MGMT 378
International Business
House Rules
1. The back row of students will clean up
the classroom and straighten chairs/tables
after each session.
2. No electronic distractions—if you violate
this rule you will stand and sing a Justin
Bieber or Jonas Brothers song of my
House Rules
3. Cheating brings pain.
Failing to confess cheating brings pain.
Failing to report cheating brings pain.
Reporting (and, when possible,
documenting) cheating brings rewards.
This course can help you
Understand our world better
Get better jobs
Get internationally oriented jobs
Be more comfortable with people from other countries
See the world with new eyes
Make your life more interesting
We’ll talk about
Globalization, internationalization
Role of technology, cost advantages
Entry methods/business forms
Importing/exporting how-to
A variety of cases/examples
Shared goals to start with
High participation
Cross-functional, integrated view of business
Trust, honesty, integrity, high standards
Sufficient time and energy
Typical Workload Problems
Lousy papers
Not keeping up
Can’t answer questions or contribute to discussion
Absence, tardiness, sleepiness
Difficulty with midterm exam
Conflicting priorities
Excessive course load
Juggling a job and too many courses
A typical semester might look like this…
15 %
55 %
25 %
Syllabus and schedule highlights
Preparation/participation—see syllabus
Ten-point scale, no pluses/minuses
Papers: part of prep/part, follow the format, due
on time.
Section 1:
Globalization and International Linkages
Implications of globalization for countries, industries,
firms, and communities.
Major trends in global and regional integration.
Changes in economic power, trade and investment flows.
Major economic systems and recent developments.
International Management
International management:
Managing in a multinational company;
Adapting management practices to different economic,
political, and cultural environments.
Multinational corporation (MNC):
Operations in more than one country
International sales
Managers and owners from a mix of countries
Globalization and Internationalization
Globalization: process of integration among
countries with a vision of a single market entity:
Social Economic Political Technological Cultural
Internationalization: when a business crosses
national and cultural borders.
Globalization: Pros and Cons
Pros: economic growth, jobs, technology, lower prices.
losing jobs to lower-wage countries;
trade deficits;
slow wage growth;
environmental and social impacts.
Global and Regional Integration:
Global Agreements:
WTO World Trade Organization
GATT General Agreement on Tariffs and Trade
Regional Agreements:
NAFTA North American Free Trade Agreement
CAFTA U.S.-Central American Free Trade Agreement
EU European Union
ASEAN Association of Southeast Asian Nations
FTAA Free Trade Agreement of the Americas
International Economic Power in
the Global Economy:
World is changing due to
Economic integration
Growth of emerging markets
The World’s Largest Economies 2005 and 2020 (Projected)
Measured by GDP at Market Exchange Rates:
Most Populous Countries in 1980, 2000, and 2050 (Projected):
Trends in International Investments and Trade
80% of foreign direct investment (FDI) from
developed countries
Continuing rise, inc from new investors (e.g. China)
>50% world trade is United States, European
Union and Japan
Continuing growth
Economic Systems of the World
Market Economy
Command Economy
Mixed Economy
Economic Performance by Region
North America
South America
Europe (EU, Central and Eastern Europe)
Asia (Japan, China, emerging markets of Asia)
Other developing and emerging countries (India,
Middle East, Central Asia, Africa)
Remember: History Matters!!
North America
North America:
Generally free market economies
United States:
Good market for foreign MNC
Foreign investment welcomed
U.S. firms dominate many European markets;
gaining in Asia
Biggest U.S. trade partner
Big US investment in Canada
Canada legal/business environment similar to US
Biggest Latin American economy
Very strong maquiladora industry w/ US markets
Rising trade with Europe, Asia
Competes with Asia for US market
South America
History of high foreign debt and high inflation
Brazil, Chile, Argentina—strongest economies
History of trade barriers now declining
European Union
EU has emerged as a functional economic union
Links/spread into Central , Eastern, Southeastern
Substantial FDI in EU: M&A, alliances, etc.
Central and Eastern Europe
Big examples: Russia, Czech Rep., Hungary, Poland
Dismantling of price controls and state ownership
1990s/2000s: Perestroika—economic and political
restructuring, Privatization
Inflation, crime, corruption, wealth disparities.
Western Europe/China investing
Membership in International Monetary Fund (IMF),
some in EU,
Political uncertainty, old habits/relationships die hard
Phenomenal success 1970s/1980s
Ministry of International Trade and Industry (MITI)
Vertically integrated industries
Ten year recession in 1990s
Bad bank loans for real estate—billions of dollars
Now: International competition—China, SE Asia
Ageing population
Annual growth 8-11%
Foreign investors interested despite political risk,
trade piracy, restrictions
Trends: Income disparities, pollution, political unrest
The Four Tigers
South Korea
Chaebols (large family-held Korean conglomerates)
Relationship issues: China, North Korea
Hong Kong
Now part of People’s Republic of China
Wealthy free market system/tension with China
Highly educated, high-tech island
Tension with China, which claims it
High-tech and industrial
Southeast Asia
Baby Tigers (Thailand, Malaysia, Indonesia):
Large population
Cheap labor
Natural resources
Attractive to outside investors
Developing and Emerging
Huge poor population, big middle class
Growth in software, IT
Attractive to West (educated, English speaking,
technologically sophisticated)
Middle East and Central Asia
Oil and natural resources
Unemployment, politics, religion
Developing and Emerging
Natural resources
Generally poor, weak infrastructure
1,000 languages and dialects
Poverty, starvation, war, illiteracy, corruption,
overcrowding in various parts
Some questions for you
What are pros and cons for globalization in different parts
of the world?
How has NAFTA affected North America and the EU affected
Europe? What importance do these economic pacts have
for international managers in North America, Europe and
Why would MNCs be interested in South America, India, the
Middle East, Central Asia, and Africa, the less developed
and emerging countries of the world?
What we just did
Section 1:
Globalization and International Linkages
Implications of globalization for countries, industries,
firms, and communities.
Major trends in global and regional integration.
Changes in economic power, trade and investment flows.
Major economic systems and recent developments.

Chapter 5 Entrepreneurship