Brian Chen
July 9, 2007
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Introduction to Course
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Chapter 1: Introduction and Overview
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About the GSI
Overview of the Course
Course Expectations
Course Grading and Policy
About the Sections
Chapter 1 Exercise: Case – Wipro
Chapter 2: National Differences in Political
Economy
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Chapter 2 Exercise: Case – The Poorest Continent
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Fourth-Year PhD Candidate in Business and Public
Policy Group, Haas School of Business, UC
Berkeley
Research Interests:
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Education:
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Health Care Management and Health Policy, Regulation,
Law and Economics, International Law and Business
Harvard College 1992, Stanford Law School 1997
Work Experience:
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Air Liquide (Paris, France); Teisan KK (Tokyo, Japan),
Baker & McKenzie (Taipei, Taiwan); Sullivan & Cromwell
(New York), Orrick Herrington & Sutcliffe (San
Francisco), Kaohsiung Medical University (Kaohsiung,
Taiwan)
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Course is divided into two major themes:
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(1) The political, economic, and financial landscape of international
business
 Instills awareness of the issues a firm might encounter in international
business:
 Globalization of the marketplace, differences that remain in the global
marketplace (culture, ethics, etc), the international trade /investment
environment, political economy of trade, foreign exchange and
international monetary system
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(2) Firm Strategies to undertake in order to operate in a global
arena
 With an awareness of the political, economic, and financial landscape of
international business, how do firms operate transnationally?
 Strategy in general, entry strategy, alliances, exporting/importing, global
production/outsourcing/logistics, global marketing, R&D, global human
resource management, international financial management
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Note that Midterm Examination is placed right between the two
parts of the course
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Thorough knowledge of the landscape of
international business and issues arising
therefore in the course of conducting
international business
To perform well in the course:
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Thorough grasp of material as demonstrated in
examinations
Participation in class and section
Excellent participation grade *may* help move your
grade one level up (e.g., from B+ to A-)
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Word about academic honesty:
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No plagiarism: pasting sentences or paragraphs
from various sources without attribution DOES
constitute plagiarism. Copying from another
student also constitutes plagiarism
No dishonesty in attendance: Signing in for one or
more other students constitutes academic dishonesty
No dishonesty in examination: No talking or
exchanging notes during examination
Students caught committing an act of academic
dishonesty will automatically fail the course
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Final course grade is determined by a rough curve
Many UC Berkeley undergraduate courses curved
around a C+. This course was curved around a B
last semester
Spring 2007: the top 13 received an A, the next 24
an A-, the next 28 a B+, the next 21 a B, the next 11
a B-, the next 2 a C+, the next 7 a C, the next 6 a C-,
and a D for the bottom 3 students
In other words, 1/3 of the class received some type
of A
And to emphasize: active participation in section
and in class can only help you
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Goal: To apply concepts learned in class
through discussion
GSI is merely a facilitator and an agenda-setter
Format:
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(1) One – slide review of the previous section
(2) Review of important points in lecture
(3) If necessary, “overflow” material from the class
(4) Two to four lecture-related topics to discuss in
small groups and in class
 Topics may be drawn from the textbook, from the
professor, or self-prepared by the GSI
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Quality trumps quantity
HOWEVER, NO POINT IS EVER DEDUCTED FOR
“WRONG” ANSWERS
 Again, to emphasize, there is only upside potential
by participating in section discussions
GSI will attempt to permit a diverse group of students
to answer questions on a voluntarily basis
However, in the event of lack of participation, GSI may
cold call
Foreign students are especially welcome to share their
experiences, so please do not allow perceived linguistic
barriers to get in way
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Globalization: Definition, Market, Production
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Global Institutions
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GATT, WTO, IMF, World Bank, UN
Drivers of globalization
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Is the globalization of markets “universal”?
Declining barriers
Technological change
How the Global Economy is Changing
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Output is shifting
FDI destination is shifting East
MNE
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Globalization Debate
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Jobs and income security
Labor policies and the environment
National Sovereignty
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Describe the shifts in the world economy over
the past 30 years. What are the implications of
these shifts for international businesses based
in Europe? North America? Hong
Kong/Taiwan?
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“The study of international business is fine if
you are going to work in a large multinational
enterprise, but it has no relevance for
individuals who are going to work in small
firms.” Evaluate this statement.
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How have changes in technology contributed
to the globalization of markets and production?
Would the globalization of production and
markets have been possible without these
technological changes?
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“Ultimately, the study of international business
is no different from the study of domestic
business. Thus, there is no point in having a
separate course on international business.”
Evaluate this statement.
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How might the Internet and the associated
World Wide Web affect international business
activity and the globalization of the world
economy?
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If current trends continue, China may be the
world’s largest economy by 2050. Discuss the
possible implications of such a development
for
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a. The world trading system
b. The world monetary system
c. The business strategy of today’s European and
U.S.-based global corporations
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How did outsourcing work to Wipro improve
General Electric’s ability to compete in the
global economy? Does such outsourcing harm
or benefit the American economy?
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Did General Electric help to create Wipro?
How?
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If India’s information technology companies
continue to prosper, over time what do you
think will happen to the income differential
between software programmers in the United
States and India? What are the implications for
the American economy?
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Since 2000, Wipro has moved abroad,
establishing sales offices in 35 nations and
design centers in nine. Why is Wipro doing
this? What would happen to the company if it
did not follow this strategy?
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What does the rise of Wipro teach you about
the nature of the global economy in the first
decade of the 21st century?
When grading:
 Questions asking mere facts are weighted less
 Questions asking for inferences and requiring
careful analysis are weighted more
 As much as possible, consider both sides of the
issue
 Imagine as many likely scenarios as possible
when asked to make a guess
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Call Center? That’s so 2004!
Outsourcing Jobs: Myths and Realities
WSJ Article: Silicon Valley Sours on India
How are they related to the course material?
What do they teach us?
Do you agree with the message(s) of the
articles?
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Does globalization cause poverty?
Why are so many people opposed to
globalization?
Does globalization diminish cultural diversity?
Can globalization be controlled?
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Political Systems: Collectivism/Socialism vs.
Individualism; Democracy vs. Totalitarianism
Economic Systems: Market Economy vs.
Command Economy vs. Mixed Economy
Legal Systems: Common Law, Civil Law,
Theocratic Law
Contract Law: Property Rights, Private Action,
Public Action, Foreign Corrupt Practices Act
Intellectual Property: Patent, Copyrights,
Trademarks, (TRIPS)
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Determinants of Economic Development
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Measuring economic development: PPP, GDP,
Amartya Sen
Political Economy:
 Innovation as engine of growth.
 Innovation requires market economy
 Innovation requires strong property rights
 But what is the right political system?
 Does progress lead to democracy?
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Geography and Education on development
States in transition: What is the general trend
in political economy worldwide?
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Free market economies stimulate greater
economic growth, whereas state-directed
economies stifle growth. Discuss.
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A democratic political system is an essential
condition for sustained economic progress.
Discuss.
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What is the relationship between corruption in
a country (i.e., bribe taking by government
officials) and economic growth? Is corruption
always bad?
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The Nobel Prize-winning economic Armatya
Sen argues that the concept of development
should be broadened to include more than just
economic development. What other factors
does Sen think should be included in an
assessment of development? How might
adoption of Sen’s views influence government
policy? Do you think Sen is right that
development is about more than just economic
development? Explain.
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You are the CEO of a company that has to
choose between making a $100 million
investment in Russia or the Czech Republic.
Both investments promise the same long-run
return, so your choice is driven by risk
considerations. Assess the various risks of
doing business in each of these nations. Which
investment would you favor and why?
Consider: political risks, economic risks, legal
risks
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How Rising Wages Are Changing the Game in
China?
Look Who’s Pumping Out Engineers?
Grassroots Democracy
Right Time for Africa
Taking Care of Business
How are they related to the course material?
What do they teach us?
Do you agree with the message(s) of the
articles?
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How is the case related to the course material?
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What do you think are the three main reasons
for the persistence of poverty in sub-Saharan
Africa?
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What steps can be taken by the nations of subSaharan Africa to address the causes of
poverty? Can the governments of developed
nations help in this process? Should they?
How?
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Can international businesses play a role in
helping nations in the region to reduce poverty
and ignite economic growth?
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Currently sub-Saharan receives very little in
the way of foreign direct investment from firms
based in developed nations. If nations in the
region start to take the actions you identified in
the answer to question 2, what do you think
will happen to the flow of foreign direct
investment? Will this benefit the region’s
economies? How?