Chapter 3 Theory &
Policy for International
Business (Trade & Investment)


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1.3.1 International Trade Theory
1.3.2 Foreign Direct Investment (FDI)
1.3.3 Government Influence on Trade and
Investment
1.3.4 China’s Comparative Advantage (for selfstudy)
1.3.5 Implications---to trade, or to invest? That’s
a question.
1.3.1 International Trade
Theory

Comparative Advantage Theory
 Survey of International Trade
 Benefits of International Trade
 Barrier to International Trade & Causes to
FDI (Government Influence)
 Case Study
Attachment to 1.3.1
Benefits of International Trade

Flow of Goods
 Balance of Trade and Balance of Payments
Attachment to 1.3.1
Barrier to International Trade
& Causes to FDI
 Culture
Barrier
 Economic Barrier
 Artificial Barrier
1.3.2 Foreign Direct
Investment / International
Direct Investment

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






What’s that? FDI .
The Relationship of Trade & Factor Mobility
Motivations for Handling International Business
through Direct Investment
Market-Expansion: Investments vs. Trade
Resource-Acquisition Investments
Diversification-Oriented Investments
Competitive Risk Minimization
Political Motives
Buy vs. Build Decision
1.3.21 What’s that? FDI.
The Core of FDI: Control 控制--FDI的核心
 The Concern about Control 对于控制的观
点
 Methods of Acquisition 收购的途径

1.3.22 The Relationship of
Trade and Factor Mobility
贸易与要素流动的关系

The Trade and Factor Mobility Theory贸易
理论与要素流动理论
 Substitution 替代
 Complementarities of Trade and Direct
Investment 贸易与直接投资的互补行
1.3.23 Motivations for Handling
International Business through Direct
Investment
通过直接投资进行国际
商务的动机




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To Expand Their Sales 扩大销售
To Acquire Resources 获取资源
To Diversify Their Sources of Sales & Supplies
销售或供给的多样化
To Minimize Competitive Risk 竞争风险的最小
化
To Attain Political Advantage 获取政治优势
1.3.24 Market-Expansion:
Investments vs. Trade
Attachment to 1.3.24
Trade Barrier Causes Flow of Capital;
Capital Flow Barrier Causes Trade

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Transportation
Lack of Domestic Capacity
Scale Economy
Trade Restriction
Country-of-Origin Effects
Nationalism
Product Image
Delivery Risk
Changes in Comparative Costs
1.3.25 Resource-Acquisition
Investments 为了获取资源的投资
Vertical Integration 垂直一体化
Rationalized Production 合理化生产
Access to Production Factors 获取生产要素
The Product Life Cycle Theory 产品生产周
期理论
Government Investment Incentives 政府对投
资的刺激
1.3.26 Diversification-Oriented
Investments 以多元化为导向的投资
Diversification
Cyclical Swings
1.3.27 Competitive Risk
Minimization 竞争风险最小化
Following Customers 追随顾客
Preventing Competitor’s Advantage 阻止竞争
者的优势
1.3.28 Political Motives
1.3.29 Buy vs. Build Decision
购买—创建决策

Reasons for Buying
 Reasons for Building