Volume 9
Interna onal Business Digest
Issue 2
December
Center for Interna onal Business Educa on
2012
Fall 2012 Field Trip to South Korea
Inside This Issue
Field Trip to South Korea
Page 1 Editor’s Note
Page 2 Training Workshops
Page 2 Impressions from South
Africa Page 3 Impressions from South
Korea
Page 4 Foreign Por olio
Investment Page 5 Contact Informa on
Page 6 The Prairie View A&M University Center for Interna onal Business Educa on (CIBE) organized an educa onal field trip/study tour to South Korea in October 20‐26, 2012. The primary objec ve of the trip was to introduce the par cipants to Korean culture and get a glimpse into Korean business prac ces. Funded by a grant from the United Negro College Funds Special Programs (UNCFSP) Corpora on, this was our third field trip to South Korea. The field trip was a ended by eight par cipants ‐ one PVAMU faculty member, six undergraduate business students and one graduate business student. The students were selected compe vely from a pool of more than 20 applicants. The field ac vi es were organized by Kong Ju Na onal University of Educa on. The group a ended class lectures presented by local professors, toured the Hyundai Automobile Asan factory and the Korean Ins tute of Energy Research, and visited several famous tourism landmarks ‐ Kyungbok Palace, Korean Folk Village, and the informal markets at Itaewon and Insadong. The last part of the trip provided the group with an interna onal se ng and the opportunity to explore some of the best cultural and culinary spots in all of Korea. The field trip par cipants were required to submit a one‐page evalua on essay and complete an evalua on ques onnaire. These evalua on essays and ques onnaires reveal that the par cipants generally felt that the program presented truly a once‐in‐a life me opportunity to broaden their educa onal, cultural, and global perspec ves. The students came away with a broad understanding of Korea and its economic success, business e que e, history, culture, geography and most importantly the Korean people. Sample excerpts from the par cipants’ assessment of the trip are provided on page 4 of this newsle er. Editor’s Note
Gree ngs. It gives us great pleasure to bring to you the 34th issue of the Prairie View
InternaƟonal Business Digest, an electronic quarterly newsle er produced by the Center for Interna onal Business Educa on. This issue features four sec ons. The first sec on presents an overview of an educa on field trip to Korea that we recently organized for a group of business faculty and students. The second sec on presents a brief summary of two workshops we conducted for local high school educators. The third sec on is an ar cle by Dr. Munir Quddus, Dean of College of Business, about his impressions of a recent visit to South Africa. The final sec on is an ar cle by Dr. Vijay Vemuri, an accoun ng professor at PVAMU, on the pa erns of foreign Dr. Rahim Quazi direct and por olio investment. Please note that all URL links are ac ve and you can go Editor directly to an ar cle from the table of contents sec on on the first page. We hope you con nue to find this e‐newsle er a valuable channel for important informa on rela ng to interna onal business. We do hope our efforts will inspire greater number of local firms to seek out new global business opportuni es. Should you have any ques ons or sugges ons, please feel free to contact us. Thank you for your support. Rahim Quazi, Ph.D. Editor, Prairie View InternaƟonal Business Digest Prairie View A&M University ‐ College of Business E‐mail: rmquazi@pvamu.edu Phone: (936) 261‐9225 Fax: (936) 261‐9226 Global Business/Entrepreneurship Training Workshops
for High School Educators The PVAMU CIBE organized two half‐day training workshop for local high school educators on September 26 and October 24, 2012. Seventeen educators from several local school districts (Cy‐Fair, Houston, Katy, Klein, Spring, etc.) a ended the workshops and received teaching ps and materials for course and curriculum design, unit and lesson planning, and con nuing professional educa on (CPE) le ers. The workshops were funded by a grant from the United Negro College Funds Special Programs (UNCFSP) Corpora on. Two PVAMU business faculty members, Dr. Reginald Bell and Dr. Rahim Quazi, were the main workshop presenters. Dr. Quazi shared lesson plans for teaching high school students the basics of globaliza on and interna onal trade, and Dr. Bell discussed several topics on cross‐
cultural communica on. Video case studies on globaliza on were presented and discussed. We believe our outreach efforts will encourage greater number of local high schools to appreciate the value of global learning and scholarship, and prepare their students for construc ve leadership in the global community. Prairie View Interna onal Business Digest Page 2
Volume 9 Issue 2
Impressions from South Africa
Contributed by Dr. Munir Quddus, Dean, College of Business and Professor of Economics
This was a journey of discovery for me. My first trip to Africa dissipated any concerns and feelings of uncertainty that I had prior to the trip. This is a magnificent country, a na on that has already achieved a miraculous transforma on from more than 40 years of apartheid to an inclusive society. The important next step is to build democracy and civil society, and most importantly the economic base. This should be done with an eye to both equity and growth. Foreign investment must be encouraged in the flagship sectors of the economy. Small businesses must be encouraged and nurtured to grow, but these should be export oriented, and importantly focused on manufacturing. Too many of the small businesses find it easier to grow in the service sector, which is not bad, but more have to move to manufacturing to create good jobs. Based on my mee ngs with business and industry leaders, government officials, and research presented by University of South Africa (UNISA) faculty, my impression is that South Africa has a dynamic indigenous small/medium enterprise sector. The incubators we visited at the Ford plant reinforced this impression that with proper mentoring and support, these businesses can grow and be more successful. The high unemployment rate (24%) shows that there is plenty of surplus labor available to help the economy grow. American business students and faculty interested in spending some me in South Africa can play a vital role here. They can travel on summer internship trips (and as consultants) and give their me and efforts to build up these organiza ons’ capacity. Student and faculty exchange programs in South Africa can be arranged any me, but summer works best in my view. These should be one to three month visits, where the visitors stay with host family and work with local businesses in rural and urban areas. Given UNISA’s new move to online educa on, the American faculty and students who are more experienced in the online format can train and provide assistance. As a professor, I will certainly discuss my experience with my students. I will men on how the South African popula on has made the enormously successful transi on from apartheid to assimila on, where all races are working together to build a society and economy that works for all. There are important lessons in leadership, ethics, entrepreneurship – that we can learn from their experience.
Prairie View Interna onal Business Digest Page 3
Volume 9 Issue 2
Impressions from South Korea
“Overall, it was an informa ve and useful field trip for our students who immersed themselves in the Korean culture and social systems, experiencing them through direct interac on.” – Dr. Brian Lee, Professor of Accoun ng and faculty trip leader “The trip allowed for a brief overview of the different aspects that make up a culture: history, food, people, cultural nuances and its businesses environment – all of which I am so very grateful that I was able to witness and explore.” – Tara Branscomb, MBA student “I liked the scenery, how everything operated, and the welcoming vibe that I received from the individuals that I was surrounded by. It has impacted me to the point where I want to learn another language. I feel that would be an essen al part of the growth of my career in business.” – Jonathan Amos, BBA student “I learned that when entering a global market, communica on has to shi from single‐mindedness to a degree of unbiased thinking. In essence, global communica on cannot be effec ve when either party has a sense of ethnocentrism.” – Ashlynn Bridges, BBA student, Honors Program “From this experience I am extremely excited to say that I have grown from a local to a global intellectual and fully plan to expand on this and travel abroad again.” – Nadia Grier, BBA student, Honors Program “My view of the world is not the same a er going on this trip.” – Kourtney Lardge, BBA student, Honors Program “Traveling to Korea has not only changed my ideas on culture and society, but it has given me a new avenue of mo va on to become a global leader.” – Demario Lowe, BBA student, Honors Program Prairie View Interna onal Business Digest Page 4
Volume 9 Issue 2
Foreign Por olio Investment: The Other Interna onal Capital Flow
Contributed by Dr. Vijay Vemuri, Assistant Professor of AccounƟng
Prairie View Interna onal Business Digest 1
0
5
.5
Exports
10
FDI and FPI
15
1.5
Globaliza on is all around us. Cross‐border movement of products, services, capital, informa on, people and technology is pervasive and accelera ng. We, living in the U.S., hardly spend a day without consuming several products and services made or supplied by countries all over the world. Other na ons, including developing countries, are also experiencing rapid growth in globaliza on. Globaliza on in the form of integra on of consumer markets is highly visible. However, integra on of capital markets, although less no ced, is also experiencing a rapid growth. The capital flows generally take the form of 1) foreign direct investment, 2) foreign por olio investment and 3) merger and acquisi on ac vity. Foreign direct investment (FDI) is investment into a business in a country by a company in another county, by either inves ng in a company or expanding exis ng opera ons. In this context, greenfield investments is a label used to describe FDI undertaken from scratch – inves ng in new assets. Foreign por olio investment (FPI), on the other hand, is investment in the securi es of another country. Mergers and acquisi ons are thought of as the opposite of greenfield investments in that no new assets are created; rather, claims to the exis ng assets are reconfigured. In the last two decades, substan al focus is placed on FDI. Now we understand many determinants of FDI, its contribu on to the economy of the host country (growth, development and technological progress) and spillover effects into human development in the host country. In contrast, not much is known about the economic and social impact of FPI and mergers. The graph featured on the le shows the worldwide totals of exports, FDI and FPI. Exports, FDI and FPI
Exports: Left Scale in Trillions; FDI and FPI Right Scale in Billions
A few important observa ons are: Except during the recent downturn, exports have a steep and steady increase. The rela ve sizes of FDI and FPI change over me, none has experienced pronounced growth, and both exhibit high levels of fluctua ons. Especially noteworthy is near‐total withdrawal of FPI during the year 2008. When considered at an individual country level, the vola lity of FPI is expected to be even more pronounced. 2002
2004
2006
2008
2010
Year
FDI and FPI are different in many exp
fdi1
important dimensions. FDI requires long
fpi1
‐range commitments by investors with substan al knowledge of host countries ‐ their economies, available technologies and human resources. FDI tends to be s cky in that it is harder to withdraw these investments. It also requires hands‐
on management of foreign investments. On the other hand, FPI requires much less commitment by the inves ng companies as the investments will be mostly in securi es that can be converted to cash and repatriated with li le effort. The knowledge of host countries that is needed to enter a foreign market can be substan ally less as poten al losses from investments can be mi gated by swi withdrawals. Roughly speaking, from the inves ng firm’s point of view, the differences between FDI and FPI are analogous to day‐to‐day opera ons of a company (in the case of FDI) and inves ng in a company (in the case of FPI). From the host country’s perspec ve, FPI can pose substan al risks as sudden withdrawals are capable of causing deep financial crises. The choice between FDI and FPI can be thought of as a tradeoff between risk, reward and control. Page 5
Volume 9 Issue 2
PVAMU College of Business
Vision and Mission Statements
Vision Statement:
Our vision is to empower students from diverse backgrounds to become produc ve and ethical business professionals who are among the best in the world. Mission Statement:
We provide a diverse student body with an educa on that creates highly produc ve professionals who are ethical, entrepreneurial, and prepared to succeed in the global economy. The College achieves this through excellence in teaching, research and service, and engagement with the business community and other stakeholders. The student experience is dis nguished by personal a en on, teamwork, leadership training, and apprecia on of the social responsibility of business. Prairie View A&M University College of Business P.O. Box 519; MS 2300 Prairie View, TX 77446 Next Issue ‐ March 2013
If you would like to receive an electronic version of this newsle er, please contact Dr. Rahim Quazi in the College of Business at 936‐261‐9225 or rmquazi@pvamu.edu Visit our website!
www.pvamu.edu/business or www.pvamu.edu/pages/4478.asp