International Business (4)

Supply & Demand
spot market: how quick to sell? now. market is determined by payment in long term. Determined in that day in short term, why US$ is higher with EU recently?
Current future: you can buy future. future is a guarantee people get the exchange, you have to do it, to excise.
current choose option: to protect yourself. option: you have a right to do or not do it. If you have extremely high risk, go option. call option: buy money, put option: sell money

Price of export: price of goods, currency exchange, transaction fee.

Banks:
commercial bank: they lend their own money and do the transaction by themselves
investment bank: they arrange the lender and borrower together, the money they use are borrowed from lenders
component relationship: somebody you have agreement with, they have great common, for many companies the bank has the agreement.
subsidiary: overseas banking separately incorporated from the parent. Usually in large money center, if you following BOA, you will find it in HK, Sg.
LIBOR: London interbank offered rate. banks offer to lend funds to other banks in the Europe (London) money market. It is a filtered average of inter-bank deposit rates offered by designated contributor banks, for maturities ranging from overnight to one year.
Foreign capital market:

Protectionism (formulation of national trade policy)
national defense: normally you don't want free trade here. The gov wants to protect some specific industries. A country must be self-sufficient in critical raw materials, tech etc, or else be vulnerable to foreign threat.
Infant industry.
Jobs
Strategic trade theory: (mature/oligopoly) Boeing, there are only only have two major competitors, airbus&boeing, we dont' want them to be out of business. BTW, we consumers dont' want it out of buzz either(if one wins, we pay more money).

barriers
tariffs: is a tax placed on a good that is traded internationally. who pay it? customers
quotas: numerical limit on the quantity of a good that my be imported into a country during some time period. Earlier, Toyota was limited to import to US
product standard: require foreign good to meet a county's product standard before the good can be offered for sale. Russia insists that imported telecommunications equipment be tested by two separate gov agencies, a process takes 12-18 months
local purchase(content laws): require the exporting firms to purchase good or services from local suppliers.
restrict access: restricting foreign supplier's access to the normal channels of distribution. China requires that imported sugar be distributed only by state-owned trading enterprises.

GATT: agreement, allow free trade
WTO: an organization, promote free trade, reduce remaining barriers
Why join WTO: members get the same preference as all the other members
power of WTO: it has multi-level power, every country has one vote, if one country has fault, all countries punish you, now you get the attention.

Regional economic integration:
Free trade areas: agree to protect each other, reduce barriers. member of free trade areas are often vulnerable to trade deflection. To prevent this, they specify rules of roigin. Jp to US with 6% duty, can they go to Mexico, then go to US? NO because duty free only made in MX.
customs union: allow labor travel between countries, US is not here because it not allow labor moving around. members also adopt common trade policies towards nonmember countries.
Common Market:members also eliminate barriers that restrict among themselves
Economic Union: members fully integrate their economies by coordinating their economic policies, have common currency.
Political Union: the union effectively transforms itself into one country

What is strategic planning? what's going to do in long term, usually 5 years. For IT, maybe 1-2-3 years

Broad strategies:
Home replication: it takes what it does very well in its home market and attempts to duplicated foreign markets. Walmat,
Multi-domestic: modify myself each time I go to another country, understand the local economic. It is decentralized. Not cost effective
Global: it is opposite of mulitdomestic, it is inexpensive and centralized. view the world as a single market, create one strategy for the world. cost effective, Boeing.
transnational strategy: use several strategies simultaneously. It is not centralized or decentralized, it carefully assigns responsibility for various roganizational task to achieve the goal efficient. MS: RnD in US, marketing to its subsidiaries. It is the most effective way, but not efficient.
Regional: company be part of the world. sometimes centralize (marketing), sometimes decentralized (manufacturing).

Environmental scan
SWOT: strength, weakness, opportunities, threats. the strength of walmart is buying power, low cost. They try to transfer this and it works. But it failed in German, coz they don't want drive to far, or buy big box.
value chain is a breakdown of the firm into its important activities: production, marketing, human resource, ... to enable its strategists to identify its competitive advantages and disadv.
core competence: what I do very well to use it globally. BOA.

Business level - how to compete
cost leadership: make the strategy that the product's cost is lower than the competitors. why shopping in walmart? sell for less.
differentiation: the products or services are unique from others in the same market. Rolex sell its products very expensive, only in a few dealers in given area.
focus:find the small market I want to attack, target specific types of products for certain customer group. Convent.
integration: use some of the above strategy. target: low cost and good shopping experience.

Issues of entry strategy
Risk: different kind of risk, like dollar, current exchange..
control
profit: share, all, incremental ( I need to know my fee, fee may be critical)
speed

method of entry
export:indirect: no high risk, not lot of control, need partner to sell product, profit: need to make money, speed, should be relatively quick
license: normally give my brand. risk: light, destroy my name, be careful to choose partner. lose control a little bit, coz give name to others. profit: incremental, speed: very fast
franchising: almost the same as license. give business to others, like McDonalds and hotels. risk:same, control: still have. speed: maybe good, dont need to build. profit: incremental
contract manufacturer: source to somebody, have control, manufacturing
management contract and Turnkey Low risk, if my technology need to transfer, I need leave somebody to do it, teach others how to do it. -- build it and sell to you, not quick
Greenfield:start with nothing, high risk (need lot money for structure, get a while to produce sales, no revenue, no guarantee), control, speed very slow, profit, lose or make money.
Acquisition: something it is there already and you bought it, risk: pay already doing, yoi know the amount of risk. speed relatively quick. control: you take over, profit: make good money but need wait a while. People more prefer this one
Joint venture - synergy: manufacture well but not sell well, another one's marketing is well. these two do synergy, A & B to create a whole new independent company C. Suppose to reduce risk, speed sometimes fast, control:share, very common, income share.
Alliance: software, hardware,

International strategic alliances
Joint ventures: two companies to create 3rd one. share risk, share profit, share control, hard to say speed, why Joint venture? two come together and make more.
non-equity: two companies agree to consist each other, there are no money between them, A & B going to a country, no new company
equity: two companies agree to corporate, Large A invert small B,
tacit collusion: A, B no agreement.

Why Joint Venture? market entry, share risk (software/hardware), share knowledge, synergy. share profit, share control

Selection of partners
capable: do you have access resource? agree a long term to be partner.
Nature of business: better to work together than compete. JP cars to US, sell in Ford dealer, small cars, not competitors with SUV
relative safeness of alliance: make sure safe, know what your partner want to do.
learning potential of the alliance: need education, use other country's marketing people, Defensive: for High Tech, keep R&D outside. Integrative: get win-win condition

Organization design:
initial: global, efficient(cheap), not effective
international division: global, efficient
global design: effective, not efficient
mixed (matrix): efficient & effective

Process theories:
expectancy--Instrumentality --valence
confidence link --reward
my effort
lead to desire
result

Equity: compare people inside business and outside. Is it fare to compare NBA player with others?

Leadership style:
autocratic: communication: up-down, European union is here. Leaders tell the employees what they want done and how they want it accomplished. Worry about how to make the work done. treat people: they are my employee.
paternalistic: communication pattern: top-down, take care of you, asia, spanish country and south America. They concern the employee, there will be some communication back.
participative: down-up, ask you questions, have more feedback, employee center to people center, US, CA, England
laissez faire: bottom-up, also known as 'handoff' style. people center, clean the path for employee. The manager provides little or no direction and gives employee as much freedom as possible