SOM 354 Final readings
moving US white-collar jobs offshore (Samuelson critique) [pg.164]
-many US companies moving white-collar jobs overseas to developing nations where they can be performed for fraction of the cost
ch 10 (foreign exchange market) closing case: "The Mexican Peso, Japanese Yen, and Pokemon Go" [pg.292]
-most trades between Japanese Yen and Mexican peso made thru USD -peso fell in value against Japanese yen in 2016
Ch 7 opening case: US and South Korea strike revised trade deal [pg.185]
-2016 free trade deal -Trump revisions 2018 -25% tariff on steel imports from S. Korea put questionable pressure on them -automobile trade deficit center discussion
Ch 8 opening case (FDI): "Geely goes global" [pg.213]
-Chinese auto manufacturer -oversea acquisition of Volvo in 2010 was winner -making more investments in 2017
should Boeing be given subsidies by the US government? [pg.209] 1. Are there any circumstances under which the subsidies that Airbus received in its early years might be justified? Who benefits from government subsidies to Boeing and Airbus? Who loses? What would be the optimal outcome of the ongoing trade dispute between the U.S. and the EU countries backing Airbus?
-EU giving airbus billions in illegal gov't subsidies for launch aid, WTO ruled in 2010 -US rumored to be given unfair tax breaks to Boeing which Airbus sees as an unfair advantage
ch 11 (international monetary fund) closing case: "Egypt and the IMF" [pg.318]
-Egypt economic problems -IMF policy measures
ch 12 (strategy of international business) closing case: "Sony Corporation: an international innovator?"
-Japanese founded 1946 -strategic curiosity -tech experience -expanding products globally, R&D
whom did IBM sell its PC business to? was it a good move?
-Lenovo in 2005 -Lenovo is China based group -IBM sold bc they were losing money selling pcs -lenovo turning over much of management to group of senior IBM execs https://www.engadget.com/2005-01-01-why-ibm-sold-its-pc-business-to-lenovo.html
who purchased Jaguar and Land Rover from Ford? Why?
-Tata motors -attempting to broaden global automotive presence https://abcnews.go.com/Business/story?id=4525035&page=1
What challenges does Huawei face in the US market?
-US bans threatened, export curbs -tech competitor -5G -Chinese telecom equipment maker was pouring money into research that reduces its need for American suppliers. https://apnews.com/e79cdf51aca4468699139c39a1105685
ch 11 (international monetary system) opening case: "can Dollarization save Venezuela?" [pg.295]
-Venezuela has largest oil reserves on the planet -Poor governance and corruption created historic economic crisis --Unemployment over 26 percent, extreme food shortages -Hugo Chavez raised oil royalty rates, used political appointees -Nicolas Maduro expanded budget deficit, printed money resulting in hyperinflation -Value of the currency, the bolivar, collapsed -Officials suggest dollarization to fix the problem --Abandon the bolivar and introduce cash denominated in U.S. dollars
EU - the Greek Debt problem [ch9 pg.255]
-decade of free spending to finance public sector by Greek gov't ran up debt -concern wouldn't be able to refinance -large scale defaults among weaker members of euro zone -euro started to fall on exchange market -euro zone and IMF agreed to lend billions to Greece in exchange for new policies -less taxes meant gov't couldn't pay debt so IMF and euro zone seemingly orchestrated orderly partial default
ch 13 (entering developed and emerging markets) opening case: "IKEA entering India" [pg.357]
-experimental center to tackle problems before large-scale store -plans for many cities in India -need to reflect life at home in India
Why did the US impose trade sanctions on Iran?
-halt it's alleged nuclear weapons program -accused of supporting terrorist action against US and building weapons of mass destruction [pg.194]
ch 12 (strategy of international business) opening case: "Red Bull, a leader in international strategy"
-host sporting events around the world -Red Bull is from Austria -many people from different countries think RB originates in their country -hailed for marketing strategy, unorthodox international strategy
Is China manipulating its currency in pursuit of a Neo-Mercantilist policy? (mercantilism) [pg.156]
-keep exports artificially cheap which fuels them -long resisted letting its currency float freely against US dollar
Brexit: Why did the UK leave the EU? [ch9 slides]
-not comfortable with the loss of national sovereignty -immigration has become key issue -Britain will most likely see significant short to medium term costs based on this decision (less likely to attract inward FDI, export to EU may fall, some MNC's may move operations to other EU countries)
Why and how is Amazon investing $7 billion in India?
-pg.237 - Amazon investing $5 billion in fulfillment centers and logistics infrastructure to enable it to deliver goods to Indian customers -responding to Walmart's purchase of flipkart by increasing investment in India by $2billion https://netrush.com/blog/amazon-to-invest-7-billion-in-india/
Text case: FDI in the Indian retail sector [ch8 pg.236] 1. What explains the fragmented nature of India's retail sector? What are the benefits of this system? What are the costs? 2. How might investment by foreign retailers change retailing in India? What are the potential benefits of such FDI? 3. Who stands to lose from FDI into India's retail sector? Who stands to gain? 4. Why has India been so slow to change its laws regarding foreign ownership of retailers? What, if anything, can foreign retailers do to influence the laws in a way that benefits entry? 5. Given the political and economic realities in India, what is the best entry strategy for a foreign retailer?
-small store owners in India have long history of lobbying to impose restrictions on FDI in retail to protect their businesses/jobs -modernization of FDI would help improve supply chain, increase consumer choice -legislation slow in improving
Ch6 opening case: "trade wars are good and easy to win" [ch6 slides, pg. 151 text]
-trump imposed a 25% tariff on imports of steel and 10% tariff on aluminum -said they were to protect 2 industries important for national security -critics argued tariffs would raise input costs for consumers, manufactures, contractors, and more -Trump sees trade policy as zero-sum game and opposes deals that lower tariffs and allow free trade -prior to Trump, US supported lower trade barriers and free flow of goods
Ch 10 (foreign exchange market) opening case: "The fluctuating value of the Yuan gives Chinese business a lesson in foreign exchange risk" [pg.271]
-value of the Yuan relative to the dollar fluctuated significantly between 2015 to 2018 -Yuan depreciated from 2015-2016 which boosted exports, increased prices of key imports which raised cost for companies and resulted in losses -Yuan appreciated from 2017-2018 which reduced costs for companies that import goods priced in dollars and raised price of exports
nixon's decision
1.) took the dollar off gold 2.) imposed a 10% import tax http://www.bing.com/videos/search?q=nuxon+gold+standard+youtube&view=detail&mid=D781E1FD546FF27B74D3D781E1FD546FF27B74D3&FORM=VIRE
Ch6 ending case [ch 6 pg.178] 1. What were the proposed benefits of the TPP? What were the potential drawbacks of the U.S. entering the TPP? What would be the drawbacks to other nations? Why do you think D.Trump was so adamantly opposed to the TPP? What is the opportunity cost to the U.S. of withdrawing from the TPP? Why do you think the 11 remaining signatories went ahead with a revised deal after the U.S. withdrawal? Is the CPTTP a threat to American economic interests?
1.proposed benefits to boost economic growth rates among TPP countries -other countries cut tariffs so US agriculture as well as other industries benefit -increased US exporting 2. potential drawbacks for US were further losses of US manufacturing jobs and lower wages 3. protectionist trend 4. mutually beneficial 5. maybe
Long-Term organizational FDI decision example
Boeing/Japan JPN forward contract in ch 10 slides
ch 13 (entering developed and emerging markets) closing case: "cutco corporation" [pg.378]
Cutco Corporation includes the wholly owned subsidiaries Vector Marketing Corporation, which it acquired in 1985, and Cutco Cutlery Corporation. Vector Marketing is the U.S.-based sales arm of Cutco Corporation, which is headquartered in Olean, New York. -students as sellers -forever guarantee
Ghana vs. South Korea: Lessons for trade [ch6]
Ghana tried socialist & self-reliant (inward looking) trade policies while South Korea tried outward oriented economy
the Euro Crisis [ch11, also in ch9]
In the early 2010s, the European Union was struggling with a debt crisis in Greece, Spain, and Ireland. It took German leadership to save the euro as a common currency. (p. 689)
Porter's Diamond - application to Japanese auto industry and Silicon Valley Cluster [ch6 pg.172]
Japan automobiles: factor endowments = advanced factors, large pool of engineers Silicon Valley: related and supporting industries = tech leadership in the US semiconductor industry provided basis for US success in personal computers and several other technically advanced products
Why did Walmart pay $16 billion to buy Flipkart in India?
Walmart is keeping the faith in its $16 billion bet to take on Amazon. Walmart now owns more than 81 percent of Indian e-commerce giant Flipkart. The purchase in May caused a sudden sell off on the US retailer's share price. Walmart wants to use Flipkart's technology to battle Amazon in the online space https://www.cnbc.com/2018/12/13/flipkart-walmarts-16-billion-indian-start-up-bet.html
Big Mac Index in The Economist
according to Big Mac Index, comparing a country's actual exchange rate with the one predicted by the PPP theorem based on relative prices of big macs is a test of whether a currency is undervalued or not. If a big mac cost $4.93 in the US it would cost $3.35 in Brazil, whose currency is undervalued by 23% https://www.economist.com/node/21569171
is the dollar getting stronger or weaker with respect to the pound?
ch 10 slides
Ch 9 (REI) closing case: "Free trade in Africa, TFTA and CFTA"
page 267
Ch 9 opening case (REI): "NAFTA 2.0: The USMCA"
renegotiation of NAFTA
one major FDI of GE, Uber, and Unilever [ch8]
see "FDI stats" excel sheet also, pg 343 management focus on Unilever's global organization
