Minggu, 17 Januari 2010

CHAPTER 11

ENTRY AND EXPANSION

Firms do not become experienced in international business overnight,but rather progress gradually through an internationalization process.The process is triggered by different motivations to go abroad.The motivations can be proactive or reactive.Proactive motivations are initiaded by aggressive management,whereas reactive motivations are the devensife response of management to environmental changes and pressures.Firms that are primarily stimulated by proactive motivations are more likely to enter international business and succed.
In going abroad ,firms encounter multiple problems and challenges,which range from a lack of information to mechanics and documentation.In order to gain assistance in its initial international experience ,the firm can make use of either intermediaries or facilitators.Intermediaries are outside companies that actively participate in an international transaction.They are export management companies or trading companies.In order for these intermediaries to perform international business functions properly,however,they must be compensated.This will result in a reduction of profits.
International facilitators do not participate in international business transactions,but they contribute knowledge and information.Increasingly,facilitating roles are played by private sector groups,such as industry associations,banks,accountant,or consultants,and by universities and federals,state,and local government authorities.
Apart from exporting and importing ,alternatives for international business entry are licensing ,franchising,and local presence.The basic adventage of licensing is that it does not involve capital investment or knowledge of foreign markets.Its major disadvantage is that licensing agreements typically have time limits,are often proscribed by foreign governments,and may result in creating a competitor.The use of franchising as a means of expansion into foreign markets has increased dramatically.Franchisors must learn to strike a balance between adapting to local environments and standardizing to the degree necessary to maintain international recognizability.
Full ownership is becoming more unlikely in many markets as well as industries,and the firm has to look at alternative approaches.The main alternative is interfirm cooperation,in which the firm joins forces with other business entities,possibly even a foreign government.In some cases,when the firm may not want to make a direct investment,it will offer its management expertise for sale in the form of management contracts.

CHAPTER 10

BUILDING THE KNOWLEDGE BASE

Constrain of time ,resources ,and expertise are the major inhibitors to international research. Nevertheless,firms need carry out planned and organized research in order to explore fereign market opportunities and challenges successfully.Such research must be linked closely to the decision-making process.
International research differs from domestic research in that the environment-whuch determines how well tools,techniques,and consepts apply-is different abroad.In addition,the international manager must deal with duties,exchange rates,and international documentation; a greater number of interacting factors;and a much broader definition of the concept of competition.
When the firm is uninformed about international differences in consumer tastes and preferences or abuut foreign market environments,the need for international research is particularly great.Research objective need to be determined based on the corporate mission ,the level of international expertise ,and the bussines plan.These objectives will enable the research to identify the information requirements.
Given the scarcity of resources,companies beginning their international effort must rely on data that have already been collected.These secondary data are available from sources such as governments,international organization,or electronic information services.It is important to respect privacy laws and preferences when making use of secondary data.
To fulfill specific information requirements,the researcher may need to collect primary data.An appropriate research technique must be selected to collect the information.Sensitivity to different international environments and cultures will aid the researcherin deciding whether to use interviews,focus groups,observation,surveys,or web technology as data-collection techniques.
To provide agoing information to management,an information system is useful.such a system will provide for the continuous gathering,analysis,and reporting of data for decision-making purposes.Data gathered through environmental scanning,Delphi studies,or scenario building enable management to prepare for the future and hone its decision-making abilities.

CHAPTER 9

EMERGING MARKETS
DOING BUSINESS WITH TRANSITION ECONOMIES
The major market economies emerging out of formerly centrally planned economies are Russia and the now independent states of the former Soviet Union,east Germany(now unified with West Germany),and the eastern and central European nations(Albania,Bulgaria,the Czech and Slovak Republics,Hungary,Poland,and Romania).For information regarding the population and GDP of the transition economies,consult this chapter’s map.Shown also are the population levels and migration flows of countries around the world.It is evident that insufficien economic opportunity result in migration from depeloping nations into industrialized ones.Successfull economic transition is a key tool to reduce such migration .If people have a reasonable chance for economic prosperity at home they are less likely to leave.

ADJUSTING TO GLOBAL CHANGE
Both institutions and individuals tend to display some resistance to change .The resistance grows as the speed of change increases.It does not necessarily indicate a preference for the earlier conditions but rather a concern about the effects of adjustment and a fear of the unknown.Major shifts have occurred both politically and economically in central Europe and the former Soviet Union ,accompanied by substantial dislocations.There fore,resistance should be expected .Deeply entrenched interest and tradidions are not easily supplanted by the tender and shallow root of market-oriented thinking.The understanding of links and interactions cannot be expected to grow overnight.

STATE ENTERPRISES AND PRIVATIZATION
One other area where the international business executive must deal with a period of transition is that of state –owned enterprises.These firms represent a formidable pool of international suppliers,customers,and competitors.Many of them are located in emerging market economies and are currently being converted into privately owned enterprises.This transition also presents new opportunities.

THE ROLE OF THE MULTINATIONAL FIRM
All problems aside ,the market potential of transition and emerging economies is enormous.It is this promise that is paramount to understanding the developing role of multinational firms in transition economies.They enter because they see substantial profit potential.This potential,however,may not be attained quickly,and firms must time their and activity to pace themselves for the long race.
As multinational firms gain experience and experience and knowledge of the local markets,they may then increase the size of their capital investments,for example in the form of acquisitions or Greenfield investments.The local market is then used as an export base to neighboring and other transition and emerging economies,taking adventage of long –standing links across countries for trade and commerce.At this point ,the domestic market is not the focus of the firms activity.With few exceptions,the profit potential is seen as cost-based access to other axternal markets.
Multinational corporations are very often the only ones that can realistically make a difference in solving some of the problems in developing markets,as shown in focus on Enterpreneurship.Developing new technologies or products is a resource-intensive task and requires knowledge transfer from one market another.Without multinationals as catalysts,nongovernmental organizations,local governments,and communities will continue to flounder in their attempts to bring development to the poorest nations in the world.

CHAPTER 8

Economic
Intergration

Building block Toward Worldwide Free Trade
Regional groupings based on economics became increasingly important in the last ten years.Thirty-two such groupings are estimated to be in existence : three in Europe,four in the Middle east,five in asia ,and ten each in afrika and the Americas .trade within the three major blocs s,the American,European and asian,has grown rapidly,while trading among these blocs or with outsiders is either declining or growing far more moderately.This chapter will begin with an explanation of tha various levels of economic integration.The level of integration defines the nature and degree of economic links among countries .the major arguments both for and against economic integration will be reviewed.Next, the European union,the north American Free Trade Agreement,Asia Pasific Economic Cooperation and other economic ooperation,and other economic alliances will bediscussed . Finally,possible strategic moves by international managers in response to integration are outlined.
Levels of Economic integration
THE FREE TRADE AREA>>The free trade area is the least restrictive and loosest from of economic integration among countries.
THE CUSTUMS UNION>>one step further along the spectrum of economic integration.
THE COMMON MARKET>>further still along the spectrum of economic integration.
THE ECONOMIC UNION>>the creation of a true economic union requires integration of economic policies in addition to the free movement of good,services,and factors of production across borders.
Arguments surrounding Economic Integration
TRADE CREATION AND TRADE DIVERSION>> The increased export of wheat and other products by Spain to the EU as a result of its membership is termed trade creation.The elimination off the tariff literally created more trade between Spain and the EU.at the same time ,because the United States was still outside of The EU ,its products suffered the higher price as a result of tariff application .U.S exports to the E.U fell.when the source of trading competitiveness is shifted in this manner from one country to another,it is termed trade diversion.
REDUCED IMPORT PRICES>>When a small country imposes a tarrif on imporst ,the price of the goods will typically rise because sellers will increase prices to cover the cost of the tariff.This increase in price,in turn,will result in lower demand for the imported goods.if a bloc of countries imposes the tariff ,however ,the fall in demand for the imported goods will be substantial.the exporting country may then be forced to reduce the price of the goods.
INCREASED COMPETITION AND ECONOMIES OF SCALE >>These lower production cocts resultingfrom greater production for an enlarged market are called internal economies of scale.this is evident if the region adopts common standards ,thus aloowing not only for bigger markets for the companies but enabling them to become global powerhouses.
HIGHER FACTOR PRODUCTIVITY>>When factors of production are freely mobile,the wealth of the common market countries ,in aggregate ,will likely increase.the theory behind this contention is straightforward:factor mobility will lead to the movement of labor and capital from areas of low productivity to areas of hight productivity.In addition to the economic gains from factor mobility,there are other benevfits not so easily quantified .The free movement of labor fosters a higher degree of cross-cultural understanding;as people move ,their adeas ,skill,and ethnicity move with them.
REGIONALISM VS NATIONALISM>>Economists have composed elegant and compelling arguments in favor of the various levels of economic integration .It is difficult,howefer ,to turn these arguments into reality in the face of intense nationalism.The biggest impediment to economic integration remains the reluctance of nations to surrender a measure of their autonomy.Integration,by its is very nature ,requires the surrender of national power and self determinism.An example of this can be seen in Focus on Ethics.

THE most successful example of economic integration is the European Union.The E.U has succeded in eliminating most barriers to the free flow of goods,services,and factors of production .In addition ,the EU has made progress toward the evolution of a common currency and central bank,which are fundamental requirements of an economic union.In the Americas,NAFTA is paving the way for a hemispheric trade bloc.
A number of regional economic alliances exist in Africa,Latin America,and Asia,but they have achieved only low levels of development,and problems with cohesiveness have impeded integrative progress among many developing countries.However,many nations in these areas are seeing economic integration as the only way to prosperity in the future.
International commodity price agreements and cartels represent attempts by producers of primary products to control sales revenues and export earning.the former involves an agreement to buy or sell a commodity to influence prices.The latter is an agreement by suppliers to fix prices,set production quotas ,or allocate sales territories.OPEC for example,has had inestimable influence on the global economiy during the past 40 years.

ECONOMIC INTERGRATION

Economic
Intergration

Building block Toward Worldwide Free Trade
Regional groupings based on economics became increasingly important in the last ten years.Thirty-two such groupings are estimated to be in existence : three in Europe,four in the Middle east,five in asia ,and ten each in afrika and the Americas .trade within the three major blocs s,the American,European and asian,has grown rapidly,while trading among these blocs or with outsiders is either declining or growing far more moderately.This chapter will begin with an explanation of tha various levels of economic integration.The level of integration defines the nature and degree of economic links among countries .the major arguments both for and against economic integration will be reviewed.Next, the European union,the north American Free Trade Agreement,Asia Pasific Economic Cooperation and other economic ooperation,and other economic alliances will bediscussed . Finally,possible strategic moves by international managers in response to integration are outlined.
Levels of Economic integration
THE FREE TRADE AREA>>The free trade area is the least restrictive and loosest from of economic integration among countries.
THE CUSTUMS UNION>>one step further along the spectrum of economic integration.
THE COMMON MARKET>>further still along the spectrum of economic integration.
THE ECONOMIC UNION>>the creation of a true economic union requires integration of economic policies in addition to the free movement of good,services,and factors of production across borders.
Arguments surrounding Economic Integration
TRADE CREATION AND TRADE DIVERSION>> The increased export of wheat and other products by Spain to the EU as a result of its membership is termed trade creation.The elimination off the tariff literally created more trade between Spain and the EU.at the same time ,because the United States was still outside of The EU ,its products suffered the higher price as a result of tariff application .U.S exports to the E.U fell.when the source of trading competitiveness is shifted in this manner from one country to another,it is termed trade diversion.
REDUCED IMPORT PRICES>>When a small country imposes a tarrif on imporst ,the price of the goods will typically rise because sellers will increase prices to cover the cost of the tariff.This increase in price,in turn,will result in lower demand for the imported goods.if a bloc of countries imposes the tariff ,however ,the fall in demand for the imported goods will be substantial.the exporting country may then be forced to reduce the price of the goods.
INCREASED COMPETITION AND ECONOMIES OF SCALE >>These lower production cocts resultingfrom greater production for an enlarged market are called internal economies of scale.this is evident if the region adopts common standards ,thus aloowing not only for bigger markets for the companies but enabling them to become global powerhouses.
HIGHER FACTOR PRODUCTIVITY>>When factors of production are freely mobile,the wealth of the common market countries ,in aggregate ,will likely increase.the theory behind this contention is straightforward:factor mobility will lead to the movement of labor and capital from areas of low productivity to areas of hight productivity.In addition to the economic gains from factor mobility,there are other benevfits not so easily quantified .The free movement of labor fosters a higher degree of cross-cultural understanding;as people move ,their adeas ,skill,and ethnicity move with them.
REGIONALISM VS NATIONALISM>>Economists have composed elegant and compelling arguments in favor of the various levels of economic integration .It is difficult,howefer ,to turn these arguments into reality in the face of intense nationalism.The biggest impediment to economic integration remains the reluctance of nations to surrender a measure of their autonomy.Integration,by its is very nature ,requires the surrender of national power and self determinism.An example of this can be seen in Focus on Ethics.

THE most successful example of economic integration is the European Union.The E.U has succeded in eliminating most barriers to the free flow of goods,services,and factors of production .In addition ,the EU has made progress toward the evolution of a common currency and central bank,which are fundamental requirements of an economic union.In the Americas,NAFTA is paving the way for a hemispheric trade bloc.
A number of regional economic alliances exist in Africa,Latin America,and Asia,but they have achieved only low levels of development,and problems with cohesiveness have impeded integrative progress among many developing countries.However,many nations in these areas are seeing economic integration as the only way to prosperity in the future.
International commodity price agreements and cartels represent attempts by producers of primary products to control sales revenues and export earning.the former involves an agreement to buy or sell a commodity to influence prices.The latter is an agreement by suppliers to fix prices,set production quotas ,or allocate sales territories.OPEC for example,has had inestimable influence on the global economiy during the past 40 years.