Commerce 498
International Business
M.Nakamura
Quiz 1 (the midterm quiz; Oct. 15 (M) (in class)) is closed book/notes and covers all lectures, assigned readings and mini-cases.
You may bring in a standard (non-memory type) hand calculator.
About 70% of the questions will be short answer types (e.g. definitions of specific terms, trade-offs, ...).
The remaining 30% will be other types of questions including a few numerically-oriented questions.
Extra office hours for the midterm:
Oct.10 (W). Some remaining lecture (if any); mostly spent on questions during the class period. Also regular office hours: 2:40-3:40pm.
Oct.12 (F). 2:15-3:30pm.
E-mail at any time.
Topics covered for Quiz1 (weight 25%)
Reading assignments (focus mostly on the topics discussed in the class)
All mini-cases and other materials covered in the lectures.
[Hill, pp. 43-57], [Head, pp. 13-18, 23-31] and culture [R/H, Ch.5, 122-139]
[D/R, 322-327, 360-367] [D/R, 526-530; also, ref. Head [Ch. 10, pp. 161-173]
[R/H, Ch.6, 150-159] [Head, pp.33-44] [R/H, Ch.15, 418-432]
[R/H, 159-168] [Head, 59-90]
(I) IB: An Overview
Theoretical framework for analysis of IB opportunities.
How is IB different from domestic business? Why you should/should not sell globally. What matters in selling in foreign markets? Issues related to
global production/procurement. Opportunities IB brings to your company.
Country Factors
1. Political Economy
Explain political factors, economic factors and legal factors in IB; measurement dimensions.
Types of risks in IB. Political risks. Economic risks. Countertrade. IPR and IB.
2. Culture
Why and how does (country) culture matter in IB? Cultural/attitudinal dimensions.
What characterizes the Western culture? Discuss a foreign culture(s) where the Western norms don't apply. When does a foreign culture
generate demand for your products?
Corporate culture versus country culture in IB?
(II) Foreign Exchange
Foreign exchange markets (demand and supply);
spot and forward rates (how are they related?); PPP; Big Mac parity; what affect future exchange rates?
issues associated with flexible exchange rates; firms' strategy to cope with flexible exchange rates.
(III) Various Theories of International Trade
Theories of international trade: absolute and comparative advantage theories; comparative advantage and multinational firms;
H-O (factor proportions) theory; PLC theory; country-similarity theory; strategic trade theory; Porter's diamond.
What are the assumptions underlying each of these theories? When are they useful?
When do they fail to hold?
Porter's diamond; when and how is it useful?
What is maquiladora? How are NAFTA countries economically integrated? Read also "Winners and Losers" (p. 433).
(IV) Various Costs of Trade and Trade Arrangements
Costs of transportation; the role of distance; costs of border crossing. (The detailed definitions of INCO terms need not be memorized.)
Different types of government trade policy measures. List them.
Visible and invisible trade barriers. What are they? How do they work?
Who gains and loses from each trade policy instrument?
When does it not work as intended?
Political economy of international trade, GATT, WTO, most-favored-nation (MFN) status.