International Business Study Guide PDF

Chapter 4 – There will be one short answer question about the Hofstede’s dimensions. I know Ch.4 is long gone from your memory, but please do review the dimensions. I’ve been askedto give one question about Hofstede’s in order to measure global awareness in our business students. Chapter 10 – The F...

Chapter 4 – There will be one short answer question about the Hofstede’s dimensions. I know Ch.4 is long gone from your memory, but please do review the dimensions. I’ve been askedto give one question about Hofstede’s in order to measure global awareness in our business students. Chapter 10 – The Foreign Exchange Market Exchange rates Definition Converting one currency into another using a hypothetical exchange rate (you’ll be asked to calculate—but very simple numbers) Comparing the prices of the same product in two different countries by converting currencies (again, very simple numbers) *We did all these calculations together in class! Review theslides and ask me questions please. I. Hofstede's Dimensions 1.​ Power Distance Index (PDI) ​ Definition: measures the extent to which individuals in a society accept and expect power inequality ​ High PDI: societies with strong authority and hierarchy ​ Low PDI: societies with more equal distribution of power 2.​ Individualism vs. Collectivism (IDV) ​ Definition: measures the balance between individual freedom and group harmony ​ Individualistic societies: prioritize individual rights and freedoms ​ Collectivist societies: prioritize group harmony and interdependence 3.​ Uncertainty Avoidance Index (UAI)  ​ Definition: measures the extent to which societies avoid uncertainty and ambiguity ​ High UAI: societies with strong preference for rules and structure ​ Low UAI: societies with more tolerance for ambiguity and uncertainty 4.​ Masculinity vs. Femininity (MAS) ​ Definition: measures the balance between masculine (assertive, competitive) and feminine (nurturing, cooperative) values ​ Masculine societies: prioritize achievement and competition ​ Feminine societies: prioritize relationships and quality of life 5.​ Long-Term Orientation (LTO) ​ Definition: measures the extent to which societies prioritize long-term goals and perseverance ​ High LTO: societies with strong focus on future rewards ​ Low LTO: societies with more focus on short-term gains 6.​ Indulgence vs. Restraint (IND) ​ Definition: measures the extent to which societies allow for free gratification of desires ​ Indulgent societies: prioritize enjoyment and leisure ​ Restrained societies: prioritize social norms and restraint II. Foreign Exchange Market 1.​ Exchange Rates ​ Definition: price of one currency in terms of another ​ Types: ○​ Spot rate: current exchange rate ○​ Forward rate: future exchange rate agreed upon today ​ Calculations:  ○​ Converting currencies: multiplying or dividing by exchange rate ○​ Comparing prices: converting prices to a common currency 2.​ FoRex (Foreign Exchange Market) ​ Definition: global market for exchanging currencies ​ Main functions: ○​ Facilitating international trade and investment ○​ Providing risk management tools (e.g., hedging) ​ Participants: ○​ Banks ○​ Corporations ○​ Investors ○​ Speculators 3.​ Spot vs. Forward Rates ​ Spot rate: current exchange rate for immediate delivery ​ Forward rate: future exchange rate agreed upon today for delivery at a specified date ​ Forward premium/discount: difference between spot and forward rates 4.​ Currency Types ​ Free Convertible Currencies: easily exchanged for other currencies (e.g., USD, EUR) ​ Non-Convertible Currencies: restricted exchange (e.g., some emerging market currencies) 5.​ Exchange Rate Fluctuations ​ Depreciation: decrease in currency value (makes exports cheaper) ​ Appreciation: increase in currency value (makes imports cheaper)  6.​ Exchange Rate Systems ​ Floating Exchange Rates: market-determined exchange rates ​ Pegged Exchange Rates: fixed exchange rates (often to a major currency) III. Strategy of International Business 1.​ Profitability vs. Profit Growth ​ Profitability: earning profits (return on sales or investment) ​ Profit Growth: increasing profits over time (growth rate) 2.​ ROI (Return on Investment) ​ Formula: ROI = (Gain - Cost) / Cost ​ Interpretation: measure of investment efficiency 3.​ Porter's Strategies ​ Differentiation: unique products/services that command a premium price ​ Low-Cost: minimizing costs to offer lower prices 4.​ Core Competence ​ Definition: unique skills/abilities that drive competitive advantage ​ Examples: Apple's design expertise, Toyota's manufacturing efficiency 5.​ Location Economies ​ Benefits: ○​ Access to resources (e.g., labor, raw materials) ○​ Access to markets ○​ Access to talent ​ Examples: ○​ Outsourcing (e.g., manufacturing in China) ○​ Offshoring (e.g., IT services in India)  6.​ The Experience Curve ​ Definition: relationship between production costs and experience (learning curve) ​ Graph: shows decreasing costs with increasing experience 7.​ Learning Effects ​ Definition: increased efficiency through experience (reduces costs) 8.​ Pressures in Global Business ​ Cost Reduction: minimizing costs (e.g., through outsourcing or offshoring) ​ Local Responsiveness: adapting to local markets (e.g., product customization) 9.​ Universal Needs ​ Definition: needs that exist across cultures (e.g., food, shelter, healthcare) ​ Examples: Apple's global appeal, Coca-Cola's global brand recognition 10.​ Global Strategies ​ Standardization: uniform products/services worldwide (e.g., McDonald's menu) ​ Localization: adapting to local markets (e.g., product customization) ​ International: leveraging core competencies across borders (e.g., exporting) IV. Global Marketing (Extra Credit) 1.​ Product Attributes  ​ Definition: characteristics that meet consumer needs (e.g., quality, design) ​ Differences across countries: varying needs and preferences 2.​ Distribution Strategy ​ Definition: getting products to customers ​ Differences: ○​ Retail Concentration: number of retailers (e.g., few large retailers in the US) ○​ Channel Length: number of intermediaries (e.g., wholesalers, distributors) ○​ Channel Quality: effectiveness of distribution channels (e.g., logistics, inventory management) 3.​ Communication Strategy ​ Country of Origin Effects: impact of country image on products (e.g., "Made in USA") ​ Noise Level: distractions that affect communication (e.g., advertising clutter) 4.​ Pricing Strategies ​ Predatory Pricing: setting low prices to drive out competition ​ Experience Curve Pricing: setting prices based on production costs and experience FoRex What it is Main functions Participants of the FoRex Spot exchange rate vs. forward rate (and the examples). Free convertible vs. non-convertible currencies Currency depreciation and appreciation Floating vs. pegged exchange rates The in-class assignment we did together: The European exportercase— As I said many times, make sure you review it thoroughly. Students seem to struggle with these concepts. And the Vietnamese coffee maker case study. Chapter 13—Strategy of IB Profitability vs. Profit growth ROI –very simple calculation (formula will be given; no need to memorize) & interpretation Porter’s differentiation vs. low-cost strategies (definition & examples) Core competence (definition) Location economies (definition & examples) The experience curve (what it is & how it works & the graph) Learning effects Pressure for cost reduction vs. pressure to be locally responsive (and examples) Universal needs (definition and examples) Standardization vs. localization vs. international strategies (also, understand the graphs) Three extra credit questions out of the following items from Chapter 18 (Global Marketing) (9 points total) Regarding Product Attributes, how do consumer needs differ across countries? Distribution strategy Definition The 3 main differences (retail concentration, Channel length, & Channel quality) Communication strategy Country of origin effects Noise level Predatory vs. Experience curve pricing