1
INTERNATIONAL BUSINESS 6
CHAPTER 1: AN INTRODUCTION TO KEY CONCEPTS IN INTERNATIONAL BUSINESS 6
1. Terminology: what is global business 6
2. Important economic terms 6
3. European and global business 7
1.1 International Business: 7
4. International trade and investments 7
5. A unified framework 8
1.1 Institutional perspective (institution-based view) 8
1.2 Resource-based view 8
6. what is globalization: definition 9
1.1 globalization or slowbalization 9
1.2 trends in globalisation 9
1.3 Three views on globalization 9
1.4 The global economic pyramid 10
1.5 The rising power of Multinational Enterprises (MNEs) 10
1.6 The UNCTAD Transnationality Indec (TNI) 10
1.7 Global trade dynamics and protectionism 11
1.8 Factors discouraging globalization 11
7. Closing Case: Global business in the digital age: Airbnb 13
1.1 Summary of the case 13
1.2 Positive and negative aspects 13
CHAPTER 2: FORMAL INSTITUTIONS 14
1. Opening Case 1: Managing business risks in Turkey 14
1.1 background 14
1.2 Importance of formal institutions 14
1.3 Institutional factors investors asses 14
1.4 Key takeaways Case 1 14
2. Opening Case 2: Managing business in South Africa after 1994 15
1.1 Context 15
1.2 Main legal changes 15
1.3 Consequences for businesses 15
1.4 Key takeaways case 2 15
3. Institution-based view 15
1.1 Institutional framework 15
1.2 Transaction costs 15
1.3 Opportunism 15
4. Institutions 16
1.1 Definition 16
1.2 Functions of institutions 16
1.3 Dimensions of institutions 16
1.4 What institutions do 17
1.5 Core propositions 17
5. Political systems 17
1.1 Importance of political elections for business 17
1.2 Definition 17
1.3 Main types 18
6. Economic systems 18
1.1 Definition 18
, 2
1.2 Types of economic systems 18
7. Varieties of capitalism 19
8. Legal systems 20
1.1 Definition 20
1.2 Legal processes 20
9. Debates and extensions 21
1.1 (Intellectual) Property Rights (IPRs) 21
1.2 Corporate governance: relationship between good corporate governance and institutions 22
1.3 Institutions and political risk 22
10. Implications for practice 22
11. Closing case: Carlsberg faces political risk in Russia 23
1.1 Summary 23
1.2 Questions 23
12. Assignment chapter 2 24
1.1 Summary of the sources 24
1.2 Questions regarding the case 24
CHAPTER 3: INFORMAL INSTITUTIONS 25
1. Cultural intelligence (CQ) 25
1.1 Development of Cultural Intelligence 25
1.2 Examples of Cultural Differences 25
2. Culture 25
2.1 Culture as shared values and norms 26
3. Religion 29
4. Language 29
4.1 Handeling language differences 29
5. Cultural clusters 30
CHAPTER 4: FIRM RESOURCES AND OUTSOURCING 31
1. Opening case: SAP drives industry 4.0 31
1.1 Summary of the opening case 31
2. Resource-based view 32
3. Identifying resources 32
3.1 Primary resources 32
3.2 Capabilities 33
4. Appraising resources: the VRIO framework 35
4.1 Value Creation 35
4.2 Rarity 35
4.3 Imitability 35
4.4 Organization 35
4.5 Summary 35
5. Benchmarking 36
5.1 4 steps of benchmarking 36
6. The scope of a firm’s resources 37
6.1 Outsourcing 37
6.2 Offshoring 37
6.3 Offshore outsourcing 37
7. Debates and extensions 38
8. Global value chains 39
8.1 Summary 39
8.2 Macro-level influences 39
8.3 Structural governance 39
8.4 Strategic governance 40
, 3
8.5 Micro-level influences 40
8.6 Overall conclusion 40
8.7 Reshoring 40
9. Case: Shanzhai! Mediatek and the whitebox handset market 41
9.1 Summary of the case 41
9.2 Questions and answers 41
CHAPTER 6: FOREIGN DIRECT INVESTMENT AND THE OLI PARADIGM 43
1. Opening case: Indian Business Go global 43
1.1 Summary of the opening case 43
1.2 How did Indian businesses adapt to helping with covid-19 vaccination production? 43
2. Foreign direct investment (FDI) 44
2.1 Foreign direct investments and foreign indirect investments 44
2.2 Horizontal and vertical FDI 44
2.3 The impact of FDI: case 45
2.4 Measuring FDI 46
2.5 Why do MNEs exist? 46
3. The OLI paradigm 47
3.1 Ownership advantage 47
3.2 Location advantages 48
3.3 Internalization advantages 49
3.4 OLI paradigm summary 50
3.5 OLI paradigm vs internationalization process models 50
4. Assignment for this chapter 51
4.1 China’s firms are taking flight, worrying its rulers 51
4.2 Existence of MNEs according to OLI paradigm 51
4.3 Exporting versus horizontal FDI – 3 deciding factors 51
CHAPTER 9: GLOBAL INTEGRATION AND MULTILATERAL TRADE AND INVESTMENT ORGANIZATION 52
1. Opening case: WTO mediates between Airbus and Boeing 52
1.1 Summary 52
2. World Trade Organization (WTO) 53
2.1 Origins of the WTO 53
2.2 The WTO setting rules for international trade 54
2.3 Trade dispute settlements 54
2.4 Reforming the WTO 55
3. Regional and bilateral economic integration 56
3.1 Multilateral trade agreements 56
3.2 Bilateral Trade and Investments Agreements 58
4. The multilateral monetary system 58
4.1 IMF - International Monetary Fund 58
5. Debates and extensions 59
5.1 The development agenda 59
5.2 The financial sector regulation data: 60
5.3 The Climate Change Agenda 60
6. Closing case 61
6.1 Summary 61
6.2 WHO challenges 61
CHAPTER 11: STARTING INTERNATIONAL BUSINESS AND MODELS OF INTERNATIONALIZATION
PROCESS 62
1. Opening case 62
1.1 Summary 62
, 4
2. Small and medium enterprises (SMEs) 62
3. Buying and selling abroad 62
3.1 The trader’s vocabulary 63
4. Exports and imports of goods 63
4.1 Working with trade intermediaries 64
5. Managing international contracts 65
5.1 Licensing and franchising 65
5.2 Other forms of co-operation 65
6. Resources and internalization 66
6.1 Internalization as a process (Uppsala model) 66
6.2 Stages models of internationalization 66
6.3 Network internationalization model 67
7. International new ventures (INV) (born global) 67
8. Kaspersky case study 68
8.1 Summary 68
CHAPTER 12: FOREIGN ENTRY STRATEGIES 69
1. Opening case 69
1.1 Summary 69
1.2 Key points linking to this chapter 69
2. Why expand abroad? 70
3. Where to expand to? 70
4. When to enter? 72
5. How to enter? 72
1.1 The resource dimension 73
1.2 The control dimension 75
6. Institutions and foreign entry strategies 77
7. Debates and extensions 77
1.1 Initial versus subsequent investments in acquisitions 77
8. Closing case 78
1.1 Summary 78
1.2 Discussion topics 78
9. Case: Porsche 79
1.1 Summary 79
1.2 Discussion questions 79
CHAPTER 13: COMPETITIVE DYNAMICS 80
1. Opening case 80
1.1 Summary: Tesla challenges the global car industry 80
1.2 Keynotes 80
1.3 Summary: Gulf airlines challenge a global industry 81
1.4 Keypoints 81
1.5 Vocabular 81
2. Dynamics of competition 82
2.1 Market structures 82
2.2 Attacks and counterattacks 82
3. Competition and collusion 83
3.1 To collude or not to collude 83
3.2 Market structure and collusion 84
3.3 Tacit cooperation by signalling 85
3.4 ABInbev/SAB-miller case: a global transaction 85
3.5 Institutions and prices 88
3.6 Preventing abuse of market dominance 88
INTERNATIONAL BUSINESS 6
CHAPTER 1: AN INTRODUCTION TO KEY CONCEPTS IN INTERNATIONAL BUSINESS 6
1. Terminology: what is global business 6
2. Important economic terms 6
3. European and global business 7
1.1 International Business: 7
4. International trade and investments 7
5. A unified framework 8
1.1 Institutional perspective (institution-based view) 8
1.2 Resource-based view 8
6. what is globalization: definition 9
1.1 globalization or slowbalization 9
1.2 trends in globalisation 9
1.3 Three views on globalization 9
1.4 The global economic pyramid 10
1.5 The rising power of Multinational Enterprises (MNEs) 10
1.6 The UNCTAD Transnationality Indec (TNI) 10
1.7 Global trade dynamics and protectionism 11
1.8 Factors discouraging globalization 11
7. Closing Case: Global business in the digital age: Airbnb 13
1.1 Summary of the case 13
1.2 Positive and negative aspects 13
CHAPTER 2: FORMAL INSTITUTIONS 14
1. Opening Case 1: Managing business risks in Turkey 14
1.1 background 14
1.2 Importance of formal institutions 14
1.3 Institutional factors investors asses 14
1.4 Key takeaways Case 1 14
2. Opening Case 2: Managing business in South Africa after 1994 15
1.1 Context 15
1.2 Main legal changes 15
1.3 Consequences for businesses 15
1.4 Key takeaways case 2 15
3. Institution-based view 15
1.1 Institutional framework 15
1.2 Transaction costs 15
1.3 Opportunism 15
4. Institutions 16
1.1 Definition 16
1.2 Functions of institutions 16
1.3 Dimensions of institutions 16
1.4 What institutions do 17
1.5 Core propositions 17
5. Political systems 17
1.1 Importance of political elections for business 17
1.2 Definition 17
1.3 Main types 18
6. Economic systems 18
1.1 Definition 18
, 2
1.2 Types of economic systems 18
7. Varieties of capitalism 19
8. Legal systems 20
1.1 Definition 20
1.2 Legal processes 20
9. Debates and extensions 21
1.1 (Intellectual) Property Rights (IPRs) 21
1.2 Corporate governance: relationship between good corporate governance and institutions 22
1.3 Institutions and political risk 22
10. Implications for practice 22
11. Closing case: Carlsberg faces political risk in Russia 23
1.1 Summary 23
1.2 Questions 23
12. Assignment chapter 2 24
1.1 Summary of the sources 24
1.2 Questions regarding the case 24
CHAPTER 3: INFORMAL INSTITUTIONS 25
1. Cultural intelligence (CQ) 25
1.1 Development of Cultural Intelligence 25
1.2 Examples of Cultural Differences 25
2. Culture 25
2.1 Culture as shared values and norms 26
3. Religion 29
4. Language 29
4.1 Handeling language differences 29
5. Cultural clusters 30
CHAPTER 4: FIRM RESOURCES AND OUTSOURCING 31
1. Opening case: SAP drives industry 4.0 31
1.1 Summary of the opening case 31
2. Resource-based view 32
3. Identifying resources 32
3.1 Primary resources 32
3.2 Capabilities 33
4. Appraising resources: the VRIO framework 35
4.1 Value Creation 35
4.2 Rarity 35
4.3 Imitability 35
4.4 Organization 35
4.5 Summary 35
5. Benchmarking 36
5.1 4 steps of benchmarking 36
6. The scope of a firm’s resources 37
6.1 Outsourcing 37
6.2 Offshoring 37
6.3 Offshore outsourcing 37
7. Debates and extensions 38
8. Global value chains 39
8.1 Summary 39
8.2 Macro-level influences 39
8.3 Structural governance 39
8.4 Strategic governance 40
, 3
8.5 Micro-level influences 40
8.6 Overall conclusion 40
8.7 Reshoring 40
9. Case: Shanzhai! Mediatek and the whitebox handset market 41
9.1 Summary of the case 41
9.2 Questions and answers 41
CHAPTER 6: FOREIGN DIRECT INVESTMENT AND THE OLI PARADIGM 43
1. Opening case: Indian Business Go global 43
1.1 Summary of the opening case 43
1.2 How did Indian businesses adapt to helping with covid-19 vaccination production? 43
2. Foreign direct investment (FDI) 44
2.1 Foreign direct investments and foreign indirect investments 44
2.2 Horizontal and vertical FDI 44
2.3 The impact of FDI: case 45
2.4 Measuring FDI 46
2.5 Why do MNEs exist? 46
3. The OLI paradigm 47
3.1 Ownership advantage 47
3.2 Location advantages 48
3.3 Internalization advantages 49
3.4 OLI paradigm summary 50
3.5 OLI paradigm vs internationalization process models 50
4. Assignment for this chapter 51
4.1 China’s firms are taking flight, worrying its rulers 51
4.2 Existence of MNEs according to OLI paradigm 51
4.3 Exporting versus horizontal FDI – 3 deciding factors 51
CHAPTER 9: GLOBAL INTEGRATION AND MULTILATERAL TRADE AND INVESTMENT ORGANIZATION 52
1. Opening case: WTO mediates between Airbus and Boeing 52
1.1 Summary 52
2. World Trade Organization (WTO) 53
2.1 Origins of the WTO 53
2.2 The WTO setting rules for international trade 54
2.3 Trade dispute settlements 54
2.4 Reforming the WTO 55
3. Regional and bilateral economic integration 56
3.1 Multilateral trade agreements 56
3.2 Bilateral Trade and Investments Agreements 58
4. The multilateral monetary system 58
4.1 IMF - International Monetary Fund 58
5. Debates and extensions 59
5.1 The development agenda 59
5.2 The financial sector regulation data: 60
5.3 The Climate Change Agenda 60
6. Closing case 61
6.1 Summary 61
6.2 WHO challenges 61
CHAPTER 11: STARTING INTERNATIONAL BUSINESS AND MODELS OF INTERNATIONALIZATION
PROCESS 62
1. Opening case 62
1.1 Summary 62
, 4
2. Small and medium enterprises (SMEs) 62
3. Buying and selling abroad 62
3.1 The trader’s vocabulary 63
4. Exports and imports of goods 63
4.1 Working with trade intermediaries 64
5. Managing international contracts 65
5.1 Licensing and franchising 65
5.2 Other forms of co-operation 65
6. Resources and internalization 66
6.1 Internalization as a process (Uppsala model) 66
6.2 Stages models of internationalization 66
6.3 Network internationalization model 67
7. International new ventures (INV) (born global) 67
8. Kaspersky case study 68
8.1 Summary 68
CHAPTER 12: FOREIGN ENTRY STRATEGIES 69
1. Opening case 69
1.1 Summary 69
1.2 Key points linking to this chapter 69
2. Why expand abroad? 70
3. Where to expand to? 70
4. When to enter? 72
5. How to enter? 72
1.1 The resource dimension 73
1.2 The control dimension 75
6. Institutions and foreign entry strategies 77
7. Debates and extensions 77
1.1 Initial versus subsequent investments in acquisitions 77
8. Closing case 78
1.1 Summary 78
1.2 Discussion topics 78
9. Case: Porsche 79
1.1 Summary 79
1.2 Discussion questions 79
CHAPTER 13: COMPETITIVE DYNAMICS 80
1. Opening case 80
1.1 Summary: Tesla challenges the global car industry 80
1.2 Keynotes 80
1.3 Summary: Gulf airlines challenge a global industry 81
1.4 Keypoints 81
1.5 Vocabular 81
2. Dynamics of competition 82
2.1 Market structures 82
2.2 Attacks and counterattacks 82
3. Competition and collusion 83
3.1 To collude or not to collude 83
3.2 Market structure and collusion 84
3.3 Tacit cooperation by signalling 85
3.4 ABInbev/SAB-miller case: a global transaction 85
3.5 Institutions and prices 88
3.6 Preventing abuse of market dominance 88
