International Business Management(IBM)

International Business Management

1: Large companies can:

-           Keep a watchful eye on such markets is to conduct preliminary studies periodically on each potential market it is considering.

-          Companies can conduct such studies in-house.

-          They can also send key managers that would oversee such new investments to the market to familiarize themselves with the local culture and begin making contacts.

However, entrepreneurs and small companies often do not have the money for expensive studies.

- They can afford to follow events in potential markets through the international media-especially the international business press.

-They can also purchase existing surveys of potential markets from international research agencies-usually available for a reasonable fee. 

-They can also seek out the advice and counsel of local retired businesspeople with international experience and contact their local Small Business Administration office (or similar agency outside the United States).

- The World Wide Web is a valuable tool for obtaining a great deal of free information

- Use secondary data research: existing researches, Medias, internet….

- Take a short course of another culture.

- Visit events prepared by another countries in our country

- Keep a good relationship with other embassies in our country

- Have more friends of other cultures

- Ask old people, parents, teachers or others who used to travel to or live in that places.

2. Yes, it is because i thought the pace of change now outpacing the ability of government to manage the global economic relies on two reasons such as ability of government on promoted trade:

-          Subsidies (Financial assistance to domestic producers in the form of cash payments, low interest loans, tax breaks, product price supports, or some other form).

-          Exporting Financing (offer loans that is lower than the market rate-guarantee)

-          Foreign trade zones (FTZ) (is allowed to pass through with lower customs duties (taxes) and fewer customs procedures)

-          Special government agencies (responsible for promote the home country’s exports and introduce business to potential business partners in the host nation).

In addition, ability of Government can restrict on trade:

-          Tariff (export tariff-transit tariff-import tariff)

o   Ad valorem tariff (percentages of the stated price of an imported product)

o   Special tariff (measured by number or weight)

o   Compound tariff (percentage of t its stated price and partly as a specific fee for each unit)

-          Quotas (measured in units or weight)

o   Import quota & export quota.

-          Embargoes (an order to temporarily stop something, especially trading or giving information)

-          Local content requirements (laws stipulating (to state exactly how something must be done).

-          Administrative delays

-          Currency control.

I thought national government will become more important to international business in the future depend on the reason above.

3. Information and communication technologies are facilitating the process of globalization in many ways. Globalization is the process by which national economies are becoming more integrated with each other. Specific example

-           Email and videoconferencing, companies are better able than ever before to keep in touch with far-flung subsidiaries, suppliers, and customers.

-          Intranets and extranets are facilitating the timely re-stocking of inventories by suppliers and the ordering of merchandise by buyers.

I think that globalization will not continue until we all live in one “global village” because the global village is the situation that people around the world living in the same environment, and all barriers are being eliminated.

Therefore, to me, I don’t think that globalization will continue until we all live in one “global village” because:

            - globalization depend on the advancement of technology but technology also have some disadvantage like expertise of technology can do s.th bad on the secret of globalization and the others bad thing can occur.

            - World political crisis

            - World economics crisis

            - Poor countries and developing countries can not easy to access the globalization…..etc. all above things, we can not estimate but I think it can be the problem.

4. To me, I think that this statement is not right because it contrasts from other countries’ visions or goal. The governments normally demand their people to work harder and longer with high pay but not less pay.

For instant,  PM Hun Sen  is the government of Cambodia used to offer garment workers $50 per month for each worker, but now it increases $62.8 per month for each. The government vision is to make people to get high standard of living, so there is no reason that government harms their own people.

5. I think their idea is not right because:

·         They are now not working in some countries, but are now living in the globalization environment; they might use or buy imported products, phones, cars, computers…..

·         They might do business with or work for foreign companies

·         The might run a local business that needs raw-materials other countries

·         They might compete with foreign investors in the future

6. I think internet will widen the economic gap between rich and poor countries because

-  Most of people in rich country they know how to use this technology more professional than people in poor country

-  They even understand about the important or advantages of using internet.

            -   People in rich country can make business or earn a lot of money through internet.

This shows the differences between the rich and the poor.

-          Other reasons are that most people in poor countries they are lack of knowledge of internet and even cannot afford to use it. It is also not widely available in poor countries. As we know that information is very important for doing business, and using internet is good mean to obtain information globally

Yes, Developing countries can use internet as a tool for economic development in some ways:

·         Made it widely available and reasonable price so that people can afford to use it.

·         Educate those who don’t understand how to use internet for their own benefit especially about the advantage of internet for their business such as :

o   How to design our webpage in order to make the customer feel good to order our product or service when we a powerful marketing field of our company

o   Send mail about our product and service via Yellow page (other company)

o   Use a videoconferencing in order to make good friendship with our own business partner….etc.

·         Should allow free market that lead to economic development.

7. If the nations of the world were suddenly cut off all trade with my country, there would be a lot of products we might no longer be able to obtain in our country such as petroleum, computers, internet, cars, motors, and other vehicles, etc. However, there are some countries especially Thailand that we would need to do without its products such as rice, vegetables, fruits, clothes, etc.

8. They might be affected by China’s economy in some fields such as:

·         Some businesses would close because the country is being flooded with cheap but good quality Chinese goods.

·         People force to study Chinese and use technologies or materials from China products while they are using Western technology and America technology.

·         Some local workers force to stop working because some companies are bankrupt.

·         Those countries might get less profit than before

9. There are some kinds of programs we would implement to educate our people about the benefits of trade; for example,

- I will inform this problem to the Ministry of Education to mix program about “the advantage of international trade” on high school, and especially university student.

- Opening Workshop about the benefit of international trade

- Select Key Person that have strongly commitment to educate Youth then they can do it the next as an our network Because Youth is everything we want.

- Request to government to open free flow of investment in my country and then post it to the news of all media in my country like TV channels, Magazines, internets, or home-to-home educated by volunteer friends to educate people to understand about the potential doing business with others countries.

10. The aim of doing business is to gain profit but ethic is also important in doing business, especially environment. If a company does not adhere to business ethics and breaks the laws, they usually end up being fined or probably are banned from doing business which finally end up in losing face. Environment is very vital in support the life in the world, without life the world would not exist. Doing business is really important to get higher living standard; however, protecting environment is really important too.

11. To me I think the first manager’s idea is not right for his words that “companies leaving their country to hire low-wage workers elsewhere. They don’t have any national pride?” And I support the second manager’s idea for his words that “It is the company duty to make as much profit…”, “reduce cost”. Yes, to go abroad to run a business benefits a lot of potential factors such as:

·         Reduce costs, labor, raw-material, transportation, technology, etc.

·         increase sales and profits for the company which helps improve the GNP of the country

·         the company might transfer their money to invest in their own country when it succeeds

·         because of the capital surplus, the government encourages to invest abroad so that the company should better invest abroad to increase the company asset

·         enter rapidly growing markets

·         spread out our culture

·         National reputation

·         12. There are 4 theories of FDI:

Actually, there are 4 theories that have been proposed to explain the flow of foreign direct investment. It includes:

·         International Product Life Cycle

·         Market Imperfections

·         Eclectic Theory

·         Market power

Among these 4 theories, the most appealing to me is Market Power because using market power, the company can obtain greater profit.

 To me, the company that fit this theory is Mobitel because this company seems to dominate the market share of phone network in Cambodia.

In my opinion, the faults of other theories are:

International Product Life Cycle:

·         It’s not sure that the companies that undertake FDI will succeed 100%

·         It may be too late to make FID if the company waits until their product moves through its life cycle.

Market imperfections:

·         Imperfection can be removed only if FID succeeds especially not success for market penetration.

Eclectic theory:

·         First is location

·         Second is ownership ( how many percentage that we can own and who will be the management)

·         Third is internalization ( can we invest for 100% or not)

13. The global carmaker I work for is investing in an automobile assembly facility in Vietnam with a local partner. The potential reasons for this investment are:

·         Lower cost of other resources such as human resources, raw-materials, and IT

·         Easy for transportation systems

·         Increase profits and sales

·         It’s in the potential market place because of the high population and economic growth in Vietnam

·         Causes a flow of money into the economy which stimulates economic activity

·         Employment will increase not only for Vietnamese people, but also our people

My company will not want to exercise the great deal of control over this operation because Vietnam is the host country so that we should share some parts or areas with the host country. The areas that we should control are technical skills, production, and installation, quality, quantity, and cost of product, but we should share some areas like Marketing, Human Resources, Sale, and R&D.

14. I think that the point that the integration process should stop at is Political Union because we have only one thing that is the same such as:

·         Politic—we have only one law, payment, education, etc.

            Ex: People in Europe don’t have to play Visa when they travelling to other countries in Europe

·         Economy—tax system, working condition, interest, free movement of labor; it means that people can work everywhere they want

·         Currency— we have the same currency which is really good for commercial transactions

16. The use of different national currencies is a barrier to further growth in international business activity. The pros and cons, among companies and governments, of replacing national currencies with the regional currencies are:

      Pro:

·         Companies:

-         Regional currencies is easier trade, leading to faster growth (assuming that every country is equally good)

-         Reducing time for trading

-         Easy to transfer and no longer require a lot of transactions especially with bank.

-         Reduce the barrier for investor to do business in the region.

·         Government:

-         Closer ties with each other

-         Rules and regulation related to currency may be also reduced.

-         Ask for help from other members when it meets economic crisis

      Con:

·         Government:

-         Weak countries weaken everybody's currency.

-         Lost national identities.

-         Weak countries may help to struggle very hard to follow other, and may be benefit much from regional currency.

-         Difficult to pay tax to the country which company invested.

·         Companies:

-         Some business will close because of no money exchange demand

Global currency is impossible because each country, especially super power will not agree to loss its currency. Global currency will lead to lose their identities, Value or benefit that is why it is impossible. For example, US will never agree to suffer because of troubles in the Mexican economy.

17. I don’t agree with the elements that affect strategy formulation are the same whether a company is domestic or international because different location we must have different strategies. And if we compare the domestic and international company is not the same such as market, culture, population (target customer), language, beliefs, religion, tradition, norms, policies and especially competitive environment. The differences lead to different strategies. For example, one company wants to sell washing powder in Japan but does not use different strategies in packaging. The company spends millions of dollars on promotion but it is not work. The result is need to change the packaging from big package to small package because they like to walk from the shop on foot, so the Japanese like to buy a small amount of goods and it is easy to carry.

 

18. I don't agree with this statement because people have different demands, needs, and wants. It depends deeply on some important factors like geography, demography, standard of living, etc. For example, the tastes fast foods in Cambodia is different from other countries especially USA. There are certain industries for which it might be more true like: Rolls Royce, Lexus, Plan, etc. because they have the same standard.

19. I am sure that continuous advancements in technology are deeply affecting the way international businesses are managed. However, it cannot radically alter the fundamental strategies and organizational structures of international companies. So, I agree with the second statement that companies should simply graft new strategies and structures onto existing ones, and try to update it because:

-It is not easy to create new strategies and organizational structures

-Use existing strategies and structures and add modern technology to develop the strategies, deal with some problems and update them. For example, we use a fingerprint scanner to observe or take control over the presence of workers.

20. I think the type of research that Sony used to "get inside the heads" of its target market is Primary International Market Research, a kind of research that use questionnaires, observations, interviews, and surveys to seek for the main or primary data and is conducted by the company.

21. Not all companies "go international" by exporting, using contracts, and investing in other markets. A company's product influences the process of going international such as: form, feature, styles, design, durability, reliability, performance, reparability, installation, ordering ease, delivery, customer training, customer consulting, and maintenance. I am sure that internet can affect the process of going international because internet can help company keep pace with competitors, become easier to access information and learn about developing economic trends and issues as well as gathering data on foreign markets, cultures, and policies. When we don't have it, the company might face a lot of difficulties like transportation and communication leading to high cost and take longer time. For example, your company doesn’t need to send its representatives to go abroad to talk about its business, but they just can chat or send e-mails by using internet.

22. "Companies should use investment entry modes whenever possible because they offer the greatest control over business operation." I agree with this statement because I agree with the statement "Companies should use investment entry modes whenever possible because they offer the greatest control over business operations." because companies can control the overall business and process of the business, so companies have a lot of opportunities to control business. Yes, there are times when the government encourages investments more, economy development, or political stability. Investment Entry Mode is poor option when the government doesn’t encourage the investment and issues difficult regulations for those investors; moreover, there are some problems happening such as economic crisis, political instability, etc.

23. Identify the two entry modes:

1.      Nonequity-based modes of entry

o   Export—direct and indirect

o   Subcontracting

o   Countertrade

o   Licensing

o   Franchising

o   Contract Manufacturing

o   Management Contract

o   Contract Manufacturing

2.      Equity-based Modes of Entry

o   Wholly owned subsidiary

o   Joint Venture

o   Strategic Alliance

o   Merger and Acquisition

Effects from the government and regional integration are:

      Government:

·         Tariff is one of the barriers in going to do business international. If there are high tariff and there are a lot of custom procedure or formal procedure, the company will find it difficult in access to the market or may help to spend more. Policy has a strong impact on exporting.  A nation's politics affect its regulatory laws.

·         Quotas: is the limitation of exporting or importing the amount of product in particular times in one country. So if the government set high quotas it will affect exporting.

·         Embargoes: is the limitation of shipment at the harbor. It is the ban of exportation and exportation of one or two products of particular country.

·         Local content requirements: is the law set the amount of products which supply in domestic market.

·         Administration Delays: is the requirement of administrative procedure for importation.

·         Currency controls: is the controlling of exchanging the currency from one country to another.

      Regional integration:

     

When there is integration in the region, exporting will be easy. Integration will help to reduce tariff and simplify custom procedure. It will benefit for all the members of the integration. It will remove barrier for investor.

Most economic experts cite that regional integration allows disadvantaged countries to realize economies of scale, compete on a broader platform and increase overall economic efficiency. Integration determines how to deal with economic disruptions and/or redistribution of resources. 

24. Price escalation is the increase of cost of products in the comparison with the old situation. Companies should:

·         Focus on supply Chain through integration strategy

·         Pay more attention on R&D (use good IT to increase profit)

·         Seek the support from the government

25. I think getting ISO is the beginning of a trend toward worldwide homogenization of product and process standards because in modern society nowadays people start to care about the quality product and they are knowledge customers, so the company that wants to sell product with low quality is hard to succeed in foreign market. When attaining ISO, the product will easy go to foreign market.

+ I think someday all companies and their products will need certification in order to conduct international business because it helps company meet legal and regulatory requirements and it reduces consumption of raw materials and help to attract more customers.

any businesses reach a point in their growth where they want to expand internationally and enter markets in other countries. There are several significant barriers to entry that present problems for these businesses. Often, there are already established markets in other countries that sell similar products or services and businesses may have a difficult time competing. In situations like this, many companies decide to pursue an investment strategy to enter the market successfully.

Joint Ventures

·         A joint venture is a contractual partnership with another company that operates in the country the business wants to enter. Joint ventures work well when both companies have specialties that, joined together, make the whole stronger.

FDI Establishment

·         Foreign Direct Investment (FDI) is a direct investment of funds into the foreign market. Businesses that have significant funds often pursue FDI by creating a new business plant in the foreign country. This is expensive, but allows the business to organize operations the way it wants and use its own people the run the business.

FDI Acquisition

·         FDI acquisition involves taking over a company that was already running in the foreign country. Since this company already has a market share, this makes it easier for the entering company to find a place in the market. Speed is important in this case, since employees must be replaced or retrained swiftly before competitors can react.

Exportation

·         Exportation is a simple form of direct investment where businesses establish just part of their operations in the foreign country. For instance, the business may make its products in its home country, then ship them to a business center in the foreign country. Businesses may also make parts in other countries and ship them internationally for assembly.

Licensing

·         Licensing requires less investment than other investment entry modes, but also works in reverse, allowing a business to enter new home markets by using the brand, patents and other materials from another company, possible foreign. In this case, the entering business pays only licensing fees and possibly extra expenses for technical assistance.