Themes And Resources For Teaching International Business Tamer Cavusgil

Themes and Resources for Teaching International Business S. Tamer Cavusgil University Distinguished Faculty John W. Byington Endowed Chair in Global Marketing Michigan State University 7th Biennial International Business Institute for Community College Faculty East Lansing, Michigan, May 2007

The Agenda
Globalization and its implications
Key Trends in Global Business
Implications for Management
Learning resources
Teaching tips and classroom exercises
Course design
Helpful publications

Themes for Teaching IB Offshoring Culture Globalization Technology Diverse Participants Smaller Firms in IB Emerging Markets Strategy International Entrepreneurship Collaborative Ventures Service Sector Industry

What is Globalization?
At the macro level…
Greater integration and interdependency of national economies
Freer movement of goods, services, capital, and knowledge
Prevalence of regional trading blocs
Emergence of monetary unions
Convergence of customer lifestyles, requirements, etc.

What is Globalization?
For business enterprises…
Foreign market entry and expansion
Selective externalization of value chain
Collaborative ventures with foreign partners
Integration of operations on a global scale
Building global capabilities and a global organization

The Many Dimensions of Globalization
Value-adding activities
Companies – The business enterprise
Products and brands
Economic assets
Business risks
Industries
Countries, markets
Regulations, laws, standards
Cultural values, mindsets, consumer behavior
Business practices

Phases of Globalization 1 st Phase: 1830, peaking around 1880 Aided by railroads, ocean transport, rise of manufacturing and trading companies 2 nd Phase: 1900, peaking around 1920s Fueled by electricity and steel 3 rd Phase: 1948, peaking around 1970 GATT, end of WW II, Marshall Plan… 4 th Phase: 1980, peaking around 1997 Tech. advances, Internet, Emerging Markets…

Globalization Trends
Global economic realignment
Geography made redundant by technological connectivity
Consolidation of industries on a worldwide scale
Strains on natural resources and the environment
Remarkable growth and potential of Emerging Markets…

Emerging Market Dynamics
Source of customers, suppliers, ideas, and human capital.
One billion new consumers will enter the global markets in the next decade!
Household income will reach threshold level of $5,000 in EMs.
Consumer spending will increase from $4 trillion to more than $9 trillion by 2015, nearly matching Western Europe.

Attractions and Challenges of EMs
Dynamic, rapidly transforming
Low competitive intensity
Dominated by family conglomerates
Political instability
Bureaucracy, redtape, lack of transparency
Legal, institutional vacuum
Safeguarding intellectual property
Cultural distance…

The Aspiring Consumer in EMs
Young demographics
Rapidly urbanizing
Middle class coming into its own
Engaged in technological leapfrogging
Exposed to Western brands
Rising expectations
Eager to consume material things
Highly brand conscious

20,400 55 26 5 South Korea 8,300 45 28 14 Thailand 8,200 45 32 10 Turkey 10,000 41 42 13 Mexico 8,400 35 65 22 Brazil 11,100 47 67 12 Russia 3,600 48 105 20 Indonesia 3,300 49 534 8 India 6,800 45 587 1 China GDP per capita ( PPP, US $ ) % of Income held by middle class Middle-class population (millions) Rank in MSU-CIBER’s EMPI Country

Why GDP Per Capita is a Poor Indicator of Market Potential for EMs?
Need to adjust for Purchasing Power Parity
Informal economy is often as large as the formal economy in developing countries
The “mean” is a poor indicator since income distribution is typically bi-modal in EMs
Household income several times larger than per capita income because of multiple wage earners
Developing country statistics may be unreliable
Typical exporter is more interested in a large enough “market niche” than huge potential

Implications for Management
Building interconnectedness: ‘global orchestration’ of value-chain activities
Exploiting knowledge
Search for maximum flexibility in manufacturing, sourcing and other value- adding activities
Relentless search for productivity gains and operational efficiency
Recognizing, cultivating, and measuring key global strategic assets of the organization
Gaining and sharpening partnering capabilities…

Research & Development Product Design Manufacturing Marketing Distribution Sales & Service Stage in Value Chain Strategic alliances Licensing/cross licensing Design contracting Global procurement Contract manufacturing Equity joint ventures (FDI) Agency agreements Licensing Exporting to distributors/ agents Franchising Exporting to end-users Business format franchising Agency/representative relationships Types of Collaboration Company Examples Telecoms, computers, drugs, aircraft, satellite communication systems… Dow, Pharmacia-Upjohn Software, autos, fashion goods, shoes, furniture… Automotive Gerber (Novartis) IKEA, Guardian Industries Kmart, Manpower, Banks, Courier Services, Amway

2. Companies-The Business Enterprise
Diagnostic tools from MSU CIBER: CORE, Distributor, Partner, Freight forwarder
Business Week’s Global 1000; Fortune’s Global 500
Fortune Global Most Admired Companies
Financial Times World’s Most Respected Companies
UNCTAD World’s Largest Transnational Corporations

National or Multi-local Companies Global or Transnational Companies Nestle, Unilever, Asea Brown Boveri, Sony, Coca-Cola
Strong national identity
National endowments: talent pool, skills, capabilities
Unique corporate governance/ownership patterns
National regulations on employment
National patterns of investment in R & D
Planning and resource allocation
Dependence on global markets
Worldwide manufacturing capability
Standardized products
Globally integrated strategy
Centralized structure and decision-making
Uniform operational policies and routines
Global organization and culture

3. Products and Brands
Business Week – Interbrand ’s Global Brands Scoreboard: World’s Top 100 Global Brands

2003 Global Brands Scoreboard

4. Economic Assets
Flows of capital (investment, debt, portfolio investment, etc.), technology, know-how, human resources, etc.
Delphion (patents), U.S. Patent Office

5. Business Risk
Economist’s Big Mac Index
The concept of Purchasing Power Parity , the notion that a dollar should buy the same bundle of goods in all countries, is explained. Comparing actual exchange rates with PPP indicates whether a currency is under- or overvalued.
MSU-CIBER’s Market Potential Indicators for Emerging Markets

Four Types of Risks Commercial Risk Types of Risks in International Business Country (Political and Legal) Risk Cross-Cultural Risk  Weak Partner  Operational Problems  Timing of entry  Competitive intensity  Poor execution of strategy  Currency exposure  Asset valuation  Foreign taxation  Inflationary and transfer pricing  Global sourcing  Social/political unrest and instability  Economic mismanagement; inflation  Distribution of income; size of middle class  Government intervention, bureaucracy, red tape  Market access; barriers; profit repatriation  Legal safeguards for intellectual property right  Cultural distance  Negotiation patterns  Decision-making styles  Ethical practices Currency/Financial Risk

6. Industries
Stat-USA (NTDB)
Hoover’s Industry Snapshots
U.S. Commercial Service

Market and Country Research
International Marketing Insight (IMI) Reports
Multilateral Development Bank (MDB)
Industry Sector Analysis Reports
Best Market Reports
Global Agriculture Information Network (GAIN) AgWorld Attaché reports
Country Commercial Guides

Aircraft (Civil) Computers Credit Cards Automobiles Soft Drinks Specialty Chemicals Pharmaceuticals (Ethical) Toothpaste Electric Insulation Commercial Banking Pharmaceuticals (OTC) Book Publishing Low High Strength of Competitive Globalization Drivers

7. Countries, Markets
IMD World Competitiveness Scoreboard
World Economic Forum Global Competitiveness Report
A.T. Kearney/Foreign Policy Globalization Index
Heritage Foundation and WSJ Index of Economic Freedom

Blah The World Competitiveness Scoreboard 2005 Source: IMD World Competitiveness Yearbook 2004

Economic freedom explains from 54 to 74 percent of the variation in income among countries.
A 10% increase in economic freedom in a country can produce an increase in GNP per capita of 7.4% to 13.6%.
CONCLUSION: The message is clear: enhancing economic freedom can lead to significant improvements in living standards. Economic Freedom and Wealth

8. Regulations, Laws, Standards Harmonization is a slow process when it comes to these… 8. Regulations, Laws, Standards

9. Cultural Values, Mindsets, Consumer Behavior
Mercer HR Consulting Quality of Life Survey
Freedom House Freedom in the World Survey
Euromonitor Market Research Monitor

10. Business Practices
Property rights, ethics and bribery, negotiation styles, entrepreneurial initiative, collective bargaining, labor-management relations.…

The 2003 Corruption Perceptions Index for Major Emerging Markets

Is Globalization a Good Thing? The Critics
Benefits of globalization are not evenly distributed
Globalization causes dislocation of jobs
Wages for unskilled labor are declining
Manufacturing moves offshore to avoid workplace safety and health regulations
MNCs fail to protect the environment

Power shifts to multinational corporations and supranational organizations; nations loose sovereignty
Concentration of power by multinational corporations leads to monopoly
International financial markets are inherently unstable
Globalization results in loss of national cultural values and identity
Is Globalization a Good Thing? The Critics (cont.)

Cultural empathy / Open-mindedness
Tolerance for ambiguity
Perceptiveness
Premium on personal relationships.
Flexibility/Adaptability/Self reliance
A good sense of humor
Warmth in human relationships
Curiosity
Skills for Global Manager

Learning Resources
The World is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman, New York: Farrar, Straus and Giroux, 2005.
The Next Global Stage : Challenges and Opportunities in Our Borderless World by Kenichi Ohmae, Pearson Education, Inc./ Wharton School Publishing, 2005.
Tectonic Shift: The Geoeconomic Realignment of Globalizing Markets by Jagdish N Sheth and Rajendra Sisodia, New Delhi: Response Books
The Culture Code: An Ingenious Way to Understand Why People around the World Live and Buy As They Do by Clotaire Rapaille, Broadway Books, 2006.

Learning Resources 2
One Billion Customers: Lessons from the Frontlines of Doing Business in China by James McGregor, A Wall Street Journal Book published by Free Press, 2005.
The Asian Mystique: Dragon Ladies, Geisha Girls, and our Fantasies of the Exotic Orient by Sheridan Prasso, Public Affairs, 2005.
China Shakes the World: The Rise of a Hungry Nation by James Hynge, forthcoming.
Doing Business in Emerging Markets , S.T. Cavusgil, P. Ghauri & M. Agarwal, Thousand Oaks, CA: Sage Publications, Inc., 2002.

Knowledge Portals
IB course modules at globalEDGE: globaledge.msu.edu /academy/co urses.asp
Diagnostic Tools available from MSU CIBER:
globaledge.msu.edu/DiagTools /
CIBER Web: ciberweb.msu.edu /
CKR Educators Consortium and Portal
Academy of International Business : aib.msu.edu /

Knowledge Portals (con’t)
McKinsey Quarterly www.mckinseyquarterly.com /
AT Kearney
Globalization Index Data 2005 www.atkearney.com/main.taf?p =5,4,1, 116,1
2004 FDI Confidence Index www.atkearney.com/main.taf?p =5,3,1,89
Offshore Location Attractiveness Index www.atkearney.com/main.taf?p =5,3,1,75
The 2005 Global Retail Development Index www.atkearney.com/main.taf?p=5,3,1,110

World Bank’s Doing Business portal, Benchmarking Business Regulations : www.doingbusiness.org /
Human Development Index commissioned by UNDP, see especially Chapter 4 on International Trade: hdr.undp.org/reports/global/2005/
Top 100 Global Brands from Interbrand Consultancy: www.interbrand.com/

Global Brands Scoreboard

US Government’s Export portal: export.gov
US Department of Commerce’s National Trade Data Bank (STAT-USA):
www.stat-usa.gov/tradtest.nsf
Knowledge @ Wharton: knowledge.wharton.upenn.edu /
Harvard Business Online for Educators: harvardbusinessonline.hbsp.harvard.e du/b02/en/academic/edu_home.jhtml
International Commercials

Other Online Sources
A Detailed Study Tour of Retailing in China and India: www.retailforward.com/freecontent/marketing/chin awebinar_files/default.htm
Jim Lehrer News Hour on Offshoring
pbs-newshour.virage.com/cgi-bin/visearch?user=pbs-newshour&template=play220asf.html&query=paul+solman&squery=+ClipID%3A4++VideoAsset%3Apbsnh121603&inputField=paul%20solman&ccstart=1985034&ccend=2621504&videoID=pbsnh121603
Globalization by New American Dream:
http://www.newdream.org/consumer/globalization.php
The Economist: The Big Mac Index, to illustrate purchasing power parity: www.economist.com/markets/Bigmac/index.cfm
The Internet Center for Corruption Research , offered by Transparency International: http:// www.icgg.org /

Faculty Development Programs Sponsored by CIBERs
Globalization Seminars sponsored by several CIBERs and held at the University of Memphis: www.people.memphis.edu/~wangctr/Pages/Gl obalization_Seminars.htm
Indiana University CIBER’s Pedagogy for International Business Workshop: www.kelley.iu.edu/ciber/eventitem.cfm?ID =102
MSU CIBER’s International Business Institute for Community College Faculty , offered every other year at MSU: ciberweb.msu.edu/activitydetail.asp?ViewID =1 &SectionRecordID=552
Other CIBER programs: ciberweb.msu.edu/facultydev /

Market entry, expansion, segmentation
Standardization /adaptation
Global brand success
Joint ventures/alliances/partnerships
Product liability laws; retail regulations
Global supply chain management
Emerging Markets; Family Conglomerates
Offshoring
Themes for General Business

Comparative advantage; gains from trade
Drivers of globalization
Purchasing Power Parity
Global Competitiveness Index
Index of Economic Freedom
Culture and IB
International entrepreneurship
Attitudes toward work and leisure
Unionization; collective bargaining
Globalization Themes for Economics

The Iceberg Principle of Culture
Cultural stereotypes, idioms, metaphors
Cultural Dimensions (High Context; Collectivism, Power distance, Uncertainty avoidance, Masculinity)
Language as the expression of culture
Self Reference Criterion
Critical incidence analysis
Negotiation patterns
Themes for Culture

Exchange rates and trade
Currency risk; Euro in the E.U.
Harmonized accounting practices
Transfer pricing; Taxation of foreign income
Foreign Corrupt Practices Act
Operating in: High-inflation countries; Free Trade Areas
Listing in foreign stock markets
Themes for Accounting

Internet and Information Technology as a driver of globalization
eBusiness /On-line strategies
Virtual interconnectedness in the multinational corporation
Globalization of IT sector; India’s advantage in this area
Globalization of related industries such as office furniture industry (Steelcase, Herman Miller, etc.)
Themes for Information Systems / Technology

Helpful Publications on Pedagogy
Robert Boice, Advice for New Faculty Members: Nihil Nimus , 2000, Allyn and Bacon: Needham Heights, MA.
Wilbert J. McKeachie, Teaching Tips , 1999, Houghton Mifflin Company: Boston, MA.
Ilan Alon and Nancy Cannon, “Internet-Based Experiential Learning in International Marketing: The Case of Globalview.org,” Online Information Review , Vol. 24, No. 5 (2000), 349-356.
R. F. Scherer, S. T. Beaton, M.F. Ainina and J. F. Meyer (eds.), A Field Guide to Internationalizing Business Education , Second Edition, 2003, Lakeshore Communications: Euclid, Ohio.
Case collections from business schools at Western Ontario, IMD, Harvard, Virginia, etc.

Internationalizing Business Education: Toward Meeting the Challenge, (Cavusgil), East Lansing, Michigan, MSU Press, 1993.
Internationalizing Business Education: Toward Meeting the Challenge , (Cavusgil), East Lansing, Michigan, MSU Press, 1993.
“ Expanding Horizons with E-Learning” in A Field Guide to Internationalizing Business Education , R. F. Scherer, S. T. Beaton, M.F. Ainina and J. F. Meyer (eds.), Second Edition, 2003, 183-194, Cavusgil, I. Kiyak and T. Kiyak.
Study Abroad Programs in Business Schools, Issues and Recommendations by Leading Educators, East Lansing, MI, MSU Press, 2002.
Publications on Internationalizing Business Education

Themes And Resources For Teaching International Business Tamer Cavusgil

by Nirmala last

Accessibility

Categories

Upload Details

Usage Rights

2 Embeds 6

Statistics