BUS613: Advanced International Business

There have been many technological advances and inventions that have revolutionized the world and brought us closer. For example, many international business calls are now conducted via video conferencing which allows groups to establish a more knowledgeable assessment of their business connections while also being able to read body language when presenting new information or opportunities. This reading on Technological Globalization from Lumen Learning provides you with information on how technology is changing the way we do business. The internet, smart phones and laptops are essentially communication tools that have enhanced our ability to connect and create opportunities on a global scale. Can you imagine how international business was conducted prior to the internet?

Advances in transportation have spurred global economic growth by reducing travel time and increasing the number of passengers. A businessperson can board a plane in the evening in New York and land in London after a 6-hour flight to attend a morning business meeting. A century ago, this journey would take several weeks by ship. Read chapter 2, which discusses the opportunities and risks for the transportation industry today. The transportation industry is vital to international business since it allows business trips, meetings, and commercial activity to occur regularly and efficiently.

In the past, the United States was a manufacturing-based economy. However, due to the rising costs of technology and the effects of globalization, most manufacturing went overseas, even though certain segments within the manufacturing industry have remained in the United States, such as high-end production that requires specialized capabilities. Though shifts in politics and international security may lead to more manufacturing happening within the United States in the future, international partners will always be necessary to provide components for production. Globalization is a critical matter for international businesses. Read this chapter and focus on the trends in global business over the past few decades. Are these trends going to continue, or could we see changes as nations start to become more isolationist in an attempt to protect jobs?

Read this introduction to a resource-based approach toward international business that highlights topics like transaction costs theory and analytical models.

Outsourcing, as a trend over the past few decades, has benefitted both consumers and companies. The ability to seek lower-cost labor, materials, and capacity has drastically reshaped the modern-day business environment. Have we hit peak outsourcing?

Outsourcing is prevalent in manufacturing, but it can be found in any industry where companies hire other providers to fill service needs at a lower cost than they could otherwise perform internally. Read this article, which discusses why contract manufacturing occurs and presents its opportunities and risks.

Outsourcing also creates challenges. The cost savings that were the primary driver in recent decades are starting to fade. Companies are now assessing other factors, such as transportation costs, quality control, and proximity to consumers, which may limit the popularity of outsourcing in the future. Watch this video to see more about these issues.

For the global economy to work efficiently, materials must be shipped and delivered expeditiously to allow end products to be quickly assembled for the consumer. Improvements in technology have been a significant driver in increasing the efficiency of logistics. Read this article and watch these videos, which explain the supply chain and how advances in technology have created essential links for global businesses.

As companies expand internationally, they must improve their human resource capabilities to consider culture, local labor laws, and differing approaches to work as they hire employees in other countries. This article introduces several key concepts in global HR management and explains its significance for international businesses.

Read this chapter, which covers globalization and how it affects individuals, companies, and nations. As you read, focus on how we got to this point and what the world might look like 50 years from now if globalization continues at the current rate.

One of the leading drivers of globalization and outsourcing is costs, since businesses seek to lower their costs while maintaining the same quality level. In competitive global markets, companies seek advantages like reducing costs to gain market share by selling more products or increasing profit margins per unit. Read this page, which describes how companies approach these situations. Focus on how an international company could use globalization and outsourcing to gain a competitive advantage in the market.

Companies and investors look for opportunities that often require expanding beyond their borders. Therefore, a thorough analysis must be conducted to determine which opportunities are legitimate and mitigate potential threats to the company.

Read this chapter, which explains how a global company must consider opportunities and threats before making business decisions in international markets. As you read, think about one of your favorite companies. What opportunities and threats do they face in the global market?

English has become the common language of most industries, and contracts between companies are typically written in English to avoid misunderstandings. As the global economy has grown, companies have needed a way to perform transactions efficiently, and English filled that gap. Watch this video to see why so many people are learning English to solve problems and understand one another better.

Though English has become the standard language for business, other major languages like Mandarin and Spanish, which have a large population of speakers worldwide, are gaining influence. Review this list of the most widely spoken languages and focus on the importance of language in communicating about products, services, or investment opportunities.

Geert Hofstede, a Dutch social psychologist, developed a widely used platform that established the dimensions of culture. Read this chapter to better understand these dimensions and see how they can be applied to different countries and cultures.

To build trust and avoid confusion, you should prepare before you interact with people from different cultures. By trying to understand others, you can create business opportunities that would otherwise have been impossible. Read this chapter and try to answer the questions to consider at the end of the section.

Communication styles vary greatly in different regions, so you need to be willing to adapt your communication to ensure it is effective. Read these sections to see how communication styles affect business.

Your communication skills will be put to the test during negotiations, especially if those negotiations include people with different personalities, approaches, and comfort levels. In international negotiations, differences in culture and communication styles become even more apparent. Read this article, which gives an example of Chinese and Brazilian companies negotiating an agreement and highlights the importance of finding a common understanding.

Cultural competence is the ability to communicate and understand people from different cultures effectively. You will need to know what to do and not do during cross-cultural interactions. You should be sure to study cultural differences before traveling to other countries or attempting to do business abroad. Read this chapter and reflect on how you can use the advice it presents to improve your skills.

Culture also plays a significant role in how groups develop their values and belief systems. Culture has a lasting impact on how people think and perceive situations. Think about when you and someone different culture looked at the same situation but perceived it differently. How might that apply to a business setting? Read this page, which describes how values differ worldwide and how they are influenced by culture.

As you read this section, think about the products or services you use daily that are possible due to international trade. How would you have to adapt if governments began to restrict international trade?

Mercantilism is an economic policy that attempts to maximize exports while minimizing imports. Every country implements mercantilist policies to some degree. A country that exports more than it imports has a trade surplus, while a country that imports more than it exports has a trade deficit. Read this section, which gives a background on how mercantilist policies have shaped international trade.

In trade, absolute advantage is when a country can produce a greater quantity of a good or service with the same input (typically labor) at a lower cost. The theory of absolute advantage was developed by the Scottish economist Adam Smith in his book The Wealth of Nations. 

Comparative advantage is a theory developed by the English political economist David Ricardo in his book On the Principles of Political Economy and Taxation. Comparative advantage, also called Ricardian advantage, describes one country's ability to produce a good or service at a lower opportunity cost than another country. Opportunity cost is the idea that making and selling one product or service is a trade-off, since you forfeit the opportunity to produce another product instead.

Read this section and answer the questions at the end.

Countries with similar economies are more likely to trade with one another, especially if they are at a similar development level, have political or security partnerships, or have cultural ties. Why might that be? Consider that qustion as you read this section, and then answer the questions at the end of the section.

Multinational corporations have a workforce, presence, and operations in multiple countries. International expansion is one way corporations attempt to gain a competitive advantage over other companies in their industry. To learn more about how companies expand across borders, read this section.

The idea of national competitive advantage attempts to explain why certain industries in a country are more competitive internationally. Read this section, and focus on how Porter's national competitive advantage theory can be applied to countries like the United States, China, or Germany.

Trade agreements allow companies to sell their products and services in other countries with little or no restrictions, depending on the agreement's terms. Think of some of your favorite products that come from another country. Most of them are possible due to trade agreements at some point in the process, and those agreements allowed the company to produce a quality product at a competitive price. Trade agreements have generated opportunities, but they have created challenges in some industries and countries. Jobs have become concentrated in lower-wage countries, which produce products that are then sent back to higher-wage countries through trade agreements. Read this section and then complete the questions at the end. 

Regional economic integration removes trade barriers in a region, allowing for the free flow of goods, services, and people. The European Union is a perfect example of this type of structure. Other parts of the world also have started to integrate their own economic systems. As you read this section, think about what opportunities neighboring countries can offer one another when trade barriers are removed. What did European trade look like before the EU? How has economic integration benefitted European nations, and what new challenges has it created?

Read this document, published by the World Bank, to see how other regions like the Middle East and North Africa can benefit from economic integration.

This study addresses the short-and long-term effects of infrastructure on exports and trade deficits in certain South Asian countries between 1990-2017. As you read, think about other countries where limited infrastructure capacity has affected their ability to develop.

International shipping is an essential part of trade. Countries must have port infrastructure and capacity to allow companies to ship their products to consumers worldwide. Countries with good port infrastructure will attract foreign investment and enable local companies to produce and ship to international markets more efficiently. Read this overview of a study of 91 countries with seaports that examined seaborne trade's economic effects, and how port infrastructure quality and logistics capacity affected trade efficiency.

Having a modern airport infrastructure is critical in today's fast-paced global economy. Some countries, such as the United Arab Emirates, have made significant upgrades and investments to their airport infrastructure in places like Dubai and Abu Dhabi, transforming the UAE from a little-known destination in the Middle East to a center of global commerce.

Have you ever wondered how the global airfreight industry operates and the level of coordination necessary throughout international airports to facilitate it? This video gives a unique view of transporting specialty luxury items via Emirates Airfreight.

Railways and roads are critical infrastructures in the international trade network since countries must have efficient means to transport goods from ports and airports to their destinations. The United States developed the interstate system in the 1950s, which created a vast network of highways that allowed for the much more efficient transporting of goods and people. Read this page, which discusses how railways developed in the United Kingdom in the 1830s and how that influenced the development of industry and transportation.

Foreign exchange markets set the value of currencies against one another, influencing the price of products and services worldwide. If one country has a cheaper or undervalued currency, it can produce and sell products to the world at a lower price. Read this section to learn more.

As countries trade goods and services, financial capital flows to establish trade balances. Capital either flows out or in, which creates the country's current account balance. The record of these transactions is reflected over a period of time in what is known as the balance of payments. Read this page and focus on how flows of goods and services are closely connected to flows of capital.

The global financial system allows you to make financial transactions from your bank account to an account in another country. Several key network institutions allow this to happen, such as the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system, a vast messaging network that enables banks to send and receive secure messages with payment transfer information. Watch this video that walks through what happens when an international payment request is sent and received.

A Letter of Credit is an essential part of buying or selling services with a group outside your country. It is one of the most common and popular methods of securing payment in international business agreements. As international transactions with new or unfamiliar businesses can bring added risk, a bank can issue a letter guaranteeing payment, mitigating risk and expediting the supply of goods or services. Read this page to see how a Letter of Credit works and the situations where one can be useful.

The European Central Bank is one of the most influential banks in the world. It sets the monetary policy for the Euro, which in turn influences economic policy everywhere. This video discusses the history of the European Central Bank and how it became a vital economic institution.

Central banks are typically government-managed or sponsored and play a significant role in some countries' banking systems. The Federal Reserve Bank in the United States sets things such as interest rates, which influence borrowing costs. Read this section and complete the exercises at the end.

The World Trade Organization (WTO) was founded in 1995 and replaced the General Agreement on Tariffs and Trade (GATT), which had been in place since the end of the Second World War. Today, the WTO has 164 member nations that coordinate on promoting trade and enforcing agreements between members. Read this page to learn more.

The World Bank is a global organization created in 1944 at the Bretton Woods Conference alongside the International Monetary Fund. The World Bank has two divisions: the International Bank for Reconstruction and Development and the International Development Association. They provide loans and grants, primarily to poorer countries, that are financed by wealthier nations. Currently, they have 184 member countries, and their main goal is to reduce poverty. The World Bank plays an essential role in the global economy and strives to develop countries to benefit from international commerce and improve living standards. Read pages 7-11 and browse the other sections to become familiar with the World Bank's structure and purpose.

The International Monetary Fund (IMF) was also established in 1944. It currently has 189 member nations. The IMF promotes financial stability and sustainable economic growth, and researches economic trends, provides statistics, and offers lending and international trade services to its members. The IMF website provides a tremendous amount of economic and financial information about countries. Watch this video to see how to obtain financial information on the IMF website.

Regional trading blocs have become common in recent decades. They remove trade borders between neighboring countries to expand local markets and bolster trade by streamlining regulations, tariffs, and economic policies. These blocs can also come in the form of customs unions, which essentially create one shared market between several countries and dictate trade policies between countries in the union and those outside it.

There are several ways a trade agreement can be structured. Bilateral trade agreements are between two countries, while multilateral trade agreements may involve countries. Read this section. Can you think of situations that could lead countries to prefer one type of agreement over another?

Watch this video to see how multilateral trade agreements can help developing countries integrate into the global economy and attain specific economic goals.

Alliances are partnerships between countries created for various reasons, such as economic, political, or security concerns. Countries that have security alliances naturally develop trust, which can expand into other areas such as trade. Watch this video on ASEAN (the Association of Southeast Asian Nations), which describes how the organization began to solidify political, security, economic, and socio-cultural cooperation in southeast Asia.

Managers of international businesses may be comfortable with current trade policies, but markets can always shift due to the political risks, which forces businesses to adapt. Watch this video on political risk, focusing on what steps a company should take to mitigate risks and plan for uncertainty.

Economic risks can include elections, wars, or recessions. There have been several cycles of economic risks in your lifetime, and we will experience even more in the coming years. International businesses also encounter economic pressures, and so they must plan for downturns even when economic conditions are good. Explore the Economic Policy Uncertainty Index on this page, and read more about how it is developed.

Let's explore emerging markets by reviewing these 2018 statistics from the World Bank.

There are several ways to export a product into an international market when it does not need to be shipped directly to consumers. Companies often search for foreign agents or distributors who live or operate in those markets and already have established networks to market and sell within a country. This approach has a few advantages, such as utilizing the agent or distributor's on-the-ground knowledge of the local market and allowing them to troubleshoot problems that could be difficult to do outside the country. Companies must find trusted partners if they want to do this since those partners will have some control over the company's local operations.

One option for companies to market products abroad has been to create "pop-up shops" that allow them to sell their products in areas of heavy foot traffic, such as in busy streets or outside popular venues. Read this chapter to see how this setup can work from a financial standpoint.

Customers in some international markets may feel more comfortable dealing with manufacturers directly. This is popular in industries that produce expensive products or machinery. An example of this would be Boeing, which manufactures expensive airplanes and sells them directly to international customers. How do customers buy expensive products like airplanes across international borders? This video explains how Emirates Airlines makes large direct-purchase airplane orders and touches on the complicated agreements and financing structures involved.

Read more about mergers and acquisitions in this section and answer the questions at the end. How could mergers or acquisitions benefit a company seeking new international markets?

Mergers and acquisitions allow for business synergy and cost savings. Synergy is the idea that a larger organization's combined value and overall performance would be greater than two separate companies. Synergy can also come about through cost savings or by combining operations to create more efficient processes.

Mergers and acquisitions can often reduce a company's spending on administrative staff, accounting, management, facilities, insurance, and other overhead costs by removing redundancy and duplicated functions.

Companies seeking to expand into a new industry or international market may find mergers and acquisitions an attractive option. For an example, think of when Amazon purchased Whole Foods. Amazon has a massive distribution network and will want to integrate Whole Foods' operations to be more efficient and cost-effective by combining resources. Watch this video to learn more.

Read this article about the important factors to consider when establishing an international partnership.

Companies must establish effective and enforceable partnering agreements using contracts that lay out the entire business relationship, avoid misunderstandings, and make sure both sides understand their responsibilities. Both parties must be clear on what is communicated and agreed to in the contract. When disputes happen, companies may seek international courts that interpret and enforce international contractual issues. These are found in major global business centers such as London and Dubai. Watch this video to see how tech companies leverage strategic partnerships in new markets.

Joint ventures can be between large corporations with many resources or smaller companies who want to combine efforts on a project. Joint ventures typically focus on a narrow field of work, such as a project. Read this page to learn more about the value of a joint venture and how they affect the global business environment.

In this video, Michael Porter, the well known author and Harvard University professor, sits down to discuss corporate social responsibility at the World Economic Forum. As you watch, focus on the areas companies can promote social responsibility and advance their own corporate interests at the same time.

Do you know the difference between free trade and fair trade? You may have heard terms such as "fair trade coffee", but what does that mean? This video explores the differences between free trade and fair trade, and why balancing the two may be necessary to sustain our global economy.

Ethics in business has changed over time. Read this section to learn more.

Corruption and bribery are severe issues in many parts of the world, but are present in all countries to some degree. In the United States has implemented a law, the Foreign Corrupt Practices Act (FCPA) applies to all American companies and individuals, whether they are conducting business in the United States or abroad. Read more about the FCPA in this article.

A corporation has many legal, economic, ethical, and philanthropic responsibilities to be considered well-rounded and in good standing with society. We have seen examples where companies do not live up to these standards and face the consequences. However, companies with robust corporate responsibility plans can set goals, benchmarks, and tracking methods to ensure they are on the right path. Learn more by reading this article.

It is possible to promote economic growth while also creating sustainable and environmentally-friendly practices. Can you think of an environmentally-friendly natural resource that can be used economically and for the benefit of everyone? The goal is to meet the present's needs without compromising the ability of future generations to meet their own needs. Watch this video, which presents economic models for sustainability and what they mean for our planet's future.

Some say that economic growth and environmental sustainability cannot coexist, but technological innovations, sustainability policies, and corporate responsibility measures have proven that idea to be wrong. Can you think of environmental policies that would help the economy and society at large? Watch this video, which highlights the fundamental principles of environmental sustainability.

Business leaders can play a leading role in establishing social sustainability, and anyone seeking a career in business should focus on social responsibility and sustainability. Watch this video, which highlights the fundamental principles of social sustainability.