IB Revision Guide - Introduction and Course Organization PDF

IB Revision guide **Session 1: Introduction and Course Organization【20†source】** **Key Topics:** 1. **Course Objectives**: - Understand the international environment and key tools for navigation. - Explore job opportunities in international business. - Develop team...

IB Revision guide **Session 1: Introduction and Course Organization【20†source】** **Key Topics:** 1. **Course Objectives**: - Understand the international environment and key tools for navigation. - Explore job opportunities in international business. - Develop teamwork, communication, and research skills. 2. **Course Structure**: - 15 units, 2 hours per unit. - Theory and practical applications in each session. - Self-assessments and preparations after each lesson. 3. **Evaluation**: - **40% Collective Evaluation**: IB project (oral presentation in Unit 13 or 14). - **60% Individual Evaluation**: - Class participation (10%). - Final exam (50%): MCQs and open-ended questions. 4. **Course Rules**: - Attendance and punctuality are mandatory. - Limited use of electronic devices. 5. **Project Guidance**: - Teamwork-oriented projects connected to course themes. - First presentation (Unit 7): formative feedback. - Final presentation (Unit 13 or 14): evaluated. **Session 2: How and Why Do Companies Internationalize?【38†source】** **Key Topics:** 1. **Reasons for Internationalization:** - **Market Seeking:** Expanding into less saturated, more profitable markets. - **Asset Seeking:** Accessing valuable resources like technology, labor, or raw materials. - **Efficiency Seeking:** Optimizing costs by spreading operations globally. 2. **Global Value Chains (GVCs):** - Definition: Activities involved in bringing a product from conception to market. - Examples: - Decathlon's B'Twin bicycle production across multiple countries. - The Barbie doll and iPhone assembly in various nations. 3. **Challenges of Internationalization:** - **Cost of Doing Business Abroad (CDBA):** - **Liability of Foreignness (LOF):** Extra costs incurred due to unfamiliar markets. - **Liability of Outsidership (LOO):** Lack of integration in local networks. 4. **The OLI Paradigm (Dunning & Lundan, 2008):** - **Ownership Advantages (O):** Competitive advantages (technology, brand). - **Location Advantages (L):** Benefits from specific geographic contexts (resources, market size). - **Internalization Advantages (I):** Cost and risk reduction by controlling key processes. **Applications:** - Use the OLI paradigm to choose the best entry mode based on company strengths and market characteristics. **Session 3: Entry Modes and Internationalization Paths【39†source】** **Key Topics:** 1. **Entry Modes:** - **Exporting:** - **Direct Exporting:** Company handles exports directly. - **Indirect Exporting:** Use of intermediaries like agents or distributors. - **Contractual Arrangements:** - Licensing: Granting rights to use intellectual property. - Franchising: Allowing the use of a brand and business model. - **Foreign Direct Investment (FDI):** - **Greenfield Investment:** Building operations from scratch. - **Brownfield Investment:** Acquiring existing facilities. - **Joint Ventures:** Shared ownership with local or foreign firms. 2. **Progressive vs. Rapid Internationalization:** - **Progressive Internationalization (Uppsala Model):** - Firms expand gradually into foreign markets as they gain experience and reduce \"psychic distance.\" - Example: Samsung\'s step-by-step global expansion. - **Rapid Internationalization (Born Global/INVs):** - Companies operate internationally from the start. - Example: Skype's global presence from inception. 3. **Comparing the Two Approaches:** - Progressive: Slower, less risky, knowledge-driven expansion. - Rapid: Faster, riskier, reliant on innovative capabilities and digital technologies. **Session 4: Managing Risks in the International Environment【40†source】** **Key Topics:** 1. **Evaluating Opportunities and Threats:** - **Conditions for Access:** - Example: Local content clauses in China's automotive industry. - **Critical Success Factors (CSFs):** - Example: Danone\'s acquisition of Opavia in the Czech Republic. 2. **Analyzing Country Risk:** - **Definition:** Potential negative events affecting foreign business operations. - **Actors Providing Country Risk Information:** - Governments, central banks, international institutions (IMF, World Bank). - Credit-rating agencies: Moody's, Fitch, Standard & Poor\'s. 3. **Credit-Rating Agencies:** - **Purpose:** Assess country or company creditworthiness using letter grades. - **Rating Systems:** - AAA (Best) to CCC (Worst). - **COFACE:** French export credit insurance provider (not a rating agency). 4. **Country Risk Indicators:** - **Economic and Financial Risks:** Currency devaluation, banking crises. - **Socio-Political Risks:** Corruption, political instability, terrorism. 5. **Controversies in Country Risk Analysis:** - Selective downgrades during crises. - Conflicts of interest in ratings. - Geopolitical implications of risk adjustments. **Applications:** - Evaluate risk indicators when expanding internationally. - Use ratings from agencies or create custom rating models. **Session 5: Introducing the Export-Import Business【41†source】** **Key Topics:** 1. **Forms of Export:** - **Direct Exporting:** - Company manages export operations directly. - **Advantages:** Higher profit margins, better market control. - **Disadvantages:** Higher costs, greater operational responsibility. - **Indirect Exporting:** - Use of intermediaries such as agents or distributors. - **Advantages:** Lower costs, reduced risk. - **Disadvantages:** Lower profits, limited market knowledge. 2. **Export-Import Operations:** - **Piggyback Exporting:** - Company A exports products using the established export system of Company B. 3. **International Shipping Process:** - **Steps from Seller to Buyer:** - Export packing, pre-carriage, export clearance, main carriage, insurance, unloading, import clearance. 4. **Customs, Duties, and Procedures:** - **Key Functions of Customs:** - Trade control, security, compliance, tax collection. - **EU Customs Union:** - No duties within the EU; common tariffs apply to third countries. 5. **Clearing Goods:** - **For Free Circulation (CFC):** - Requires customs value (CV) calculation, customs duties, and tariffs. - **For Home Use (CHU):** - Requires CV, parafiscal charges (PC), and VAT calculation. 6. **Example Calculations:** - CV = Price + Transport Costs + Insurance. - Taxes = CV × Applicable Rates. **Applications:** - Use export-import processes for global trade planning. - Calculate costs using real-world examples. **Session 6: Managing International Logistics -- The Incoterms【43†source】** **Key Topics:** 1. **Definition of Incoterms:** - International Commercial Terms standardizing responsibilities between sellers and buyers in global trade. - Govern cost and risk transfer but **not** property transfer. 2. **Categories of Incoterms 2020:** - **Group E (Departure):** EXW (Ex Works) -- Seller places goods at disposal. - **Group F (Main Carriage Unpaid):** FCA, FAS, FOB -- Seller delivers goods to a specified point. - **Group C (Main Carriage Paid):** CFR, CIF, CPT, CIP -- Seller pays for delivery but transfers risk at shipment point. - **Group D (Arrival):** DAP, DPU, DDP -- Seller assumes responsibility up to the buyer\'s premises. 3. **Key Incoterms Explained:** - **EXW (Ex Works):** Buyer manages transport from the seller's premises. - **FCA (Free Carrier):** Seller delivers goods to the agreed location. - **FOB (Free On Board):** Seller loads goods onto the ship. - **CIF (Cost, Insurance, and Freight):** Seller covers main carriage, insurance, and risk until port of destination. 4. **Using Incoterms:** - Always specify Incoterm, destination, and version (e.g., CIF Hamburg Incoterms 2020). 5. **Insurance and Risk:** - Seller may arrange insurance (e.g., CIF), but the buyer claims compensation in case of damage. 6. **Practical Example:** - A damaged goods case study involving DAP and DPU terms, highlighting responsibilities in logistics and insurance claims. **Applications:** - Select appropriate Incoterms based on cost, risk, and logistics requirements. - Use case studies for real-world application. **Session 7: IB Project -- First Presentation【42†source】** **Key Topics:** 1. **Presentation Goals:** - **Purpose:** Receive constructive feedback (no evaluation). - **Duration:** 5-7 minutes per group. 2. **Presentation Structure:** - Introduction of the company and central question. - Overview of project methodology. - Initial findings or expected outcomes. 3. **Presentation Tips:** - **Timing:** Respect allocated time. - **Fluency:** Use professional vocabulary, avoid reading from notes. - **Visuals:** Consistent and professional PowerPoint design. - **Bibliography:** Include properly formatted references. 4. **Organizational Roles:** - **Master of Time:** Keeps track of each group\'s presentation length (+1 point). - **Efficiency Manager:** Collects and organizes all presentations on a USB key (+1 point). - **Backup Plan:** Each group should have a backup USB key. 5. **Feedback Process:** - The professor and classmates provide constructive criticism after each presentation. **Applications:** - Use the feedback received to improve the project for the final evaluation in Units 13 or 14. **Session 8: Cross-Border Contractual Arrangements【45†source】** **Key Topics:** 1. **Definition:** - Cross-border contractual arrangements involve agreements between companies from different countries, typically involving the exchange of intangible assets like intellectual property (IP), services, or business systems. 2. **Types of Contractual Arrangements:** - **International Licensing:** - **Definition:** Licensor grants the licensee rights to use intellectual property (IP). - **Examples:** Trademarks, patents, copyrights, and know-how. - **Advantages:** Low-cost entry mode, passive income. - **Disadvantages:** Risk of IP loss, low control, creation of competitors. - **International Franchising:** - **Definition:** Franchisor provides the franchisee with brand use, business systems, and support. - **Examples:** Global fast-food chains. - **Advantages:** Brand expansion, low-cost market entry. - **Disadvantages:** Control loss, brand damage risks, franchisee disputes. - **Manufacturing Contracts and Service Outsourcing:** - **Definition:** External production or service agreements to reduce costs or enhance expertise. - **Examples:** IT outsourcing, contract manufacturing for tech firms. - **Management Contracts:** - Foreign firms manage assets like hotels or airports in return for fees. - **Turnkey Projects:** - Contracts for designing, building, and delivering fully operational facilities. - **Example:** Large-scale construction projects. 3. **Legal and Practical Considerations:** - Contracts specify scope, financial terms, obligations, and duration to avoid conflicts. **Applications:** - Use these arrangements to expand internationally while managing costs and risks. - Choose the right model based on the industry and business objectives. **Session 9: Forms of Foreign Direct Investment (FDI)【44†source】** **Key Topics:** 1. **Definition of FDI:** - Investment by a company into business operations in another country, involving ownership and control of value-added activities. 2. **Types of FDI:** - **Greenfield Investments:** - **Definition:** Establishing new facilities from scratch. - **Advantages:** Full control, tailored operations. - **Disadvantages:** High cost, longer implementation time. - **Brownfield Investments:** - **Definition:** Acquiring existing businesses or assets. - **Advantages:** Quick market entry, established operations. - **Disadvantages:** Cultural and organizational integration challenges. - **Joint Ventures (JVs):** - **Definition:** Two or more firms form a new legal entity. - **Advantages:** Shared risks, local knowledge access. - **Disadvantages:** Conflict potential, power struggles. 3. **Case Study -- Car Manufacturers in the Czech Republic:** - **Volkswagen (Skoda):** Greenfield investment to build new facilities. - **Hyundai:** Greenfield expansion to access local production advantages. - **Toyota & PSA:** Joint venture turned acquisition (Toyota took full control). 4. **Factors to Consider in FDI Selection:** - **Location Advantages:** Market size, labor costs, proximity to suppliers. - **Control Needs:** Management autonomy, intellectual property protection. - **Risk Level:** Political stability, economic environment, market competition. **Applications:** - Choose the right FDI form based on business strategy, operational needs, and market conditions. **Session 10: Successfully Managing Foreign Direct Investments (FDI)【46†source】** **Key Topics:** 1. **Policy Makers and Local Institutions Facing FDI:** - **Outward FDI:** Local companies investing abroad, boosting international expansion. - **Inward FDI:** Foreign investments into the country, creating jobs and technological advancement. - Local production increases GDP. - Taxes paid by subsidiaries. - Employment creation and technological transfer. - Foreign companies as competitors. - Risk of losing strategic industries. - Potential control by foreign governments. 2. **Investment Promotion Agencies:** - **Examples in France:** - Business France: Promotes foreign investment and exports. - Invest in Lyon & ONLYLYON: Attract investments to Lyon. 3. **Types of FDI Management:** - **Greenfield FDI:** Establishing new facilities, full control but high risk. - **Brownfield FDI:** Acquiring existing businesses, quicker market entry. - **Joint Ventures (JVs):** Sharing resources, reducing risks, but requiring alignment of goals. 4. **Managing Greenfield FDI:** - Build relationships with local institutions. - Create a foreign subsidiary. - Establish organizational structure and recruit local talent. 5. **Managing Brownfield FDI:** - **Acquisition Process:** - Identify target companies. - Conduct due diligence and negotiations. - Finalize purchase and implement post-merger integration. 6. **Managing JVs:** - **Development Stages:** - Courtship → Negotiation → Establishment → Maintenance → Relationship Change (e.g., separation, expansion). 7. **Case Study -- Toyota & PSA in the Czech Republic:** - From a joint venture to full acquisition by Toyota, demonstrating a long-term investment strategy. **Applications:** - Use tailored FDI strategies for different internationalization scenarios. - Build partnerships with local institutions to ease market entry. **Session 11: Intercultural Management in a Globalized World【47†source】** **Key Topics:** 1. **Culture as a Multifaceted Concept:** - **Definition:** Shared values, beliefs, behaviors, and symbols that characterize a group. - **Visible Aspects:** Behaviors, customs, dress, and language (20%). - **Invisible Aspects:** Values, beliefs, and attitudes (80%). 2. **Cultural Identity:** - **In-Group (Us):** Shared norms and values within the group. - **Out-Group (Them):** Groups perceived as different due to cultural disparities. 3. **Intercultural Models:** - **Hofstede's Dimensions of National Cultures:** - **Power Distance:** Acceptance of unequal power distribution. - **Individualism vs. Collectivism:** Group focus versus individual rights. - **Masculinity vs. Femininity:** Gender role distribution. - **Uncertainty Avoidance:** Comfort with ambiguity and risk. - **Long-Term vs. Short-Term Orientation:** Future planning versus immediate gratification. - **Indulgence vs. Restraint:** Life enjoyment versus societal restrictions. - **Hall's Cultural Dimensions:** - **High vs. Low Context Communication:** Indirect versus explicit communication. - **Monochronic vs. Polychronic Time Orientation:** Time as linear versus flexible. - **Space and Interpersonal Distance:** Comfort with personal space and social proximity. 4. **Intercultural Challenges:** - **Cultural Stereotypes:** Oversimplified and generalized views of cultures. - **Ethnocentrism:** Viewing one's culture as superior to others. 5. **Practical Roleplay Exercise:** - Exploring cultural differences through activities involving personal space, communication style, and behavior interpretation. **Applications:** - Use cultural models for managing international teams, market entry, and negotiation strategies. - Apply Hofstede and Hall's frameworks for intercultural analysis in real-world business scenarios. **Session 12: Headquarters-Subsidiary Relations【50†source】** **Key Topics:** 1. **Types of Relationships Between Headquarters (HQ) and Subsidiaries:** - **Multinational Model:** - Decentralized subsidiaries operating independently. - **International Model:** - Centralized HQ with limited local adaptation. - **Global Model:** - Highly centralized, standardized operations. - **Transnational Model:** - Integrated network balancing global efficiency and local responsiveness. 2. **Roles of Headquarters (HQs):** - **Entrepreneurial Role:** Create value by identifying opportunities, supporting subsidiaries, and fostering global business expansion. - **Administrative Role:** Control, monitor, and prevent losses by setting goals and overseeing subsidiaries\' performance. 3. **Mechanisms of Control, Incentives, and Coordination:** - **Control Mechanisms:** - **Behavioral Control:** Rules, procedures, direct supervision. - **Output Control:** Performance targets, key performance indicators (KPIs). - **Social Control:** Corporate culture, training, and values. - **Incentives:** - **Monetary:** Bonuses, salary increases, promotions. - **Non-Monetary:** Recognition, career development, best-unit awards. - **Coordination:** - Support through cost and risk-sharing while limiting subsidiary autonomy. 4. **Roles of Subsidiaries:** - **Autonomy vs. Control Balance:** - Some subsidiaries operate independently, while others depend heavily on HQ directives. 5. **Theoretical Frameworks:** - **Bartlett & Ghoshal (1998):** Defined organizational models for HQ-subsidiary relationships. - **Agency Theory:** Managing information asymmetry between HQ and subsidiaries. 6. **Key Considerations for Managing Subsidiaries:** - Adapting management style to the subsidiary's strategic role. - Balancing global efficiency with local responsiveness. **Applications:** - Use these models to design global expansion strategies. - Balance HQ control with subsidiary autonomy based on business objectives.