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Themes And Resources For Teaching International Business Tamer Cavusgil


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  • Sincere congratulations to the entire Wolverine team! 17 consecutive quarter of record revenue and earnings per share is no small feat. Your brand portfolio is strong and covers much competitive space. the company has not been content with its success; and is looking to leverage its brands beyond food rather than across apparel and accessories. You have set ambitious goals for the future.
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    • 1. 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
    • 2. 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
    • 3. Themes for Teaching IB Offshoring Culture Globalization Technology Diverse Participants Smaller Firms in IB Emerging Markets Strategy International Entrepreneurship Collaborative Ventures Service Sector Industry
    • 4. 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.
    • 5. 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
    • 6. 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
    • 7. 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…
    • 8. 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…
    • 9.  
    • 10.  
    • 11. 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.
    • 12. 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…
    • 13. 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
    • 14. 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
    • 15. 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
    • 16. 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…
    • 17. 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
    • 18. 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
    • 19.  
    • 20. 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
    • 21.  
    • 22.  
    • 23. 3. Products and Brands
      • Business Week – Interbrand ’s Global Brands Scoreboard: World’s Top 100 Global Brands
    • 24. 2003 Global Brands Scoreboard
    • 25. 4. Economic Assets
      • Flows of capital (investment, debt, portfolio investment, etc.), technology, know-how, human resources, etc.
      • Delphion (patents), U.S. Patent Office
    • 26.  
    • 27. 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
    • 28. 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
    • 29. 6. Industries
      • Stat-USA (NTDB)
      • Hoover’s Industry Snapshots
      • U.S. Commercial Service
    • 30.
      • 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
    • 31. 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
    • 32.  
    • 33. 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
    • 34.  
    • 35. Blah The World Competitiveness Scoreboard 2005 Source: IMD World Competitiveness Yearbook 2004
    • 36.  
    • 37.
      • 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
    • 38. 8. Regulations, Laws, Standards Harmonization is a slow process when it comes to these… 8. Regulations, Laws, Standards
    • 39. 9. Cultural Values, Mindsets, Consumer Behavior
      • Mercer HR Consulting Quality of Life Survey
      • Freedom House Freedom in the World Survey
      • Euromonitor Market Research Monitor
    • 40.  
    • 41. 10. Business Practices
      • Property rights, ethics and bribery, negotiation styles, entrepreneurial initiative, collective bargaining, labor-management relations.…
    • 42.  
    • 43. The 2003 Corruption Perceptions Index for Major Emerging Markets
    • 44. A
    • 45.  
    • 46. 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
    • 47.
        • 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.)
    • 48.  
    • 49.
      • 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
    • 50. 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.
    • 51. 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.
    • 52. Knowledge Portals
      • IB course modules at globalEDGE: /academy/co urses.asp
      • Diagnostic Tools available from MSU CIBER:
      • /
      • CIBER Web: /
      • CKR Educators Consortium and Portal
      • Academy of International Business : /
    • 53. Knowledge Portals (con’t)
      • McKinsey Quarterly /
      • AT Kearney
        • Globalization Index Data 2005 =5,4,1, 116,1
        • 2004 FDI Confidence Index =5,3,1,89
        • Offshore Location Attractiveness Index =5,3,1,75
        • The 2005 Global Retail Development Index,3,1,110
    • 54. Knowledge Portals (con’t)
      • World Bank’s Doing Business portal, Benchmarking Business Regulations : /
      • Human Development Index commissioned by UNDP, see especially Chapter 4 on International Trade:
      • Top 100 Global Brands from Interbrand Consultancy:
    • 55. Global Brands Scoreboard
    • 56. Knowledge Portals (con’t)
      • US Government’s Export portal:
      • US Department of Commerce’s National Trade Data Bank (STAT-USA):
      • Knowledge @ Wharton: /
      • Harvard Business Online for Educators: harvardbusinessonline.hbsp.harvard.e du/b02/en/academic/edu_home.jhtml
      • International Commercials
    • 57. Other Online Sources
      • A Detailed Study Tour of Retailing in China and India: awebinar_files/default.htm
      • Jim Lehrer News Hour on Offshoring  
      • Globalization by New American Dream:  
      • The Economist: The Big Mac Index, to illustrate purchasing power parity:
      • The Internet Center for Corruption Research , offered by Transparency International: http:// /
    • 58. Faculty Development Programs Sponsored by CIBERs
      • Globalization Seminars sponsored by several CIBERs and held at the University of Memphis: obalization_Seminars.htm
      • Indiana University CIBER’s Pedagogy for International Business Workshop: =102
      • MSU CIBER’s International Business Institute for Community College Faculty , offered every other year at MSU: =1 &SectionRecordID=552
      • Other CIBER programs: /
    • 59.
      • 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
    • 60.
      • 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
    • 61.
      • 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
    • 62.
      • 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
    • 63.
      • 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
    • 64. 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,” 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.
    • 65.
      • 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