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BA 347 - International Business
Winter 2007
[BA 347 Home Page]
Chapter Learning Objectives
OBJECTIVES OF CHAPTER 1
1. Introduce the student to the contemporary issues in international
business that illustrates the unique challenges of international business.
2. Point out the macro-economic and political changes that have
taken place in the last 30 years, and suggest the implications of these changes
for international business.
3. Illustrate the importance of information technology and
technological changes in driving the globalization of products and markets.
4. Explore the changing nature of firms that do business outside
their national borders – many small firms in remote locations can now market
their products and services world wide through the internet.
5. Highlight some of the concerns raised by critics of
globalization, and the adverse effects globalization can have on some firms and
individuals.
6. Explore the challenges that globalization holds for managers
within an international business.
OBJECTIVES OF CHAPTER 2
1. Describe how the political systems of countries often follow
‘collectivist vs. individualist’ and ‘democratic vs. totalitarian’
dimensions. That tendency can be best
visualized by looking at the degree of economic and political freedom enjoyed
by a country’s citizens.
2. Explain the differences in economic systems between
countries. Examining specifically the
characteristics of market economies, command economies, mixed economies, and
state-directed economies achieves that objective.
3. Examine the differences in the economic development of different
countries. The chapter presents and describes
economic development measures like GDP, purchasing power, and human development
indices.
4. When considering international expansion, suggest that the
potential for future economic growth and the growth rate may be as or more
important than static measures of economic development.
5. Explain how differences in the legal systems of countries can
dramatically affect the attractiveness and ease of doing business in different
countries. The chapter highlights
differences in protections of intellectual property (patents, copyrights, and
trademarks), product safety and liability, and contract law to suggest how
legal systems affect the conduct of international business.
6. Show how changes in the world order in the 1980s and 1990s
affected countries in Europe, Asia, Latin American, and
7. Summarize issues that affect the attractiveness of doing business
in different countries, including the benefits, costs, and risks determined by
the political economy of nations.
8. Present some ethical concerns of doing business in countries that
have different standards, political ideologies, economic systems, and patterns
of acceptable and expected behavior (i.e. bribes).
OBJECTIVES OF CHAPTER 3
1. Provide a basis for understanding what culture is, the norms and
values of a society, and how these affect interpersonal dealings.
2. Describe differences in the social structures of people and
businesses in different countries.
3. Describe the heritage and key philosophies underlying the major
religions of world, and discuss the economic implications of these religious
beliefs both for a nation’s economy and for the practice of business in
countries with different religions.
4. Introduce how a country’s language and education are intertwined
with its culture.
5. Show that culture is not a constant, but evolves over time.
6. The key reason to describe aspects of culture, social structure, religion,
language, and education is to provide a basis for understanding 1) the
importance of cross-cultural literacy and 2) how competitive advantage can be
affected.
7. The connection between culture and competitive advantage has
important implications for deciding where a firm may want to locate facilities
and expand its presence in the market.
OBJECTIVES OF CHAPTER 5
1. Outline and critically evaluate the major theories that attempt
to explain 1) why nations should engage in international trade and 2) the
patterns of international trade.
2. Show, via simple examples, the case for free trade and how all
countries can benefit from free trade.
3. Suggest the conditions under which governments should consider
adopting policies that can influence an industry’s competitiveness and/or the
flow of trade.
4. Describe how each of the theories presented certainly has some
validity and seems logical, how in many ways the theories build on each other,
and how taken together they explain a great deal of the world trade
picture. Yet there is still a great deal
more to understand.
OBJECTIVES OF CHAPTER 6
1. While Chapter 5 discussed the economic theories of international
trade, this chapter focuses on the political systems and tools of trade
policy. The major objective of this
chapter is to describe how political realities have shaped, and continue to
shape, the international trading system.
2. Provide a history of the development of the current world trading
system, leading to an understanding of the current international trade
framework.
3. Outline the primary policy instruments: tariffs, subsidies, quotas, voluntary export
restraints, local content requirements, antidumping policies and administrative
policies.
4. Present the political and economic arguments for governmental
intervention in trade, as well as the counter arguments that suggest that
intervention is rarely successful in the long run.
5. Discuss the implications of trade barriers for business.
OBJECTIVES OF CHAPTER 7
1. Describe the importance of foreign direct investment (FDI) in the
world economy, and the changing patterns of FDI over time.
2. Present a number of different theories that attempt to explain
why a company would undertake an acquisition rather than a
3. Present a number of different theories that attempt to explain horizontal FDI, and suggest the
conditions under which each may be most applicable.
4. Present a number of different theories that attempt to explain vertical FDI, and
5. Explain carefully the importance of market imperfections in
understanding FDI, specifically as it pertains to the transfer of know-how and
technological information.
6. Suggest the implications of these theories of FDI for the process
of international expansion for business firms, particularly comparing licensing
to FDI. A more detailed discussion of
entry modes is contained in Chapter 14.
OBJECTIVES OF CHAPTER 8
1. Present the role governments play in restricting and encouraging
flows of FDI.
2. Show how political philosophy affects the attitude of a
government towards FDI.
3. Explain the sources of costs and benefits of FDI to host and home
countries.
4. Describe the policy instruments available to governments
interested in affecting FDI flows.
5. Discuss the negotiation and bargaining processes firms undertake
with host governments.
OBJECTIVES OF CHAPTER 9
1. Explore the economic and political debate surrounding regional
economic integration.
2. Review the progress towards regional integration in Europe, the
3. Describe the implications of regional integration for businesses.
OBJECTIVES OF CHAPTER 10
1. Explain how the foreign exchange market works.
2. Explore the forces that determine exchange rates.
3. Discuss
the degree to which future exchange rates can be predicted.
4. Map out the implications for international businesses of exchange
rate movements and the foreign exchange market.
OBJECTIVES OF CHAPTER 11
1. Provide a history of the international monetary system, and
describe different monetary systems.
2. Explain how the real world may differ from that discussed in the
previous chapter where all exchange rates were assumed to be flexible and based
on supply and demand for currencies.
3. Explore the debate about the appropriateness of fixed and
floating exchange rates.
4. Suggest the implications of the current international monetary
system for the practice of international business.
OBJECTIVES OF CHAPTER 12
1. With this chapter we switch our emphasis from the environment of
business to the strategies of firms.
Students should be able to more directly understand how firms handle the
complex international environment previously described.
2. Suggest the reasons why firms may decide to enter international
business, and identify the benefits from international strategies.
3. Outline the basic strategies undertaken by MNEs, and specifically
focus on how they relate to the needs for local responsiveness and cost
minimization
OBJECTIVES OF CHAPTER 14
1. Present the advantages and disadvantages of six different modes
of entering new countries and markets.
2. Bring together the issues of FDI discussed in chapters 7-8 and
the issues of strategy and organization discussed in chapters 12-13 to better
understand why different firms may make different decisions regarding the best
modes of entry.
3. Discuss in some detail strategic alliances, their advantages and
disadvantages, and the factors critical to making alliances work.
OBJECTIVES OF CHAPTER 15
1. Outline some of the tremendous advantages and common pitfalls of
exporting.
2. Identify the primary sources of information available to firms
interested in exporting.
3. Describe the “nuts and bolts” of exporting.
4. Suggest how firms can use the EXIM bank and insurance to
facilitate exports.
5. Explain in more detail the various types of countertrade and the
pros and cons of engaging in countertrade.
OBJECTIVES OF CHAPTER 16
1. Discuss the factors that firms should consider when deciding
where particular goods should be manufactured.
2. Identify the issues associated with deciding what products or
component parts a firm should manufacture in-house and what should be out-sourced
to independent suppliers.
3. Illustrate the advantages, disadvantages, and problems associated
with coordinating a tightly linked global manufacturing system.
OBJECTIVES OF CHAPTER 17
1. Review the debate on the globalization of markets – are all
customers the same? Or are there
distinct and significant differences?
2. Show how some market segments transcend national borders, while
in other situations the structure of market segments differs significantly
across countries.
3. Better understand the factors that cause firms to alter the
marketing mix across countries.
4. Discuss issues related to the location of R&D facilities and
linking marketing and R&D in new product development.
OBJECTIVES OF CHAPTER 18
1. Discuss briefly the strategic role of HRM.
2. Identify the issues and problems with expatriate staffing in
particular, and more generally rotating managers through international
assignments.
3. Suggest some actions for managerial training and development for
international firms.
4. Present some of the problems and guidelines relating to the
performance appraisal of expatriates.
5. Discuss the issue of compensation in the context of international
firms, where differing standards across countries can create problems within
firms.
6. Show how relations with organized labor can vary across
countries, and how organized labor has attempted to develop a more
international approach to labor negotiations with multinationals.
OBJECTIVES OF CHAPTER 20
1. Discuss how political and economic risk can complicate capital
budgeting decisions in multinationals.
2. Show how the capital structure of firms varies in different
countries, and explore what this means for how a firm should structure the
capitalization of its subsidiaries in different countries.
3. Suggest how firms can and should adjust their international
management of money to increase efficiency, minimize expenses, and move money
across borders.
4.
Consider alternatives for managing and minimizing foreign exchange
risk.