International Business

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International Business by Mind Map: International Business

1. National competitiveness

2. Divisional structure

2.1. International division (organizations with domestic-international divisions separately)

2.2. Global product division

2.3. Global functional division (each with domestic and international counterparts)

2.4. Geographical devision

3. Initial screening: Basic needs potential

4. Common Law (Anglo-american model) (rule-based)

5. International Human Resource Management

5.1. Worldwide labor conditions

5.1.1. Population aging lower supply of labor Higher cost of production Higher competition on talents

5.1.2. Workforce urbanization Stimulate higher consumption Overall increase in income Job creation poverty reduction

5.1.3. Immigrant labor

5.1.4. Brain drain and reverse brain drain Brain drain happens also in developed economies. OCED countries struggle to attract and retain talents Reverse brain drain can offset the impacts off brain drain in the long-term Solutions Policies to support people returned from overseas to stimulate reverse brain drain Create opportunities and growth to attract and retain talents

5.1.5. Labor unions Pros Cons Group think symtomp Unfair employment Higher cost

5.2. International HRM approaches

5.2.1. Staffing policies Ethnocentric (Hire PCN - expats) Repats Geocentric (irrespective of nationality) Polycentric (Hire HCN) Regiocentric (Hire within a region of business)

5.2.2. Training and Development HR compensation Compensation package (salaries and benefits) Expats and repats Bonuses and allowances

6. International Institutions

6.1. Formal institution

6.2. Informal institution

6.2.1. Normative informal

6.2.2. Cognitive informal

6.3. International institutions

6.3.1. the UN SDGs MDGs

6.3.2. IMF

6.3.3. World Bank

6.3.4. WTO

6.3.5. OECD

6.4. Trading blocs - levels of regional economic integration

6.4.1. FTA

6.4.2. Customs Union

6.4.3. Common market

6.4.4. Economic union

6.4.5. political union

6.4.6. Prominent trading blocs NAFTA, and later USMCA Mercosur ASEAN EU European council Council of european union European parliament European commission Court of justice Central bank court of auditors

7. Socio-cultural forces

7.1. Rules of thumb for doing business internationally

7.1.1. Be prepared

7.1.2. Slow down

7.1.3. Establish trust

7.1.4. Understand the importance of language

7.1.5. Respect the culture

7.1.6. Understand the components of culture

7.2. Socio-cultural concept

7.2.1. Socialization

7.2.2. Acculturalization

7.2.3. T.Hall's cultural iceberg Internal (values, beliefs, External (outward behaviors of a society)

7.3. Culture and language

7.3.1. Paralanguage

7.3.2. Homologous relationship

7.3.3. Influence on thinking

7.3.4. Inter-cultural interaction (terms in one culture are non-existence in others)

7.3.5. Diversity

7.4. Cultural perceptions

7.4.1. Ethnocentrism

7.4.2. Ethnorelativism

7.4.3. The transition stages: Denial -> defense -> minimization -> acceptance -> adaptation -> integration.

7.5. Marketing (marketing campaign must match local cultural aspects)

7.6. Culture and business functions

7.6.1. Accounting and finance National cultures Conservatism (defer recognition of assets and items that increase net income) Secrecy (restrict disclosure of financial information) Accounting approaches Anglo-american - Rule-based Continental European - Principle-based

7.6.2. Production and manufacturing

7.6.3. Universalism vs particularlism

7.6.4. Human resource Complexities in workplace communication National culture vs corporate culture Prejudice and discrimination

7.6.5. Leadership factors of motivation Individualism vs collectivism Achievement vs ascription Leadership traits and behaviors vary between cultures

7.7. Model frameworks for cultural profiling

7.7.1. Trompenaars' model Individualism vs communitarianism Specific vs diffuse Neutral vs affective Achievement vs Ascription Sequential time vs synchronous time Internal control vs external control

7.7.2. Edward T.Hall High vs low context Monochronic and polychronic Proxemics

7.7.3. Geert Hofstede Individualism vs collectisvism Power distance Masculinity vs femininity Uncertainty avoidance Indulgence vs restraint Short-term vs long-term orientation

8. Chapter 2. International trade and investment theories

8.1. Foreign Investment

8.1.1. Foreign portfolio investment

8.1.2. Foreign direct investment (FDI)

8.1.3. Theories on FDI Monopolistic advantage theory Internalization theory Eclectic theory of international production (most accepted) Ownership-specific (ownership of operations) Internalization Location-specific (choice of markets that fit specific knowledge)

8.2. Exchange rate and direction of trade

8.3. Mercantilism

8.4. International Trade Theories

8.4.1. Comparative advantage Absolute advantage

8.4.2. New theories explaining International trade Resource endowments Overlapping demand International Product Life Cycle (IPLC) Stage 1: introduction Stage 2: Growth Stage 3: Saturation Stage 4: Decline

9. International market assessment

9.1. Market screening

9.1.1. Country screening Second screening: financial and economic forces Third screening: Political forces Forth screening: sociocultural forces Fifth screening: competitive forces Final screening: final market selection Gov-sponsored trade missions Trade fairs Field trips

9.1.2. Segment screen Definability Accessability Sustainability Actionability Measurability

9.2. Barriers to entry

9.2.1. Natural (structural) barriers Economies of scale exploited Network effect (market share captured) HIgh R&D cost Ownership of key materials

9.2.2. Artificial (strategic) barriers Predatory pricing Acquisition and merger Advertising Patents and licenses

9.3. Market analysis and tools

9.3.1. Market indicators

9.3.2. Market factors

9.3.3. Trend analysis

9.3.4. Cluster analysis

9.3.5. Estimation by analogy

9.4. Factors affecting market selection

9.4.1. External Market size and growth Competition regulatory issues Infrastructure Added cost

9.4.2. Internal Internal resource availability Corporate objectives Level of commitment

9.5. Environmental scanning (3 layers)

9.5.1. Macroeconomic (PESTEL)

9.5.2. Industry (Porter's 5 forces)

9.5.3. Internal (SWOT)

10. Market modes of entry

10.1. Fast mover vs fast follower

10.1.1. Fast mover able to define and shape the market easy market share due to low competition Cons: Failures present greater risks

10.1.2. Fast follower Learn from the first mover has the potential to outperform first mover with innovations cons: face great risk of failures if unable to outpace first mover

10.2. Equity-based modes of entry

10.2.1. Subsidiary Greenfield investment Acquiring distributors

10.2.2. Joint Venture Flexible in structure (partnership, LLC, etc.) Can both be contractual and equity-based (separate entity)

10.2.3. Strategic alliance Contractual agreement May or may not involve equity (equity strategic alliance)

10.3. Non-equity based modes of entry

10.3.1. Exporting Direct exporting Direct sales to customers Through intermediaries Indirect exporting Intermediaries of domestic or foreign origin Export merchants Export trading company Cooperative exporter Pros developing competitiveness through learning Economies of scale Cons financial risk Increased competition added complexities

10.4. Contractual agreement

10.4.1. Licensing

10.4.2. Franchising

10.4.3. Research and development contract

10.4.4. Turnkey projects (short-term entry mode)

10.4.5. Management contract

11. Global operations and supply chain management

11.1. Supply chain management

11.1.1. Competitive strategies to manage supply chain Forward vertical integration Backward vertical integration Horizontal integration

11.1.2. Supply chain networks Keiretsu Virtual corporations Global production network

11.1.3. Components of SCM Planning and designing Sourcing Making Delivery - Logistics (reduce cost and increase productivity) Supply logistics (allocating to the right site) Distribution logistics (delivering to customers) Production logistics (to the right processes) Reverse logistics (collecting disposed goods) Return Enabling (ensure smooth operation)

11.2. Global Sourcing

11.2.1. Trend: E-procurement (B2G, B2C, B2B purchases and sles on the internet)

11.2.2. Problems Added cost (brokers, duties, freight, communication costs, etc.) Logistical challenges (low infrastructure, suppliers' reliability) Environment stability (natural, economic, and political) Complications in legal matters

11.2.3. Terms Offshoring Outsourcing Nearshoring Onshoring

11.2.4. Global sourcing arrangements Wholly owned subsidiary (supply complements to home country plants) Joint Venture In-bond plant contractor Overseas independent contractor (contract foreign manufactures to make products) Independent overseas manufacturer

11.3. Global supply chain and environmental factors

11.3.1. Economic forces (cost of production)

11.3.2. Political forces (government requirements)

11.3.3. Cultural forces (lack of skilled workers due to education patterns)

12. International Accounting and Financial Management

12.1. International financial management

12.1.1. Sovereign Wealth Funds (SWFs) To protect & stabilize state budgets To serve as additional source of revenue To fund economic & development project To stimulate long-term growth of a targeted economy (as a form of FDI) To increase national savings

12.1.2. Capital structure Debt financing Bonds Loans Other debtors Equity financing Preferred stock Common stock

12.1.3. Foreign transactions Risk hedging Forex option (rights to trade with fixed exchange rate) Money market hedge Netting and multilateral netting Leading and lagging Swaps contract Foreign currency risks Translation exposure (valuation of assets) Economic exposure (unexpected currency fluctuations) Transaction exposure (Forex exchange rates)

12.1.4. Cash flow management Helps to understand the health of a company for decision-making Cash and profits are not the same

12.1.5. For start-ups, burn-rates are extreme

12.1.6. International finance and its complications Exposure to forex Legal and tax environment Diversified stakeholders Complex capital structure Accounting standards

12.2. International accounting

12.2.1. Accounting standards convergence GAAP and IFRS Corporate management: streamlined reporting processes Investors: consider investments in many countries without conversion Stock market: lower-cost of entering global investment

12.2.2. Approaches to accounting in a global context Codified law (Continental European model) (principle-based)

12.2.3. Aspects of international accounting International policies (determined by international institutions Business activities Differences in tax, regulation and accounting systems Income tax Value-added tax Withholding tax

12.2.4. Sarbanes-Oxley Act (SOX)

13. International marketing

13.1. Pricing strategies

13.1.1. International pricing (goods produced in one country but sold in another)

13.1.2. Transfer pricing (prices set for intracompany transactions)

13.1.3. foreign national pricing (domestic pricing in a foreign country)

13.2. Marketing mix

13.2.1. 4Ps (Product, Place, Promotion, Price)

13.2.2. 7Ps (generally in the service industry) (People, process, and physical evidence)

13.3. Promotional strategies

13.3.1. Sales promotion (short-term campaigns to boost sales)

13.3.2. Product localization vs globalization (Product differentiation and message delivery)

13.3.3. Advertising

13.4. Complexities of international marketing

13.4.1. Administrative policies

13.4.2. Tariff barriers

13.4.3. Political and socio-cultural environment

13.4.4. Geographical challenges

14. International Competitive strategy

15. Organizational structure

15.1. Organization structure and design

15.1.1. Functional structure Pros Skill and work specialization Efficient resource allocation Streamlined accountability Clear career path for employees Cons Functional chimney, or silos, problem Inter-department conflicts Repetitive work

15.1.2. Hybrid structure (establish departments that can either be functional or divisional)

15.1.3. Matrix structure (grid-like structure with permanent teams cutting across functions)

15.2. Centralized (Hierarchy, mechanistic design

15.3. Types of structure

15.3.1. Decentralized (horizontal organization, organic design)

15.3.2. Virtual organizations

15.3.3. Strategic business units (SBUs) vs divisions

16. Global Leadership

16.1. Components of a global mindset

16.1.1. Intellectual capital

16.1.2. Psychological capital

16.1.3. Social capital

16.2. Leadership complexities

16.2.1. Domestic vs International leadership Multiplicity (ranges of dimensions) Interdependence (hosts of stakeholders) Ambiguity (blurs in causal relationships and clues) Dynamism, or flux, is differences

16.2.2. Henry Mintzberg's suggestions for effective leaderships

16.2.3. Corporate leadership council suggestions

16.2.4. Leadership competencies pyramid model

16.2.5. Barriers to leadership Timezone Complexity Technology Culture Distance

16.3. Leadership development model

16.3.1. Global Competencies inventory

16.3.2. Global Executive Leadership Inventory (GELI)

16.3.3. Global Leadership expertise development model (GLED)

16.3.4. "right stuffs" model

16.4. Teams

16.4.1. Global virtual teams Harder than domestic teams Effective teams need to (1) build trust and relationships (2) chase the right people (3) focus on teamwork mechanics

16.4.2. Team norms

16.5. Change models

16.5.1. Kurt Lewin's Freeze-change-unfreeze

16.5.2. Kotter's 8-step

17. Ex-Im practices

17.1. Sources of ex-im information

17.1.1. National pavillions

17.1.2. Trade missions

17.1.3. Product literature centure

17.1.4. Reverse trade missions

17.2. Letter of credit

17.2.1. Confirmed latter of credit

17.2.2. irrevocable letter of credit

17.3. Containerization

17.3.1. Benefits Save enormous cost Eliminate barriers of differences Economies of scale Supply chain management revolution

17.3.2. Container types Dry containers open top tunnel side open refrigirated insulated

17.3.3. Flat rack

17.4. Ex-Im documents

17.4.1. Airway bill

17.4.2. Pro-forma invoice

17.4.3. Banker's acceptance

17.4.4. Validated export license

17.5. Ex-Im financing

17.5.1. Factoring

17.5.2. Forfaiting (sale of long-term receivables to the importer at a discount)

17.5.3. SBA loan guarantees Export bill of lading (B/L)

17.5.4. EX-IM bank (federal agency that aids American exporters in obtaining loans)

17.5.5. OPIC (Overseas Private Investment Corp): stimulate investment in developing countries through risk insurances and guarantees