MKT 3400
INTERNATIONAL BUSINESS PRINCIPLES
Professor Cliff Wymbs
Baruch College, Zicklin School of Business
Fall, 2010, August 18, 2010
Objectives:
The objectives of the course are to introduce future managers and specialists to how international
factors influence modern business decision-making and to provide them with the requisite
problem solving skills to understand and function in this global environment.
Learning Goals:
• An understanding of key economic, political and social dimensions of international
business and an ability to relate them to current business news in the press.
• An ability to systematically analyze a “case.”
• An ability to analyze the factors that drive currency movements.
• An ability to understand and trace the key steps associated with running an international
export/import business.
• An understanding of how the changing global economy affects each student.
• An opportunity for students to improve their written and oral skills.
Meeting Time: Tuesday and Thursday 11:10 to 12:25
Office: Room 12-284
Phone: 646-312-3299
Fax: 646-312-3271
email: Clifford.Wymbs@baruch.cuny.edu
Office Hours: Tuesday and Thursday 10:30 to 11:00 or by appointment
Reading Material:
• Daniels, Radebaugh, and Sullivan. International Business: Environment and Operations,
12th Edition, Addison-Wesley, 2009.
•
Friedman, T. The World is Flat (Updated and Expanded). Farrar, Straus & Giroux, New
York, 2006, (a paperback version is available.)
Course Description:
This is a survey course, a journey if you will, that will expose students to a large number of
micro and macro factors that affect the management and operations of international business.
Topics to be covered include: an analysis of the cultural, political and legal environments in
which international business operates; a survey of trade and investment theories and their
business applications; an assessment of how global financial markets operate and why they are
important; an overview of the dynamics of international business relationships and their
associated risks; an understanding of corporate strategy formulation and execution; a discussion
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of functional manager roles and responsibilities. In many cases, the interactions between topics
will bring to light many thought-provoking questions and lively discussion.
The texts, other assigned readings and lectures provide the necessary body of knowledge to
analyze real world business problems. Case studies will be used as a device for developing
analytical and decision-making skills and for highlighting the realities of organizational and
environmental uncertainties in the international business decision-making process. You and/or
your team will be required to study the assigned cases, analyze them, and discuss your insights
with the rest of the class.
Class Procedures:
The content of the course will be conveyed through a mix of lectures, discussions, projects, and
cases. Students are expected to discuss knowledgeably the assigned readings, raise questions
they may have on the readings, and participate in the case discussions.
Each class will be segmented into three related activities:
-Discussion of topical articles, video and/or cases.
-Lecture on and/or activities demonstrating important theoretical, definitional or situational
areas.
-Synthesis of the above material.
The level of time spent on each activity will vary depending on the topic.
Grading:
1. Class Participation/Individual Assignments 10%
2. First Exam (essay) 25%
3. Mid-Term (multiple choice) 15%
4. International Business Project 15%
5. Currency Exercise 5%
6. Team Exercises 10%
7. Final Exam (essay) 20%
A description of each activity follows:
1. Class Participation/Individual Assignments
Class participation is an important way of sharing your thoughts with class members to enhance
group learning. It also serves as a valuable training forum for business because there you will be
required to respond to unanticipated questions. There is no magical way of acquiring this skill.
You must overcome your individual level of anxiety via practice. Your logical, concise analysis
should make distinct, positive and useful contributions to the class. Remember, there is no one
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right answer, but views which cannot be logically supported will be deemed to be poor answers.
If the need arises, I reserve the right to curtail or defer discussion.
Student will be asked to bring to class and be prepared to discuss, materials they have read in
business journals and newspapers, e.g., Wall Street Journal, New York Times, Financial Times,
Economist, on-line, Business Week, Fortune, etc., which relate to the overall international
business topic, preferable the one for that day’s class. Credit will be given for discussed articles.
Class participation credit will also be given for attending international seminars, class attendance
taken randomly, individual assignments and class contribution.
2. First Exam
The first exam will cover Chapters 1, 2, 3, 4, 6, 7, 8, 14 and be closed book. There will be only
essay questions. Approximately 50 to 75 percent of the questions will be taken from the syllabus
questions and the rest will be taken from class discussion. (October 12th). You can have one
page of notes (individually prepared) and you must hand them in with the exam.
3. Second Exam
The second exam will cover Chapters 9, 10, 11, 12, 13, 15, 16, and 17. This will be a multiple
choice exam. Closed book. You can have one page of notes (individually prepared) and you
must hand them in with the exam. Exam is November 11th.
4. International Business Project
This project is an individual paper on the creation of an international import export business.
You will pick your own product and countries and you will need to apply concepts covered in
the middle chapters of the course; the more relevant the concepts that you relate to the creation
and operation of your business, the higher your grade. For example, assume that your company
is a U.S. company acquiring blue jeans from a low cost area (possibly China, Mexico, or
Panama) and wishing to sell them in Europe (possibly U.K., France, or Germany). What is your
plan and activity sequence? The plan must include:
•
•
•
•
•
A strategy, how are you going to be competitive? (e.g., lower cost, differentiation)
A market program, what countries are you going to choose? Why? Criteria, etc.
A supply chain for goods, how does the company get physical products from the
suppliers to the customer.
A financial trail, how will the company pay for the goods (which currency), minimize
financial exposure (options, forward contracts, inflation, etc.) and get profits back to the
U.S. for shareholders (currency conversion).
An information trail associated with the goods; when does the company need to do what,
payments, milestones, etc.
You are free to use real data from customs and trade databases, but that is not the main point of
the exercise. Rather you must go through the thought process of doing international business and
identify what problems you will encounter and what tools you may use to overcome them. You
can make up some facts and numbers along the way to make your business sound real. A flow
chart and pictures are also helpful. More details will be provided when we cover the material in
Chapters 9, 10, 11, 12, 13, 15, 16, and 17.
The International Business Project is due December 2nd.
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5. Currency Exercise
A short write-up describing what causes exchange rates to move which begins on 3/15 (Friday’s
paper, Thursday closing prices) and ends on 3/22 - explaining the change in currencies over 5
periods, e.g., Thurs to Fri, (1 period). Turn in the write-up on October 28th. Graph the
indirect exchange rates (foreign currency per U.S. dollar) for the Yen, Pound and Euro. Give an
explanation of why each currency moved in the direction it did for the particular period, e.g., the
pound appreciated relative to the dollar between October 19 and October 20 because the Federal
Reserve Chairman Bernanke lowered U.S. interest rates one-quarter of one percent, thereby
reducing the attractiveness of U.S. bonds to foreigners.
6. Team Exercises
Team Case Presentation
Each student team will perform a case analysis chosen from the main text book. The case will be
presented in the format set forth below, be limited to two overheads in readable type and take no
more than 10 minutes. Each group should prepare an analysis of between 8 and 10 pages, typed,
double-spaced, well written, carefully proofread, and stapled one week after the last
presentation. Your analysis should include the following sections (begin typing immediately
after the heading, which should be in bold):
•A Statement of the Problem(s);
•Definition of Key Players and an Explanation of Why They are Key;
•Decision(s) that are Required to be Made; (Key Factual Support);
•Alternatives Considered; (Key Factual Support)
•Recommendations; (Key Factual Support)
After the presentation, I will ask the class to highlight what the presenting group did well and
what they could have done better. The presenting group is free to revise their recommendation
or discuss why the alternatives are without merit.
7. Final Exam
The final exam will cover Chapter 5 from Daniels and the material from the book, The World is
Flat, and be closed book and one side of one page of notes. Approximately 50 to 75 percent of
the questions will be taken from the syllabus questions and the rest will be taken from class
discussion.
8. Code of Conduct: Academic dishonesty includes, but is not limited to cheating, plagiarism,
collusion, sabotage, and falsification of records. For clarification and definitions see the
College’s
Academic
Honesty
Website:
www.baruch.cuny.edu/academic/academic_honesty.html. Penalties can be severe and are
determined by the instructor on a case-by-case basis.
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Course Schedule
Overview – August 26 (Class 1)
Provide course overview
Go over syllabus
**** Form teams of approximately 7-9 persons****
As a team go out and identify two businesses around Baruch that have international
operations. Answer the following three questions for each
• What makes them international?
• Why have they gone international?
• Why have they become more so in the last ten years?
*****Be prepared to discuss at the next class****
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A. International Business Overview
Chapter 1 -Background: August 31 (2)
What is globalization? What are the problems associated with globalization?
What factors increase globalization?
What is international business and why do you need to learn about it?
How does international business affect, and how is it affected by, other disciplines?
Describe the three primary reasons firms engage in international business.
Case – The Globalization of Professional Sports
Discuss the concept, professional sports stars are free agents with a brand.
Case – Carnival Cruise Lines
What are the global forces that contribute to the growth of the cruise lines and what are some of
the national differences that affect their operations?
Write down and hand in on September 2 two examples of : How does today’s culture
(norms, values and beliefs) differ from that of your parents when they were growing up?
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________________________________________________________________________
B. Environmental Frameworks
Chapter 2 – Cultural Environment: September 2 & 7 (3 & 4)
What role does religion play in culture? Give examples of religion affecting business behavior
around the world.
Is a “nation” a good proxy for culture? Why or Why not?
Discuss some factors you must consider when thinking about a strategy for instituting change.
People of different nationalities differ in how they accept authority (power distance), how
sympathetic to others they are (Individualism vs. Collectivism), and how they feel about
controlling their own destiny (uncertainty avoidance). Discuss the following three aspects of
risk-taking behavior and trust in this context.
What is acculturation? How does it occur? How far can it go?
Case – The Java Lounge - Adjusting to Saudi Arabian Culture
Case - Charles Martin in Uganda
Describe Ugandan cultural attributes that might affect the operations of a foreign company doing
business there.
Chapter 3 - Political and Legal Environment: September 16 (5)
Should laws regarding commerce (property rights, governance and exchange) be universal, be
the same everywhere, or be culturally dependent? Why or Why not?
What roles do international standards play in global commerce? (more than you think!)
Discuss the sources and consequences of political risk.
Describe the impacts of law on business and discuss the areas where the law affects international
business.
Case – Legal Growing Pains in a Land of Opportunity
Case – Crime that Pays - Global Software Piracy
How do you think consumers in high-theft countries justify software piracy? Similarly, what
ideas or conditions lead consumers in low-theft countries to respect intellectual property rights
(IPRs)?
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Chapter 4 - The Economic Environment: September 21 (6)
Define inflation and discuss the effects of inflation on international business.
Discuss the importance of factor of production conditions and demand conditions on
international business.
From a MNE perspective, is income equality something to be celebrated or something to be
feared?
What are the similarities and difference between NICs (Taiwan, Korea, Singapore, Hong Kong)
and the BRICs?
Case – Economic Conundrums and the Comeback of Emerging Economies
Discuss the implications of having billions of people entering the world marketplace.
Case – Meet the BRICs
What are the implications of the emergence of the BRICs for careers and companies in the US?
Environmental Framework Wrap-up
How would economic, political, legal, cultural, and geographic factors require you to change
your marketing strategies for the following products from one country to another: Soft drinks? Ipods?
________________________________________________________________________
C. Theories of Trade and Investment
Chapter 6 - International Trade and Factor Mobility: September 23 (7)
What are the advantages of specialization? What problems is it causing in today’s business
environment?
Why is there trade? How does comparative advantage differ from absolute advantage?
Discuss the strategic advantages of exporting to other countries.
With whom does a country trade?
Case - Costa Rica: Using Foreign Trade to Trade Up Economically.
Describe Costa Rican use of various trade policies over the past 200 years.
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Case – LUKoil
How do global political and economic conditions affect global oil markets and prices?
Chapter 7 - Governmental Influence: September 28 (8)
What is the significance of a country’s border?
problems do they solve?
What problems do they create and what
List and explain the various types of tariffs governments often impose on products and include
how these tariffs are affected by a country’s economy.
List and discuss the nontariff barriers. List and discuss differing regulatory standards relating to
quality control.
Assume the US announced that it planned to move to a free-trade position with the rest of the
world. What problems do you foresee and how might they be mitigated? What industries would
be most affected and how?
Case – Making the Emperor’s New Clothes
How does government policies affect where your clothes are made? Give examples.
Case – U.S. – Cuban Trade
Does the US embargo policy still makes sense? Did it ever make sense?
Chapter 14 - Direct Investment and Collaborative Strategies: September 30 (9)
Why do you want to own an asset (house)? How is it the same or different for a foreign
corporation?
Why might exporting not be feasible?
What are the main reasons for firms to engage in foreign direct investments?
Discuss how transportation, trade restrictions, country of origin effects, and changes in
comparative costs affect companies' sales.
Discuss market-seeking direct investment and resource seeking investment and the type of
strategy most appropriate for each investment.
Case – The Fizz Biz: Coca-Cola
Discuss Coca-cola’s ownership strategies, e.g., joint ventures, franchises and wholly owned?
Case – Getting Airline Alliances Off the Ground
What will be the consequences if a few large airlines or networks come to dominate global air
service?
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Chapter 8 - Cross-National Cooperation and Agreements: October 5 (10)
What is regionalization and why is it increasing in importance? What role does the WTO play?
Describe the political, social and economic effects of regional integration.
What are the concerns associated with NAFTA?
Case – Toyota’s European Drive
Discuss Toyota’s European rationalized production strategy.
Case – Wal-Mart Goes South
How has the implementation of NAFTA affected Wal-Mart’s success in Mexico?
World is Flat: Chapter 1 – While I Was Sleeping. pages 1-49. October 7 (11)
Define Globalization 1.0, 2.0 and 3.0 and discuss how Globalization 3.0 is different from the
other two.
Discuss how Globalization 3.0 has contributed to outsourcing and general industry restructuring,
give an example a particular industry, e.g. accounting.
________________________________________________________________________
Theories of Trade and Investment - Wrap-up
What factors affect trade and investment trade-offs of firms and which are likely to dominate in
the near future and for what reasons?
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First Exam – October 12 (12)
All Essay
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D. Global Financial Environment
------Work Begins on the International Business Project December 2nd -------
Chapter 9 – Global Foreign Exchange: October 14 (13)
Why do you need to understand exchange rates to do international business?
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Apply key terms of foreign exchange, e.g., exchange rate, spot rate, forward rate, forward
contract, futures market, spread in a business context.
Case – Going Down to the Wire in the Money Transfer Market
Case –Banking on Argentina
Chapter 10 - Determinants of Exchange Rates: October 19 (14)
Discuss why you would use purchasing power parity as a measure of economic wellbeing?
Explain the relationship between interest rates and exchange rates and apply in a business
context.
What are the major factors that must be considered in forecasting exchange rates?
Discuss in the context of a business transaction, the marketing, production and financial
implications of exchange rate changes.
Case – El Salvador Adopts the US Dollar
Case- The Chinese Yuan
Global Financial Environment - Wrap-up
If you were trying to forecast the value of the U.S. dollar against the Japanese Yen, what factors
would you consider? If you expected the U.S. dollar to lose in strength what effect would that
have on your U.S. production in the Japanese market? What business strategies might you
consider?
Currency Exercise: Begin on 10/15 (Friday’s paper, Thursday closing prices) and end on
10/22 - explain the change in currencies over 5 periods, e.g., Thurs to Fri, (1 period)
------------Turn in Currency Exercise on October 28th --------________________________________________________________________________
E. Global Strategy Structure and Marketing
Chapter 11 – The Strategy of International Business (also a librarian we come in and talk
about data availability during part of one of the next couple classes) October 21 (15)
Discuss the liability of foreignness, first in a student context and then in a business context.
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Discuss strategy as it relates to customers, market position, efficiency, goals and value added.
How do industry structure and value chains affect strategy?
Case – Value Creation in the Global Apparel Industry
Case – The Globalization of eBay
Chapter 13 - Export & Import Strategies: October 26 (16)
Why do some companies rely on export to service world markets rather than FDI?
Discuss the various steps management must take to establish a successful export strategy.
What role does a foreign freight forwarder play in the export of a product? How are irrevocable
letters of credit used in an export transaction?
Why do governments view exports differently than imports?
Case- Grieve – A Small Business Export Strategy
Case- A Little Electronic Magic at Alibaba.com
Chapter 15 –The Organization of International Business: October 28 (17)
Discuss the tradeoffs between the following concepts:
• coordination and control,
• centralization and decentralization
• hierarchal vs. network and virtual organizational forms.
Case – Organizing “People, Values, and Environment” at Johnson & Johnson
Case – Infosys: The Search for the Best and Brightest
Chapter 12 - Country Evaluation and Selection: November 2 (18)
Be able to identify different types of risk (competitive risk, monetary risk, political risk) that are
associated with return on investment.
Discuss via an example how companies choose and weight country variables prior to investing in
a foreign country.
When choosing geographic sites for international expansion, what are the two fundamental
questions a firm must ask and answer?
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How do you use scanning in selling a geographic location?
Assume that you had to decide where your company should begin making foreign sales. How
would you go about the task?
Case – Carrefour: Finding Retail Space in All the Right Places
Case – FDI in South Africa
Chapter 16 – Marketing Globally: November 4 (19)
How do you assess the potential demand in a foreign market? How can gap analysis help you?
What should a company do abroad when foreign product regulations are less stringent than in its
home country?
Discuss the reasons that pricing internationally is more complex than pricing domestically.
How do inflation and the relative value of currencies affect pricing internationally?
Case – Avon Calls on Foreign Markets
Case – Tommy Hilfiger: Clothes Make the Man and Vice Versa
Chapter 17 - Manufacturing and Supply Chain: November 9 (20)
What is meant by outsourcing, and what options does the strategy present to MNEs?
Discuss the various reasons companies pursue global sourcing strategies.
How do differences in company and country strategy, especially as related to employment, affect
a company's manufacturing strategy?
How is electronic commerce affecting global sourcing? What are the long term ramifications?
Case - Samsonite's Global Supply Chain
Case – Ventus and Business Process Outsourcing
Exam and Work Period: November 11 (21)
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Chapter 5 - Globalization and Society: November 16 (22)
What is ethical behavior: “I’ll know it when I do not see it?”
Is “doing good, good business” or is “the business of business is business”
Case – Ecomagination and the Global Greening of GE
Case- Anglo – American in South Africa
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F. The World Is Flat
Ten forces that Flattened the World: November 18 (23)
Flatteners 1-4, Pages 50-126 (Friedman, The World is Flat)
Discuss the intersection of politics, technology and sociology as they apply to these flatteners.
Ten forces that Flattened the World (Continued): November 23 (24)
Flatteners 5-8, Pages 126--176 (Friedman, The World is Flat)
Define key terms, outsourcing, offshoring, supply chaining, insourcing.
How does each relate to key concepts discussed earlier in the course?
How could each affect you in pursuit of a career?
--------The International Business Project is due December 1st -------.
Ten forces that Flattened the World (Continued) & Triple Convergence: November 30 (25)
Flatteners 9-10, Pages 176—200, and Triple Convergence, 201--233 (Friedman, The World
is Flat)
Discuss the implication of steroids (digital, mobile, personal and virtual) on at least three
different aspects of international business.
What does the author mean by triple convergence and how does it affect global commerce?
The Great Sorting Out, Pages 234—258, America & Free Trade, 261-275: December 2 (26)
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What are some obstacles to frictionless trade? Which are likely to stay and which will go away
soon?
What does the author mean when he states you have to “learn how to learn” in a flat world?
What are the implications for international business?
The Quiet Crisis, Pages 323-359, & How Companies Cope, Pages 425-453: December 7 (27)
How does America solve the three gaps for its citizenry?
Discuss the plight of developing economies in the flat world. Why will some make it and others
will not?
Discuss three of the rules that you think are most important and how you think they will affect
your business career.
Discuss how politics, trade and international business co-evolve in a flat world.
G. Synthesis of the Course Material
Synthesis of the Course Material: December 9 (28)
Why do companies engage in International Business and how do they do it? In a flat world,
what become key differentiators for international firms?
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H . Final Exam
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