BSAD 127 Gove

#30

see # 30

1. Have trade agreements facilitated the expansion of global trade?

-Agreements exist, guide trade and investment... -... but are constantly in flux -Pendulums swing and change direction. •Direction of Trade: Swinging toward internationalization (designing products to meet the needs of users in many countries or designing them so they can be easily modified, to achieve this goal) •Direction of Sentiment: Currently swinging toward nationalism (benefits nations interests)

1. What is a trade agreement? What is the trend in the number of trade agreements? What explains this?

-Agreements negotiated by governments... -... but businesses directly affected by outcomes and drive their creation -Government goals may extend beyond business into environment, human and social issues, immigration, etc.; Disagreements

Define "risk" in the international management setting. What types of risk are there? Are they connected? Provide examples to illustrate them.

18.• Economic risk is virtually inseparable from political risk -Transferability - determined by political factors -Ability to repay, value of currency, etc. from political decisions • Political risk -The unanticipated likelihood that a business's foreign investment will be constrained by a host government's policies

Define micro and macro political risk. How are they different? How are they interrelated? Provide an example to illustrate your understanding.

19. -Macro political risk analysis •Analysis that reviews major political decisions likely to affect all enterprises in the country -Micro political risk analysis •Analysis directed toward government politics and actions that influence selected sectors of the economy or specific foreign businesses in the country

What is Ghemawat's main point about "distance"?

11.identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies.

What are the four major elements of Ghemawat's C.A.G.E. distance model?

12. cultural distance, administrative distance, geographic distance, economic distance

Define the culture/administrative/geographic/economic element of Ghemawat's C.A.G.E. distance model. List and define three attributes (i.e., how is it measured?) of each distance element.

13. cultural - different languages, different religions, different social norms administrative - political hostility, government policies, institutional weakness geographic - physical remoteness, lack of common border, size of country, different climates economic - different consumer incomes, differences in costs and quality of natural resources, financial resources, human resources, infrastructure, knowledge

Is trade involving all products or industries affected equally across the elements of Ghemawat's C.A.G.E. distance framework? Compare two industries or two different products/services and explain how they would influence trade between two of your countries using any two of the C.A.G.E. elements.

14.

What does Ghemawat's C.A.G.E. distance model address? Phrased differently, what insights can it provide to a user? Identify, define, and present examples of three insights the model provides.

15.•Level of trade between two nations •Identification of the need for product customization •Differences in what is traded •Identification of specific aspects of differences across borders (cultural distance different than physical) •The degree of difficulty in cross-cultural managing an entity across borders •Explain the success of competing firms in markets (Ex. Success of Chinese firms versus U.S. firms in Singapore) •Rank entry targets using a ratio of size of market / CAGE distance

What elements of Ghemawat's C.A.G.E. distance model have the greatest influence on trade between two nations?

16. Culture and administrative elements

Select a focal country and two of its trade partners. Explain differences in the volume of trade each partner has with the focal country using Ghemawat's C.A.G.E. distance model. Be sure to discuss each of the four C.A.G.E. elements and at least two attributes of each of the four C.A.G.E. elements.

17.

Identify and define the three dimensions of political risks, providing an example of each.

20. -Transfer risks - govt. policies limiting distribution of assets within and in-out of the country (e.g., tariffs on exports and imports, restrictions on exports, dividend remittance, capital repatriation) -Operational Risks - policies and procedures that directly constrain management and performance of local operations (e.g., price controls, financing restrictions, export commitments, taxes, local sourcing requirements) -Ownership control risks -inhibit ownership or control of local operations (e.g., foreign-ownership limitations, pressure for local participation, confiscation, expropriation, abrogation of proprietary rights)

How does the general nature of investment influence risk? Explain the difference in risk by contrasting two firms with different general investment profiles.

21.-Conglomerate investment •A type of high-risk investment in which goods or services produced are not similar to those produced at home; high risk -Vertical investment •The production of raw materials or intermediate goods that are to be processed into final products; risk of being taken over by the government

How does the special nature of investment influence risk? Explain the difference in risk along this dimension by contrasting two different types of investment at its extremes (i.e., level I and level V).

22. -The special nature of foreign direct investment can be categorized as one of five types •Type I: highest-risk venture; Primary sector: agriculture, forestry, mineral exploration and extraction •Type III: Industrial sector: manufacturing •Type V: lowest risk; Service sector: transportation, finance, insurance, and related industries

What is corruption? How does corruption affect a firm's in-country risk? Provide an example demonstrating either the differing risk between two national settings or the risk from corruption across two businesses within a country.

23. dishonest practices - Bribes, grease, pay-to-play, pay-and-win

Is risk in an international management an absolute or relative? Explain and provide an example to illustrate the point.

24. Relative! It is differences in risk levels across contexts that are the concern.

The film Power Trip demonstrated the risk of AES entering the Georgian market for electrical distribution. How would the risk for AES be different if they were in the financial services sector as opposed to electrical distribution? How would the risk for AES be different if they were operating in Canada, Belgium, the United Kingdom, or Australia instead of Georgia? Use the three-dimensional framework for assessing political risk to support your answer.

25.

1. A firm is evaluating a decision to enter two countries (A and B). Consider the following Corruption Perception Scores (not rank!) from Transparency International for the countries: The firm's home country: 25 Country A the firm is considering entering: 35 Country B the firm is considering entering: 72 Interpret the risk associated with these scores.

26.

What is the Foreign Corrupt Practices Act? What are the three main parts?

27.

Is the U.S. alone in enacting anti-corruption provisions? What other countries have adopted such provisions? Provide examples to illustrate your understanding.

28.

In 2012, a country scored 66 on Corruption Perception Index; in 2018, the country scored 62. The country's rank remained unchained. Interpret the data. Has the country become more corrupt? Less corrupt? Something else?

29.

You are a manager asked to provide your company with a "risk assessment" of a country you are unfamiliar with. Provide two examples of data resources you would start with to better understand the risk.

31. CORRUPTION PERCEPTIONS INDEX, and euler hermes country risk map and rating

What is relative bargaining analysis? Describe an example.

32. The Multi national corporation works to maintain a bargaining power position stronger than that of host country

What three techniques can a company use to respond to political risk in a country? Be sure to sufficiently describe and present an example (perhaps using AES from Power Trip) of what each entails to fully demonstrate you understanding.

33. Integrative, protective, and defensive techniques A.Integrative techniques help overseas operation become part of host country's infrastructure B.Protective and defensive techniques discourage the host government from interfering in operations -Doing as little local manufacturing as possible and conducting all research and development outside the country -Limiting responsibility of local personnel and hiring only those who are vital to operation -Raising capital from local banks and the host government as well as outside sources -Diversifying production of the product among a number of countries

What is corporate social responsibility? What is the CSR "dilemma"? What are some of the differences in stakeholder expectation which cause the dilemma?

34. -Involves the actions of a firm to benefit society beyond requirements of the law and the direct interests of the firm. •Profit is MNC's only goal •MNCs should anticipate and solve social needs

How can a firm assess if their actions are ethical? What three questions might a firm ask?

35. 1. Is it legal? 2. Does it work in the long run? 3. Can it be talked about?

Why is determining whether an action is ethical or not is more challenging for an international firm than for a firm operating within just one national context?

36. • Different cultures consider different things ethical and cultures vary much more internationally.

What are the three perspectives a firm may take to guide ethical practice?

37 moral universalism, an ethnocentric approach, and ethical relativism

Establishing moral universalism, using an ethnocentric approach, and ethical relativism are three perspectives to guide a firm toward ethical conduct. Define each and describe the strengths and limitations of each in practice using an example to illustrate.

38. ••Addressing the need for a moral standard that is accepted by all cultures ••Applying the morality used in home country - regardless of the host country's system of ethics ••Adopting the local moral code of whatever country in which a firm is operating

Explain the concept of ethical relativism. Explain how the use of different standards and expectations across national contexts is justifiable.

39. ••Adopting the local moral code of whatever country in which a firm is operating

Is it important for an international firm to have a code of conduct? Explain why or why not.

40. •Develop worldwide code of ethics / code of conduct •Build ethical policies into strategy development. •Plan regular assessment of the company's ethical posture. •If ethical problems cannot be resolved, withdraw from that market.

Why do so few codes of conduct for larger, multi-national companies include specific details as to aspects like rate of pay? Hours worked?

41. because different countries have different laws and regulations for things like that.

What role does the UN's Global Compact play in a firm's development of a code of conduct? Why is it important?

42. The UN Global Compact is a principle-based framework for businesses, stating ten principles in the areas of human rights, labor, the environment and anti-corruption

A company is publicly criticized for employing 15 year olds in a full-time capacity to perform non-hazardous work at manufacturing facility in a developing nation. The company follows all labor laws in both their home and the host country. Is their employment of 15 year olds ethical? What rational argument would support this practice? Evidence of its justification? What if the employee were 11 years old? 12 years old? 18? What two factors need to be considered under the UN Global Compact?

43.

Why is it important for a company to set a code of conduct for suppliers? Why is it especially challenging to ensure compliance? Provide an example to illustrate.

44.

Consider a firm with suppliers operating in multiple countries. Which is more challenging: setting the code of conduct or enforcing it? How might a firm enforce their code? How can they effectively convey that their practices are ethical to stakeholders?

45.

What role due third-parties and non-governmental organizations (NGOs) have in ensuring a company is in compliant with its code of conduct?

46.

You overhear a fellow student - outside of the business school of course - saying that governments are the only parties which can increase human rights, physical and workplace safety, labor and employment rights and practices, and improve the environment. Can an argument be made that companies can have a positive influence on all of these factors? Support your position.

47.

Explain the principles of the base of the pyramid approach. What does it hope to achieve? For whom? How?

48. Bottom of the pyramid approach hopes to create buying power, improve access, shape aspirations and tailor local solutions for the people in the world making less than $1500 anually

Provide a brief overview of the size and incomes of the tiers in either the global bottom of the pyramid model or that for India. What percentage of the population and income level defines each?

49. day 6 slide 31

What income defines the lowest tier of the bottom of the pyramid? Does one level apply across all national settings? Present and contrast two national settings to support your answer.

50. less than $1500 anually

Approximately what percentage of global GDP or wealth is distributed among the upper 20% of global population? Why is this important for international managers?

51. 82.7%

As a soon to be college graduate you would likely be dismayed if your yearly starting salary was $12,500. Where does this annual salary place one in the content of the global population? What are the implications for international business? Similarly, as a soon to be college graduate who will be frugal and start saving soon after graduation, it is likely you will amass a net worth over $1 million. Where does a $1 million in net worth place one in the content of the global population? What are the implications of this for multi-national firms?

52.

The commercial infrastructure to serve the bottom of the pyramid consists of what four aspects? Are these equally challenging for a firm to achieve?

53. Bottom of the pyramid approach hopes to create buying power, improve access, shape aspirations and tailor local solutions

Prahalad and Hart argue that new strategies must be taken by firms seeking to serve the bottom of the pyramid. These include the areas of price performance, views of quality, sustainability, and profitability. Select three of these areas. Detail what each includes and present an example as to why each is important.

54. Price Performance - product development, manufacturing, distribution Sustainability - reduction in resource intensity, recyclability, renewable energy Profitability - investment intensity, margins, volume

Why are Africa and India considered the primary locations for bottom of the pyramid efforts over other country settings such as China and Mexico? Be sure to support your answer with some data. How large are these markets?

55. They are far less developed and have more citizens in the bottom of the pyramid.

Why are MNC's uniquely suited to address bottom of the pyramid issues? Identify the four reasons, explain and provide an example of each.

56. • Resources. Building a complex commercial infrastructure is a resource and management-intensive task. Few local entrepreneurs have the managerial or technological resources to create this infrastructure. • Leverage. MNCs can transfer knowledge from one market to another — from China to Brazil or India — as Avon, Unilever, Citigroup, and others have demonstrated. • Bridging. MNCs can be nodes for building the commercial infrastructure, providing access to knowledge, managerial imagination, and financial resources. MNCs are best positioned to unite the range of actors required to develop the Tier 4 market. • Transfer. Not only can MNCshave the capacity to transfer innovations up-market all the way to Tier 1

MNC's are considered both essential for the successful implementation of the bottom of the pyramid approach and the key beneficiaries of it. Present, detail, and provide an example of either why they are essential or how they benefit.

57. They are essential because they have the resources and leverage to create infrastructure. They benefit by tapping into a new market with new profits

Why is India increasingly being identified as the most important emerging market for U.S. firms?

58. They have the 2nd biggest population in the world and the worlds largest democracy. Most citizens are @ bottom of the pyramid

Tata's development of the Nano car targeted the bottom of the pyramid market for autos in India. Identify and detail two instances where innovation was important in the car's development.

59. engine far cheaper than any other engine in india and also far more fuel efficient. Much less complex ECU drawing less power and using less parameters than other vehicles

Tata's development of the Nano rested on meeting three criteria: (1) cost, (2) domestic safety regulations, and (3) the minimum expectations of customers for utility. Did Tata meet these? Why did the car fall short of commercial expectations?

60.

A key selling point of Tata's Nano car was the 1 Lakh selling price. What is 1 Lakh? Why did Tata set this price? Was it realistic for serving the bottom of the pyramid market? For the developing and producing the product? In answering, be sure to provide specific evidence.

61. 1 lakh is 100,000 rupees which is about $1,364 USD

Are there benefits Tata could hope to achieve by developing the Nano car in their other vehicle operations? If so, identify two potential ones. Be sure to provide examples of each.

62.

Was Tata's Nano car successful serving the bottom of the pyramid? Provide specific evidence to support your position.

63.

Was Tata's Nano car a success or failure for Tata? Provide specific evidence to support your position.

64.

Why are MNC's such as Tata in a unique position to serve the bottom of the pyramid?

65.

1. Why is an understanding of international business of increasing importance? Provide data (such as the trend in FDI, a country's imports and exports as a percentage of their economy, company sales, etc.) to support your answer.

Global foreign direct investment 1.5 trillion annually. Perspective: Market capitalization of U.S. domestic publicly traded stocks ≈ $30 trillion (so 5%). More than half of apple sales growth is outside the americas

1. What distinguishes international management from "regular" management? Why is it important to examine international management as a specialized topic?

In international management there is an explicit and a priori recognition of diversity of geographic, political, regulatory, demographic, social, cultural, operational, etc. factors. International management is just good management

Define international management.

The process of developing strategies, designing and operating systems, and working with people around the world to ensure sustained competitive advantage

1. Why is it important to study global management? Provide evidence of its relevance.

To learn about how other cultures do business to better capitalize on foreign markets.

1. What agreement(s) govern trade between the United States, Mexico, and Canada?

USMCA United states mexico canada agreement. it's essentially NAFTA 2.0 and will account for 1.2 trillion in trade in one of the worlds largest free trade zones

1. Does international management apply only to cross border trade? Explain and support your answer.

even helpful in USA because of internal diversity.

1. What is the challenge of understanding and assessing trade agreements today?

•Different levels of economic development (differences in competition, technology, regulation, protections, etc.) of nations, markets, individuals, etc.