International Business Environment Quiz

International Business Environment

• This is a course on International Business Environment.
• The instructor is Professor Radu Mușetescu, PhD.
• Contact information for the instructor is provided.

Grading

• Exam: 50% (written, multiple choice and open-ended questions)
• Seminar: 50%
• Participation in lectures will also contribute to the grade.

Uncontacted Tribe (Amazon)

• Image depicting an uncontacted tribe in the Amazon rainforest.

Singapore

• Almost 50% of Singapore's population is foreign.
• 70% of the workforce in Qatar is foreign.
• 95% of the workforce in Qatar is foreign.

Ease of Doing Business (World Bank, 2021)

• Ranking of countries by ease of doing business, with New Zealand at the top.
• Singapore ranked highly in the list.

Going Beyond Borders

• Comparing foreign and domestic values.
• Exploiting opportunities through imports or exports of ideas, technologies, and products.
• Correcting distortions in markets.
• Early warning for global/regional risks.
• Examples: Roman army speculatores, developing ambidexterity to manage complex situations.
• Managing uncertainty better using the concept of “anti-fragility.”

Going Beyond Borders: Personal

• Role-playing by learning foreign languages.
• Developing risk-taking and entrepreneurship.
• Building self-awareness (“who am I?”).
• Historical context: XIXth-century British society expected young people to travel the world.

How to Learn Swimming/International Expertise

• Tacit knowledge cannot be formally worded.
• Comparing "thrown in the lake" versus "swimming pool" learning methods.

Why Study International Business Environment?

• John Sloman (2008) perspective: crucial economic concepts for business students; complements introductory economics textbooks; thinking like an economist; toolkit of concepts applicable across diverse contexts; understanding economic environments for business decisions.

Questions

• Does a businessman need economic theory?
• Is a PhD in economics necessary for success?
• Can one be successful without paying attention to economic theory?

Theoretical Statement, Historical Proposition, Entrepreneurial Judgment

• Theoretical statement: establishes universal causal relationships between concepts (e.g., price increase leads to decreased demand).
• Historical proposition: describes past events within specific time and space contexts.
• Entrepreneurial judgment: opinion about future development, often speculative and implying risk (e.g., sales of compact cars next year).

Successful Entrepreneurship

• Ability of entrepreneurs to meet consumption desires.
• Entrepreneurs allocate resources now expecting future profits.
• No certain path to profit; there's no "theory" of success.
• Economic principles/laws guide business decisions: Ignoring them can lead to significant issues.
• Consequences may be extensive: inflation, business cycles, nationalization.

Business Versus Politics

• Profit-driven core in business; political objective core in politics.
• Mutual agreement in market transactions; coercion-based state mechanisms.
• Price determined by supply and demand; satisfaction of "citizens" is assessed differently.
• Failures are privatized in business; "socialized" in politics.
• Alternatives exist in business; no alternative politically.

Definitions of International Business Environment

• Definition: all forces influencing any aspect of an organization's activity.
• Complexity: multitude of dimensions; need for focused study.

Environment Versus Market

• Variety of actors (political, economic, social, cultural).
• Interactions through formal and informal agreements.
• Diverse actors with diverse knowledge.
• Externalities cannot be internalized.
• Social order and rule-making are endogenous.
• Two types of actors: buyers and sellers.
• Profit maximization goal.
• Knowledge unification through competition; welfare-enhancing competition.
• Externalities can be internalized through contracts.

Limited Dimensions of Business Environment Study

• PEST: political, economic, social, technological.
• PESTLE (STEEPLE): political, economic, socio-cultural, technological, legal, ethical (or natural environment).
• Initial focus on the "legal environment".
• Growing awareness of broader impacts of national culture, practices, and organizational culture.

Some Clarifications: Business Environment

• Objective Reality (quantifiable aspects using international indices like World Economic Forum, Heritage Foundation and others).
• Subjective perspectives. differing among organizations and individuals.

Approaching Business Environment

• Business Perspective: firm and international firm theories; perception of the business environment.
• Government Perspective: public regulation theories; competition in attracting economic activity; government attempts to craft friendly environment.

Comparison Between Business and Natural Environments

• Parallel between business environments and the natural environment (ecosystem).
• Interconnected entities and their surroundings; similar concepts.
• Competition, survival, and adaptation are recurring themes.
• No single entity disrupts a complex system when following norms.
• Alien entities may disappear or thrive due to adapting to their surroundings.

Limits of Metaphors for Business Environments

• Multiple actors actively participate and influence environments.
• Social actors (businesses, NGOs, governments) shape environments.
• Social actors are not only reactive but also constructive.
• Human ability to surprise and reshape rules.