Lecture Notes for International Management.docx

Lecture Notes for International Management.docx

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LectureNotesforInternationalManagement

LectureNotesforInternationalManagement

Chapter1

AnOverviewofGlobalandRegionalTrendsandChallenges

1.1InternationalBusinessinthe21stCentury

WrightBrothersandtheInternationalBusiness

SeveralSpecialTerms:

（1）outsourcing

（2）logisticssystem

（3）just-in-time

（4）globalization

（5）WorldTradeOrganization（WTO）

⏹responsibilities

⏹goal

1.2GlobalizationandthegrowthofinternationalBusiness

GlobalizationismeasuredbyFDI.

Managerialknowledgeandtechnicalknow-howcanflowintoacountrywiththeFDI

SeveralKeyTerms:

（1）ForeignDirectInvestment（FDI）

（2）Triad（USA,EU,Japan）

（3）NorthAmericanFreeTradeAgreement（NAFTA）（USA,Canada,Mexico）

（4）GDP（GrossDomesticProduct）

（5）FreeTradeAreaofAmericas（FTAA）

ReadandStudythefollowingexhibits:

Exhibit1.1:

WorldDFI

Exhibit1.2:

Imports/exportsPartners’shareofUSTrade

Exhibit1.3:

GDPin2010（Projected）

Exhibit1.4:

UnderstandthenamesoftheAmericanCountries

Exhibit1.5:

CreativeCountries

Exhibit1.6:

World’sLargestCompanies

Exhibit1.7:

USTrade:

deficitandSurplus

Whyinternationalbusinessgoessofast

⏹Greatereaseoftransportation

⏹Widerpoliticalandeconomicties

⏹Developmentofcommunicationnetwork

⏹Competitionrequirement

1.3RegionalTrends

Canada

⏹growthratesweresteady

⏹foreigntradeaccountsfor82%oftheGDP

⏹Incomepercapitais30%lowerthanthatofUSA’s

⏹Militaryforce:

59,100

⏹CloserelationwithUSAandUK

Mexico

⏹EconomyiscloselytiedtoUSA

⏹America’sthirdlargesttradepartner

USA

⏹population:

300millionin2005

⏹GDPin2010was15,600$billions

⏹InternationalTradePartners:

Canada19%

China12%

Mexico11%

China

⏹Secondlargesteconomyintheworld

⏹GDPin2010was6,500$billions

⏹Weaklegalsystemandopaquegovernmentpolicies

⏹BusinessisguidedbyGuanxiratherthanbyrulesandlaws

⏹Regionaldifferencesarehuge

⏹Morethan150,000foreignbusinessesinChina

⏹Largestluxurygoodsmarket

⏹Paidhighwaysystem

India

⏹EmergingsuperpowerinAsia

⏹Hightech:

Computerscience

Japan

⏹Thirdlargesteconomyintheworld

⏹GDPin2010was5,400$billions

⏹Goodreputationinproductquality

⏹Nuclearplantleakwillcausemoreproblems

PleaseseemorefromthetextbookaboutEuropeanUnion,Russia,andMiddleEast.

1.4ChallengesFacingInternationalBusiness

Currencyexchangerate

Globalizationonworkforce:

diversity

Laborcostincreaseinmanydevelopingcountries

1.5DefinitionofInternationalManagement

Internationalmanagementistheprocessofpracticingmanagementtechniqueswithinaninternationalenvironmentorcrossculturalsituations.

Chapter2:

LegalandPoliticalFoundationsofInternationalManagement

2.1LegalIssuesinInternationalManagement

2.1.1TypesofLegalSystems（SeeP44-48）

CivilLaw（大陆法系）

⏹Codelaw,basedonelaborateanddetailedsetofrules.

⏹Triedtodesignacompletesetofregulationsaboutwhatisrightandwrong

CommonLaw（英美法系）

⏹UsedinUK,USA,Canada,Australia,Ireland,etc.

⏹Usepreviouscasesorprecedenttoresolvelegaldisputes

SeeExhibit2.1and2.2

IslamicLaw

⏹usesreligiousregulationsintheQuran（可兰经）

⏹honoragreementismoreimportant

WhataboutChina?

⏹complexcombinationofseveralsystems

⏹SeeP47atbottomparagraph

2.1.2InternationalLaws

WTO

⏹Over140members

⏹ChinabecameaWTOmemberin2002

⏹Most-favorednation（最惠国待遇）

⏹Resolvinginternationaltradedisputesismorecomplicated.

2.2PoliticalIssuesandRisksinInternationalManagement

2.2.1WhatisPoliticalRisk

Politicalrisksaretheactionsbygroupsofpeopleorgovernmentsthathavethepotentialtoaffecttheimmediateand/orlong-termviabilityofafirm.

2.2.2TypesofPoliticalRisks

Political/EconomicEnvironmentRisk

⏹Stabilityofacountry’sgovernmentandpoliticalsystem

⏹1989Tian-An-MenSquireIncident

⏹Nationalizationin1950sinChina:

SeeP55-56

⏹ExchangeRates

ReadP57TheDangerinDoingBusinessAbroad

DomesticEconomicConditionsasRiskFactors

⏹sizeofpopulation

⏹incomepercapita

⏹inflation

⏹availabilityoflabor

⏹regulationsonenvironmentpollution

ExternalEconomicRelation

⏹import/exportrestriction

⏹restrictiononmoneytransfertoanothercountry

⏹currencyexchangerestriction

ReadandstudyExhibit2.4onP58

2.2.3ManagingorDealingwithPoliticalRisk

⏹Understandtheothercountry’spoliticalsystemsandculture

⏹Reduceriskbyusingdifferenttypesofoperation,Forexample:

Managementcontractandfranchisingarebetterthandirectinvestment

Explainthedifferencestostudents

Chapter4

CulturalDimensionsandinternationalManagement

Learningobjectives:

⏹Understandhowcountriescanbeclusteredaccordingtotheirculturevalues.

⏹Describehowculturalvaluescanaffectemployeeattitudesaboutwork.

⏹Culturedimensions

4.1WhatisCulture

4.1.1WhyDoWeStudyCulture

Behaviorisaffectedby:

•Internalfactors,suchasstrategy,theorganizationalculture,history,theindividualpsychologyofmembers;

•Externalfactorssuchasmarkets,competition,technology

•Culture

4.1.2DefinitionofCulture

Hofstede’sDefinitionofCulture:

Cultureisthecollectiveprogrammingofthemindwhichdistinguishesonegrouporcategoryofpeoplefromanother.Cultureincludesthesharedknowledge,beliefs,andvalues,aswellasthecommonmodesofbehaviorandwaysofthinkingamongmembersofasociety.

Managersneedtoknowwhichmotivationstrategiesareapplicableacrossculturesandwhichareculturespecific.

4.1.3CharacteristicsofCulture

——Acultureisparticulartoonegroupandnotothers

•Differentsocialgroupshavedifferentcultures;

•Differentsocialgroupsmayrespondtosimilarsituationsindifferentways.

•ExampleofDonationissue:

InUSA,peoplemaketheirowndecision.

InChina,peoplelookaround.

——Cultureinfluencesthebehaviorofgroupmembersinuniformandpredictableways

⏹Ifyouunderstandtheotherculture,thenyoucanpredictthebehaviorofitsmembers:

⏹Forexample:

Howtheyrespondtonewincentiveschemes;

Howtheyrespondtothreatsandconcessions;

Howtheyrespondtoexpatriatemanagement.

——Cultureislearned,notinnate.

⏹Cultureisnotprogrammedintoyourgeneticstructure.

⏹Youlearnmostintheearlyyearsoflife.

⏹Yourbehaviorandvalueareassociatedwithsuchfunctionsas:

•Interactingwithothermembersofyourfamily;

•Elicitingrewardsandavoidingpunishments;

•Causingandavoidingconflict.

——Cultureincludessystemsofvalues.

DefinitionofValue（Hofstede）

⏹Valuesareassumptionsabout“howthingsoughttobe”inthegroup.

⏹Inmanytimespeoplemaynotclearlyexplaintheseassumptions.

Questions:

1.Afterclass,doyouleavetheclassroombyyourselforwaitforsomebodyandleavetogether?

2.Supposeyouareadirectorofadepartment.Doyouwanttokeepacloserelationshiporadistancewithyoursubordinates?

Asakeyfactorofculture,valueisaffectedby:

⏹NaturalEnvironment

⏹Socialclass;

⏹Subculture;

⏹Family;

⏹Age

——Cultureisalsoinfluencedbybeliefs

⏹Theindividual’sbeliefsindicatehowhethinksthatthingsare,oroughttobe.

⏹Butpeopleoftendonotbehaveaccordingtotheirbeliefs.Examples

1:

Religionandcrime

2:

Communists:

serveforpeople?

4.2CultureandContext

AccordingtoEdwardHall,culturesvaryintermsofhowcontextualinformationistypicallyviewedandinterpreted.

Members’experiencesofcontextinfluencehowtheycommunicate.Differentculturegroupsrespondtotheircontextsdifferently.Theanalystinterestedinthebehavioralprioritiesofaparticulargroupmusttrytounderstandtheircontextsandhowmembersexperiencethem.

Hall（1976）classifiesculturesorcountriesintotwogroups:

Low-contextCultureandHigh-contextCulture.SeePage110Exhibit

4.2.1Low-contextCulture低语境文化

Inlow-contextcultures,likeintheUSAorGermany,theinterpretationofpeopleandbehavioroftendependsonwhatisactuallysaidorwritten.

ThecharacteristicsofLow-contextcultures

⏹RELATIONSHIPbetweenindividualsisrelativelyshorterinduration,andingeneraldeeppersonalinvolvementwithothersisvaluedless.

⏹MESSAGEmustbemadeexplicit,andthesendercandependlessonthereceiverinferringthemessagefromthecontext.

⏹AUTHORITYisdiffusedthroughoutthebureaucraticsystemandpersonalresponsibilityisdifficulttopindown.

⏹AGREEMENTStendtobewrittenratherthanspoken.

⏹INSIDERSandOUTSIDERSarelesscloselydistinguished.

⏹CULTURALPATTERSarefastertochange.

4.2.2High-contextCulture.高语境文化

Inhigh-contextculture,likeinChina,Korea,orJapan,thecontextitselfoftenprovidesinformationthatcanbeusedtointerpretwhatmightbe.Peoplemaynotrequireorexpectmuchdetailedandexplicitinformationaboutanevent.

ThecharacteristicsofHigh-contextcultures

⏹RELATIONSHIPSarerelativelylonglasting,andindividualsfeeldeeppersonalinvolvementwitheachother.

⏹BecausesomuchiscommunicatedbySHAREDCODE,communicationiseconomical,fast,andefficient–inaroutinesituation.

⏹PeopleinAUTHORITYarepersonallyresponsiblefortheactionsofsubordinates.

⏹AGREEMENTS（betweenmembers）tendtobespokenratherthanwritten.

⏹INSIDERandOUTSIDERSarecloselydistinguished;outsidesinclude:

non-membersofthefamily,clan,organization,etc.,andforeigners.

⏹CULTUREPATTERNSareingrained,andslowtochange.

4.3Hofstede’sCultureDimensions

GeertHofstedeisProfessorofMaastrichtUniversityinHolland.Hesur