International Business and Trade Past Paper 2024-25 PDF

Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 INTERNATIONAL BUSINESS AND TRADE Dear Students, Welcome to the lecture series-INTERNATIONAL BUSINESS & TRADE….Today marks the beginning of the 1st Semester of the School year 2024 – 2025… Another year of challenge in the trying times of Pandemic…. However, with the help of Technology, Global Marketing is possible. In this course, there will be sessions which will be held once a week schedule. As we embrace the new normal way of life. This gives you students a much greater time to learn at your own pace at the convenience of your homes or any other space at your comfort, provided you will be responsible enough to be time bound as to the readiness for engagement in scheduled Teaching Learning Activities. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 1 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Course Description: This course focuses on marketing strategy and management within the context of global an international markets. It evaluates cultural differences and aims to enhance your skills in developing and implementing marketing strategies and decision making in international context. This course was developed to provide international business students with an opportunity to study interesting aspects of the international business environment and to improve their capacity to assess and solve international business problems. Through discussion, research and practical activity students will develop the ability to prepare marketing programs that effectively reduce risk and take advantage of opportunities in the marketplaces of the world. Course Credit: 3 units Prerequisites: Principles of Marketing Course Duration: Nine (9) Weeks Course Outcomes: At the end of the course, students will be able: a. Understand the global marketing environment. b. Synthesize and apply universal marketing concepts, principles, and processes honed through written analysis of selected cases, as well as through the design and composition of a strategic Business Plan for a selected product or service for international marketing. c. To develop and design global Participation and marketing strategies PROFESSOR: SHIANNY JEN C. GAYANILO, MBA Email address: [email protected] Messages: FB class group chat; LMS class account LMS:Google Classroom Other portal: Zoom Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 2 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 MODULE 1 PACKET BA 412: INTERNATIONAL BUSINESS AND TRADE MODULE 1 OVERVIEW: Welcome to Module 1 – Globalization and International Business In this module, we will discuss the introduction and overview of global marketing. We will be discussing the importance of global marketing and why we need to study international and global marketing activities. Over the last two centuries trade has grown remarkably, completely transforming the global economy. Today about one fourth of total global production is exported. Understanding this transformative process is important because trade has generated gains, but it has also had important distributional consequences. Over the past two decades, we have witnessed the globalization of markets and production. 2. The globalization of markets implies that national markets are merging into one huge marketplace. However, it is important not to push this view too far. 3. The globalization of production implies that firms are basing individual productive activities at the Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 3 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 optimal world locations for the particular activities. As a consequence, it is increasingly irrelevant to talk about American products, Japanese products, or German products, since these are being replaced by "global" products. Over the past two decades, we have witnessed the globalization of markets and production. 2. The globalization of markets implies that national markets are merging into one huge marketplace. However, it is important not to push this view too far. 3. The globalization of production implies that firms are basing individual productive activities at the optimal world locations for the particular activities. As a consequence, it is increasingly irrelevant Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 4 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 to talk about American products, Japanese products, or German products, since these are being replaced by "global" products. Over the past two decades, we have witnessed the globalization of markets and production. 2. The globalization of markets implies that national markets are merging into one huge marketplace. However, it is important not to push this view too far. 3. The globalization of production implies that firms are basing individual productive activities at the optimal world locations for the particular activities. As a consequence, it is increasingly irrelevant to talk about American products, Japanese products, or German products, since these are being Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 5 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 replaced by "global" products. At the end of this module, you are going to submit output specifying how you apply the lessons you learned from this module in reality as a global marketing most especially in the current global scenario. CONSULTATION HOURS: Phone or Messenger: 3 – 5:00 PM Wednesdays Virtual time: 11:00 – 12:00 Monday, Tuesday, Thursday & Friday MODULE 1 LEARNING OBJECTIVES: By the end of this module, the students will be able to: 1. To define globalization and international business and show how they affect each other 2. To understand why companies engage in international business and why international business growth has accelerated 3. To discuss globalization’s future and the major criticisms of globalization 4. To become familiar with different ways in which a company can accomplish its global objectives 5. To apply social science disciplines to understanding the differences between international and domestic business 6. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 6 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 COURSE CONTENT FOR MODULE1: Introduction to Global Marketing ACTIVITY DESCRIPTION TIME TO COMPLETE Introduce and Familiarized one another, Introduction 30 minutes Discuss House Rules and set expectation Lecture Define globalization and international 15 minutes discussion business Why companies engage in international Lecture business and why international business 30 minutes discussion growth has accelerated Review Quick review 10 minutes Lecture Globalization’s future and the major criticisms of globalization. 30 minutes discussion Activity Giving instructions for the activity 15 minutes Social science disciplines to Lecture understanding the differences between 30 minutes discussion international and domestic business Quiz Summative quiz for module 1 20 minutes LECTURE DISCUSSIONS Module I - Globalization and International Business 1.1 Globalization is the ongoing process that deepens and broadens the relationships and interdependence among countries. International Business is a mechanism to bring about globalization. International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 7 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 cross-border transactions of goods and services between two or more countries.... International business is also known as globalization. International Marketing is defined as the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Difference Between Global & International Marketing International marketing involves the marketing tactics adopted by knowledgeable marketers in different countries specific to the markets of those countries. Global marketing, on the other hand is a marketing concept which involves the marketing efforts put in for the unique worldwide market. "International" has a smaller scope encompassing only two or more countries while "global" has a much larger scope which includes the whole world.... Although they are sometimes used interchangeably, "global" means "all-encompassing and worldwide" while "international" means "foreign or multinational." The importance of Global Markets Global markets are expanding rapidly. The combine value of merchandise exports has exceeded $15 trillion annually. In addition, exports of commercial services has account for more than $3 trillion. For many years, international trade has grown faster than domestic economies, further contributing to the ever increasing pace of globalization. International business - consists of all commercial transactions—including sales, investments, and transportation—that take place between two or more countries Increasingly foreign countries are a source of both production and sales for domestic companies Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 8 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Importance of International Marketing 1. Important to expand target market – Target market of a marketing organisation will be limited if it just concentrate on domestic market. When an organisation thinks globally, it looks for overseas opportunities to increase its market share and customer base. 2. Important to boost brand reputation – International marketing may give boost to a brand’s reputation. Brand that sold internationally is perceived to be better than the brand that sold locally. People like to purchase products that are widely available. Hence, international marketing is important to boost brand reputation. 3. Important to connect business with the world – Expanding business into an international market gives a business an advantage to connect with new customers and new business partners. Apple - the tech giant designs its iPhone in California; outsources its manufacturing jobs to different countries like - Mongolia, China, Korea, and Taiwan; and markets them across the world. Apple have not restricted its business to a nation, rather expanded it to throughout the world. The opportunities for networking internationally are limitless. The more "places" a business is, the more connections it can make with the world. 4. Important to open door for future opportunities – International marketing can also open door for future business opportunities. International marketing not only increases market share and customer base, it also helps the business to connect to new vendors, a larger workforce and new technologies and ways of doing business. (https://www.enotesmba.com/2016/04/importance-of-international-marketing.html) 1.2 Why companies engage in international business Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 9 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 1. To Expand Sales: pursuing international sales increases the potential market and potential profits 2. To Acquire Resources: may give companies lower costs, new and better products, additional operating knowledge 3. To Diversify or Reduce Risks: international operations may reduce operating risk by smoothing sales and profits, preventing competitors from gaining advantage Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 10 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Factors Contributing to Rapid Growth of International Business 1. Increase in and expansion of technology 2. Liberalization of cross-border trade and resource movements 3. Development of services that support international business 4. Growing consumer pressures 5. Increased global competition 6. Changing political situations 7. Expanded cross-national cooperation Modes of Operation in International Business Merchandise exports and imports Service exports and imports ▪ Tourism and Transportation ▪ Service Performance ▪ Asset Use Investments ▪ Foreign Direct Investment (FDI) Portfolio Investment Multinational Enterprises Multinational Enterprises (MNEs) take a global approach to markets and production. Sometimes they are referred to as multinational corporations or companies (MNCs) or transnational companies (TNCs). Development of Global Marketing - The term Global Marketing has been in use only since the 1980’s. Before that decade, international marketing was the term used most often to describe marketing activities outside one’s domestic market. Global Marketing is just a new label for an old phenomenon, however provides a new vision. Domestic marketing – Marketing activities aimed at a firms domestic market. Export marketing – marketing activities undertaken when a firm sells its products abroad and when those products are shipped from one country to another. International marketing – Marketing activities undertake when a company becomes significantly involved in local marketing environment in foreign countries. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 11 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Multi-domestic marketing – A company that possesses extensive investment in assets abroad and operates in a number of foreign countries as thought it were a local company. Pan-regional marketing – A regional strategies encompass a number of markets such as Pan-European, NAFTA (North American Federal Trade Agreement). Global marketing - A global marketing strategy involves the creation of a single strategy for a product, service, or company for the entire global market nonetheless incorporates flexibility for local adaptation. 1.3 Criticisms of Globalization: Growing Income Inequality More Losers than Winners The previous articles in this module covered the topic of globalization in depth. Some of the points of discussion were about how globalization has succeeded in lifting millions of people out of poverty. While accepting this fact, it is also the case that globalization has created income inequality which when coupled with inflation and falling living standards has resulted in a class of people who are losing out more than gaining from the process of globalization. If we take each of these factors into consideration, it becomes clear that globalization leads to worsening income gaps and the transfer of wealth from the bottom to the top. Increase in Social Tensions Globalization by virtue of being a process that benefits elites and the educated more has contributed to social tensions where the native populace without the benefit of English speaking skills or the necessary attributes to partake of the fruits of globalization end up resenting the success of the class that benefits from globalization. This has resulted in social tensions wherein those left out of the process of globalization envy those who have benefited from it and this leads to periods of unrest and fights at the slightest provocation. Indeed, as one of the experts on globalization. Lack of Class Mobility The ongoing global economic crisis has brought home the fact that youth born into a certain class are likely to remain in that socio-economic class without hopes of social mobility or progress. This is because globalization has skewed the game in favor of those with the required skills and attributes and has restricted the upward movement of people along the social ladder. Though this is just one reason, the other reason of class stratification and lack of opportunities are equally pernicious as far as the limitation of social mobility is concerned. Therefore, it is high time for the elites to address these problems because ultimately the rising tide should lift all boats and not only those that belong to the privileged class. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 12 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Future of International Business and Globalization Further globalization is inevitable. International business will grow primarily along regional rather than global lines. Forces working against further globalization and international business will slow down both trends. 1.4 Difference Between International and Domestic Operations When operating abroad companies may have to adjust their usual methods of carrying out business. Foreign conditions often dictate a more suitable method, and the operating modes used for international business differ from those used on a domestic level. Physical and Social Factors Affecting International Business Operations To operate within a company’s external environment, its managers must have knowledge of business operations and a working knowledge of social sciences, and how they affect all functional business fields. It includes the political, social, economic and cultural relationships within the international system foreign policy, diplomacy and other modes of interaction between the countries of the world the significance of foreign societies, cultures, and systems of government the international movement of people as immigrants, refugees, workers, students, tourists and investors the role of international organizations the globalization of the world economy foreign languages history Sources: John D. Daniels, International Business, 16th Edition, Pearson, 2018 Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 13 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Kate Gillespie and H. David Hennessey. Global Marketing, 3rd (2013) ed.Singapore, Cengage Learning Vern Terpstra; James Foley; Ravi Sarathy, International Marketing, Naper Publishing Group; 10th edition (2012) (https://www.enotesmba.com/2016/04/importance-of-international-marketing.html) MODULE 1, ACTIVITY 1: ACTIVITY OUTPUT Instructions: In Easy format, please submit your assignment as on or before the start of the 2nd Module. QUESTIONS FOR DISCUSSION 1. How is global marketing as a field related to your future career? How would you expect to come into contact with global marketing activities? This question parallels the chapter sections on “Why Study Global Marketing” and “A Need for Global Mindsets.” Answers are personal but may include: o A desire to work in international marketing o Working in domestic marketing but dealing with foreign competitors o Entering other professions but with an international orientation 2. What do you think are the essential skills of a successful “global marketer”? Again, this calls for a personal response, but suggestions at this introductory stage might include: o A knowledge of and sensitivity to other cultures o Foreign language knowledge o An understanding of the global economy as well as national politics and laws o A good knowledge of your domestic business o The ability to identify market opportunities internationally o An understanding of how to manage within a multinational firm 3. Which important skills make up an effective “global mindset”? A global mindset involves an ability to predict what foreign competitors will do next. Skills might include being able to think like your competitors: understanding their background and culture as well as speaking their language; knowing how to integrate Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 14 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 actions among national markets; and synthesizing experiences across national markets. RUBRIC FOR ACTIVITY 1 GRADING RUBRIC FOR WRITTEN ASSIGNMENTS LEVELS OF ASSESSMENT BELOW STANDARD – 2 MEETS STANDARD – 3 EXCEEDS STANDARD EXEMPLARY – 5 PTS. SCOR PTS. PTS. – 4 PTS. ORGANIZATION Writing lacks logical Writing is coherent Writing is coherent Writing shows high organization. It shows and logically and logically degree of attention to some coherence but organized. Some organized with logic and reasoning of ideas lack unity. points remain transitions used points. Unity clearly Serious errors. misplaced and stray between ideas and leads the reader to the from the topic. paragraphs to create conclusion and stirs Transitions evident but coherence. Overall thought regarding the not used throughout unity of ideas is topic. essay. present. LEVEL OF Shows some thinking Content indicates Content indicates Content indicates CONTENT and reasoning but most thinking and original thinking and synthesis of ideas, ideas are reasoning applied with develops ideas with in-depth analysis and underdeveloped and original thought on a sufficient and firm evidences original unoriginal. few ideas. evidence. thought and support for the topic. DEVELOPMENT Main points lack Main points are Main points well Main points well detailed development. present with limited developed with quality developed with high Ideas are vague with detail and supporting details and quality and quantity little evidence of critical development. Some quantity. Critical support. Reveals high thinking. critical thinking is thinking is weaved degree of critical present. into points thinking. STYLE Mostly in elementary Approaches college Attains college level Shows outstanding form with little or no level usage of some style; tone is style going beyond variety in sentence variety in sentence appropriate and usual college level; structure, diction, patterns, diction, and rhetorical devices rhetorical devices and rhetorical devices or rhetorical devices. used to enhance tone used effectively; emphasis content; sentence creative use of Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 15 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 variety used sentence structure and effectively. coordination FORMAT Fails to follow format Meets format and Meets format and Meets all formal and and assignment assignment assignment assignment requirements; incorrect requirements; requirements; requirements and margins, spacing and generally correct margins, spacing, and evidences attention to indentation; neatness margins, spacing, and indentations are detail; all margins, of essay needs indentations; essay is correct; essay is neat spacing and TOTA attention. neat but may have and correctly indentations are some assembly errors. assembled. correct; essay is neat and correctly assembled with professional look. MODULE 2 PACKET BA 412: INTERNATIONAL BUSINESS AND TRADE MODULE 2 OVERVIEW: Welcome to Module 2 – The Global Economy In the past fifty years the global economy has changed rapidly. Particularly marked has been the development of world economic integration and standardized products. Coca Cola, Nissan and Marlboro cigarettes are examples of products which serve nearly every market. Generally there have been four major changes: capital movements rather than trade have become the driving force of the global economy, production has become "uncoupled" from employment, primary products have become "uncoupled" from the industrial economy and, the world economy is in control - individual nations are not, despite the large world economic share of the USA and Japan. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 16 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 You are set for an incredible journey starting from the legacy of mercantilism 1500-1750! Have fun in the world of marketing! CONSULTATION HOURS: Phone or Messenger: 3 – 5:00 PM Wednesdays Virtual time: 11:00 – 12:00 Monday, Tuesday, Thursday & Friday MODULE 2 LEARNING OBJECTIVES: By the end of this module, the students will be able to: 1. Distinguish among the basic theories of world trade: absolute advantage, comparative advantage, and competitive advantage. 2. Discuss the pros and cons of global outsourcing. 3. List and explain the principal parts of the balance-of-payments statement. 4. Describe how and why exchange rates fluctuate. 5. List and describe the major agencies that promote world trade, as well as those that promote economic and monetary stability. 6. Describe common trade restrictions and explain their impact on international marketers. 7. Compare the four different forms of economic integration. COURSE CONTENT FOR MODULE 2: The Global Economy ACTIVITY DESCRIPTION TIME TO COMPLETE Lecture International Dependence of Nations 30 minutes discussion Video Basic Theories of World Trade 10 minutes Presentation Lecture Global Outsourcing 30 minutes discussion Activity Grouping & Giving Instruction for the 20 minutes Instruction Activity Lecture Balance of Payment 30 minutes discussion Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 17 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Lecture discussion with Exchange Rates 30 minutes Video Presentation Group International Agencies for Promoting 1 ½ hours Presentation Economic and Monetary Stability Lecture Protectionism and Trade Restrictions and 30 mins discussion Entry Modes to International Marketing Quiz Summative quiz for module 2 30 minutes LECTURE DISCUSSIONS 2.1 International Dependence of Nations Foreign goods are central to the living standards of all nations. Countries vary widely in their reliance on foreign trade. China became the top exporter while United States of America becomes the top dependent country in the world. Thus, both China and USA supports the creation of an average of 11,500 jobs for these. The Growth of Word Trade(WTO) An international organization designed by its founders to supervise and liberalize international capital trade. The organization officially commenced on January 1, 1995 under the Marrakesh Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1947. The World Trade Organization deals with regulation of trade between participating countries; it provides a framework for negotiating and Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 18 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. The WTO has 153 members representing more than 95% of total world trade and 30 observers, most seeking membership. The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland. History of WTO ITO and GATT 1947 The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation - notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization was successfully negotiated. (https://www.wto.org/) The On GATT to WTO agreements fall into a structure with six main parts: The Agreement Establishing the WTO Goods and investment — the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures Services — the General Agreement on Trade in Services Intellectual property — the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Dispute settlement (DSU) Reviews of governments' trade policies FUNCTIONS OF THE WTO Among the various functions of the WTO, these are regarded by analysts as the most important: It oversees the implementation, administration and operation of the covered agreements. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 19 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 It provides a forum for negotiations and for settling disputes. (issue in export and import) Principles of the trading system The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: Principle One: Creating Opportunities for Economically Disadvantaged Producers Poverty reduction through trade forms a key part of the organization’s aims. The organization supports marginalized small producers, whether these are independent family businesses, or grouped in associations or co-operatives. It seeks to enable them to move Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 20 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 from income insecurity and poverty to economic self-sufficiency and ownership. The organization has a plan of action to carry this out. Principle Two: Transparency and Accountability The organization is transparent in its management and commercial relations. It is accountable to all its stakeholders and respects the sensitivity and confidentiality of commercial information supplied. The organization finds appropriate, participatory ways to involve employees, members and producers in its decision-making processes. It ensures that relevant information is provided to all its trading partners. The communication channels are good and open at all levels of the supply chain. Principle Three: Fair Trading Practices The organization trades with concern for the social, economic and environmental well-being of marginalized small producers and does not maximize profit at their expense. It is responsible and professional in meeting its commitments in a timely manner. Suppliers respect contracts and deliver products on time and to the desired quality and specifications. Fair Trade buyers, recognizing the financial disadvantages producers and suppliers face, ensure orders are paid on receipt of documents and according to the attached guidelines. For Handicraft FT products, an interest free pre-payment of at least 50 % is made on request. For Food FT products, pre-payment of at least 50% at a reasonable interest is made if requested. Interest rates that the suppliers pay must not be higher than the buyers’ cost of borrowing from third parties. Charging interest is not required. Where southern Fair Trade suppliers receive a pre payment from buyers, they ensure that this payment is passed on to the producers or farmers who make or grow their Fair Trade products. Buyers consult with suppliers before canceling or rejecting orders. Where orders are cancelled through no fault of producers or suppliers, adequate compensation is guaranteed for work already done. Suppliers and producers consult with buyers if there is a problem with delivery, and ensure compensation is provided when delivered quantities and qualities do not match those invoiced. The organization maintains long term relationships based on solidarity, trust and mutual respect that contribute to the promotion and growth of Fair Trade. It maintains effective communication with its trading partners. Parties involved in a trading relationship seek to increase the volume of the trade between them and the value and diversity of their product offer as a means of growing Fair Trade for the producers in order to increase their incomes. The organization works cooperatively with the other Fair Trade Organizations in country and avoids unfair competition. It avoids duplicating the designs of patterns of other organizations without permission. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 21 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Fair Trade recognizes, promotes and protects the cultural identity and traditional skills of small producers as reflected in their craft designs, food products and other related services. Principle Four: Payment of a Fair Price A fair price is one that has been mutually agreed by all through dialogue and participation, which provides fair pay to the producers and can also be sustained by the market. Where Fair Trade pricing structures exist, these are used as a minimum. Fair pay means provision of socially acceptable remuneration (in the local context) considered by producers themselves to be fair and which takes into account the principle of equal pay for equal work by women and men. Fair Trade marketing and importing organizations support capacity building as required to producers, to enable them to set a fair price. Principle Five: Ensuring no Child Labor and Forced Labor The organization adheres to the UN Convention on the Rights of the Child, and national / local law on the employment of children. The organization ensures that there is no forced labor in its workforce and / or members or homeworkers. Organizations who buy Fair Trade products from producer groups either directly or through intermediaries ensure that no forced labor is used in production and the producer complies with the UN Convention on the Rights of the Child, and national / local law on the employment of children. Any involvement of children in the production of Fair Trade products (including learning a traditional art or craft) is always disclosed and monitored and does not adversely affect the children’s well-being, security, educational requirements and need for play. Principle Six: Commitment to Non Discrimination, Gender Equity and Women’s Economic Empowerment and Freedom of Association The organization does not discriminate in hiring, remuneration, access to training, promotion, termination or retirement based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, HIV/Aids status or age. The organization has a clear policy and plan to promote gender equality that ensures that women as well as men have the ability to gain access to the resources that they need to be productive and also the ability to influence the wider policy, regulatory, and institutional environment that shapes their livelihoods and lives. Organizational constitutions and by-laws allow for and enable women to become active members of the organization in their own right (where it is a membership based organization), and to take up leadership positions in the governance structure regardless of women’s status in relation to ownership of assets such as land and property. Where women are employed within the organization, even where it is an informal employment situation, they receive equal pay for equal work. The organization recognizes women’s full employment rights and is committed to ensuring that women receive their full statutory employment benefits. The organization takes into Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 22 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 account the special health and safety needs of pregnant women and breast-feeding mothers. The organization respects the right of all employees to form and join trade unions of their choice and to bargain collectively. Where the right to join trade unions and bargain collectively are restricted by law and/or political environment, the organization will enable means of independent and free association and bargaining for employees. The organization ensures that representatives of employees are not subject to discrimination in the workplace. Principle Seven: Ensuring Good Working Conditions The organization provides a safe and healthy working environment for employees and / or members. It complies, at a minimum, with national and local laws and ILO conventions on health and safety. Working hours and conditions for employees and / or members (and any homeworkers) comply with conditions established by national and local laws and ILO conventions. Fair Trade Organizations are aware of the health and safety conditions in the producer groups they buy from. They seek, on an ongoing basis, to raise awareness of health and safety issues and improve health and safety practices in producer groups. Principle Eight: Providing Capacity Building The organization seeks to increase positive developmental impacts for small, marginalized producers through Fair Trade. The organization develops the skills and capabilities of its own employees or members. Organizations working directly with small producers develop specific activities to help these producers improve their management skills, production capabilities and access to markets – local / regional / international / Fair Trade and mainstream as appropriate. Organizations which buy Fair Trade products through Fair Trade intermediaries in the South assist these organizations to develop their capacity to support the marginalized producer groups that they work with. Principle Nine: Promoting Fair Trade The organization raises awareness of the aim of Fair Trade and of the need for greater justice in world trade through Fair Trade. It advocates for the objectives and activities of Fair Trade according to the scope of the organization. The organization provides its customers with information about itself, the products it markets, and the producer organizations or members that make or harvest the products. Honest advertising and marketing techniques are always used. Principle Ten: Respect for the Environment Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 23 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Organizations which produce Fair Trade products maximize the use of raw materials from sustainably managed sources in their ranges, buying locally when possible. They use production technologies that seek to reduce energy consumption and where possible use renewable energy technologies that minimize greenhouse gas emissions. They seek to minimize the impact of their waste stream on the environment. Fair Trade agricultural commodity producers minimize their environmental impacts, by using organic or low pesticide use production methods wherever possible.(https://www.wto.org/) 2.2 Basic Theories of World Trade 1. Absolute advantage - Trade is based on each country selling what it is best at producing 2. Comparative advantage - Trade can occur between two countries even if one of the countries has no absolute advantage in any product 3. Competitive Advantage - Michael Porter argues that the theory of comparative advantage is limited by its focus on the elements of production: i. –Land ii. –Labor iii. –Natural resources iv. –Capital Theory of Competitive Advantage Elements of production Nature of domestic demand Presence of appropriate suppliers or related industries The conditions in the country that govern how companies are created, organized, and managed Nature of domestic rivalry 2.3 Global Outsourcing - procurement strategy in which a business seeks to find the most cost efficient location for manufacturing a product, even if the location is in a foreign country. For example, if a toy manufacturer finds that manufacturing and delivery costs are lower in a foreign country due to lower wages of foreign employees, the company might close the domestic factory and use a foreign manufacturer. The most commonly outsourced streams of business include: Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 24 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 IT outsourcing Legal outsourcing Content Development Web Design and Maintenance Recruitment Logistics Manufacturing Technical/Customer Support Source: Boeing 787 Dreamliner Assembly WHY DO ORGANIZATIONS OUTSOURCE THEIR BUSINESS PROCESS? THE KEY FACTORS WHICH HAVE LED TO A GROWING TREND OF OUTSOURCING ARE Lack of expert-labor in some portions of the business process Availability of cheaper labor, whilst not comprising on the quality of output Ability and feasibility to concentrate on the other crucial business process These factors have specifically contributed to most of the outsourced partners across different locations in the world. Expertise in communication capabilities, technical expertise and favorable financial packages are the most important advantages of outsourcing to India. Outsourcing most commonly known as off-shoring has pros and cons to it. Most of the time, the advantages of outsourcing overshadow the disadvantages of outsourcing. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 25 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 The Advantages of Outsourcing Swiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output Concentrating on core process rather than the supporting ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process Risk-sharing: one of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing The Disadvantages of Outsourcing Risk of exposing confidential data: When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party Synchronizing the deliverables: In case you do not choose a right partner for outsourcing, some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat Lack of customer focus: An outsourced vendor may be catering to the expertise-needs of multiple organizations at a time. In such situations vendors may lack complete focus on your organization’s task (K. Gillespie and H. Hennessey,2013) 2.4 Balance of Payments - (BOP): an accounting record of the transactions between the residents of one country and the residents of the rest of the world over a given period of time. Balance of payments accounts are an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BOP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 26 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items. 2.5 Exchange Rate - The price of a nation’s currency in terms of another currency. An exchange rate thus has two components, the domestic currency and a foreign currency, and can be quoted either directly or indirectly. In a direct quotation, the price of a unit of foreign currency is expressed in terms of the domestic currency. In an indirect quotation, the price of a unit of domestic currency is expressed in terms of the foreign currency. An exchange rate that does not have the domestic currency as one of the two currency components is known as a cross currency, or cross rate. The Exchange Rate is determined by Supply and Demand 1. Imports/exports 2. Inflation rate 3. Investors and speculators 4. Government actions Kinds Exchange rates 1. Floating exchange rates – in which currency rates are determined by market force – are the norm for most major nations, 2. Peg Exchange Rate - some nations prefer to fix or peg their domestic currencies to a widely accepted currency like the US dollar. 3. Spot rate – which is the current rate – or a forward rate, which is the spot rate adjusted for interest rate differentials. 4. Soft Currencies - Currencies of smaller, less developed countries. Rates can be determined by the governments of these countries. Governments must eventually respect supply and demand; currencies often face significant devaluations. Zimbabwean dollar is a classic example of soft currency. Currency Fluctuations: Impact on Export Markets When the currency of a foreign market devalues against an exporter’s home currency, marketers must consider 2 options: Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 27 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 1. Raise prices in the export market in order to preserve margins - Can your brand command a higher price? 2. Keep prices steady in hopes of sustaining or increasing market share - Cost containment might help to maintain margins somewhat 2.6 Agencies Promoting Economic and Monetary Stability 1. WTO – World Trade 2. GATT – General Agreement on Tariffs and Trade 3. IMF - International Monetary Fund 4. WB – World Bank 5. Group of 7 6. European Monetary System International Monetary Fund (IMF)- is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. It is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalizing economic policies. Organization and purpose The International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 when 29 countries signed the agreement, with a goal to stabilize exchange rates and assist the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances (Condon, 2007). The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries. The IMF describes itself as "an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". IMF Activities Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 28 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 1. Surveillance – This refers to the monitoring of economic and financial development and policies in member countries at the global level. 2. Technical Assistance – The IMF provides the governments and central banks its member countries with technical assistance and training in the area of expertise. 3. Lending – The IMF lends to member countries with balance of payment problems. This pursues the two-pronged goal of providing temporary financing and supporting financial system. IMF Accomplishments 1. Increasing volume of trade and investment 2. Adapting to changes in international commerce 3. Allowing more international cooperation (https://www.imf.org/external/index.htm) Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 29 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Entry Modes to International Marketing There are different modes by which a company can inter foreign markets. Franchising - is the practice of using another firm's successful business model. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.Ex. Mc Donalds Enter the Philippines because of franchising. Licensing - may be granted by a party ("licensor") to another party ("licensee") as an element of an agreement between those parties. A shorthand definition of a license is "an authorization (by the licensor) to use the licensed material (by the licensee)." Manufacturing - takes turns under all types of economic systems. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by the state to supply a centrally planned economy. In free market economies, manufacturing occurs under some degree of government regulation. Forms of Manufacturing Assembly plant Contract manufacturing Joint Venture Wholly-owned Plant Exporting - refers to selling goods and services produced in home country to other markets. World Bank is an international financial institution that provides loans to developing countries for capital programs. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank is a component of the World Bank Group, and a member of the United Nations Development Group. The World Bank's official goal is the reduction of poverty. According to its Articles of Agreement, all its decisions must be guided by a commitment to the promotion of foreign investment and international trade and to the facilitation of capital investment. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 30 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 THE WORLD BANK 1818 H Street, NW Washington, DC 20433 USA Goals of World Bank 1. Eradicate Extreme Poverty and Hunger: From 1990 through 2004, the proportion of people living in extreme poverty fell from almost a third to less than a fifth. Although results vary widely within regions and countries, the trend indicates that the world as a whole can meet the goal of halving the percentage of people living in poverty. Africa's poverty, however, is expected to rise, and most of the 36 countries where 90% of the world's undernourished children live are in Africa. Less than a quarter of countries are on track for achieving the goal of halving under-nutrition. 2. Achieve Universal Primary Education: The percentage of children in school in developing countries increased from 80% in 1991 to 88% in 2005. Still, about 72 million children of primary school age, 57% of them girls, were not being educated as of 2005. 3. Promote Gender Equality: The tide is turning slowly for women in the labor market, yet far more women than men- worldwide more than 60% – are contributing but unpaid family workers. The World Bank Group Gender Action Plan was created to advance women's economic empowerment and promote shared growth. 4. Reduce Child Mortality: There is some improvement in survival rates globally; accelerated improvements are needed most urgently in South Asia and Sub-Saharan Africa. An estimated 10 million-plus children under five died in 2005; most of their deaths were from preventable causes. 5. Improve Maternal Health: Almost all of the half million women who die during pregnancy or childbirth every year live in Sub-Saharan Africa and Asia. There are numerous causes of maternal death that require a variety of health care interventions to be made widely accessible. 6. Combat HIV/AIDS, Malaria, and Other Diseases: Annual numbers of new HIV infections and AIDS deaths have fallen, but the number of people living with HIV continues to grow. In the eight worst-hit southern African countries, prevalence is Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 31 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 above 15 percent. Treatment has increased globally, but still meets only 30 percent of needs (with wide variations across countries). AIDS remains the leading cause of death in Sub-Saharan Africa (1.6 million deaths in 2007). There are 300 to 500 million cases of malaria each year, leading to more than 1 million deaths. Nearly all the cases and more than 95 percent of the deaths occur in Sub-Saharan Africa. 7. Ensure Environmental Sustainability: Deforestation remains a critical problem, particularly in regions of biological diversity, which continues to decline. Greenhouse gas emissions are increasing faster than energy technology advancement. 8. Develop a Global Partnership for Development: Donor countries have renewed their commitment. Donors have to fulfill their pledges to match the current rate of core program development. Emphasis is being placed on the Bank Group's collaboration with multilateral and local partners to quicken progress toward the MDGs' realization. (https://www.worldbank.org/) Different Types of Regional Economic Integration Free Trade Area - Two or more countries agree to eliminate trade barriers and tariffs between their countries. Countries continue to have individual agreements with other countries. The North American Free Trade Agreement is between Mexico, Canada, and the U.S. Customs Union - A trade agreement between 2 or more countries. Elimination of the internal barriers and tariffs. Establishment of common external barriers and tariffs to other countries. Mercosur, referred to as the Southern Common Market, includes the countries of Argentina, Brazil, Paraguay and Uruguay Common Market - Elimination of the internal barriers and tariffs between 2 or more countries. Establishment of common external barriers to trade. Free movement of the factors of production, including labor, capital and information The European Union is a common market. 2.7 Protectionism The reality of world trade is that countries protect its markets from foreign companies by setting up tariffs, quotas, and nontariff barriers. Barriers to trade can take any of the following forms: – Legal (tariffs and quotas) – Exchange – Psychological (nontariffs) – Private market Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 32 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Arguments for protectionism: – Protection of infant industry – Protection of the home market – Need to keep money at home – Encouragement of capital accumulation – Maintenance of the standard of living and real wages – Conservation of natural resources – Industrialization of a low-wage nation – Maintenance of employment and reduction of unemployment – National defense – Increase of business size – Retaliation and bargaining Trade Barriers Tariffs Quotas and Import Licenses Voluntary Export Restraints (VER) Boycotts and embargoes Monetary barriers – Blocked currency – Government approval – Differential Exchange rates Standards Antidumping penalties Domestic subsidies and economic stimuli Sources: Kate Gillespie and H. David Hennessey. Global Marketing, 3rd (2013) ed.Singapore, Cengage Learning (https://www.wto.org/) (https://www.imf.org/external/index.htm) (https://www.worldbank.org/) MODULE 2, ACTIVITY 1: GROUP PRESENTATION Instructions: 1. The class will be divided into teams 2. Each team will be assign topic for simple research task Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 33 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 3. Each team will then do a video presentation based on the given requirements for a certain topic Note: The teams/pairs must use the official template that will be sent in doing this output. RUBRIC FOR ACTIVITY 1: Group Video Presentation Trait Criteria Points Points 1 2 3 4 Content Presentation Presentation Presentation Presentation contained little had moments had a good had an Did the to no valuable where valuable amount of exceptional presentation material material was material and amount of have valuable present but as benefited the valuable material? a whole class. material and content was was extremely lacking. beneficial to the class. Collaboration The The The teammates The teammates Did everyone teammates teammates worked from always worked contribute to never worked sometimes others’ ideas from others’ the from others’ worked from most of the time. ideas. It was presentation? ideas. It seems others’ ideas. And it seems evident that all Did everyone as though only However it like every did of the group seem well a few people seems as some work, but members versed in the worked on the though certain some people are contributed material? presentation. people did not carrying the equally to the do as much presentation. presentation. work as others. Organization The There were The The Was the presentation minimal signs presentation presentation presentation lacked of organization had organizing was well well organized organization or preparation. ideas but could organized, well and easy to and had little have been much prepared and follow? evidence of stronger with easy to follow preparation. better preparation. Presentation Presenters Presenters Presenters were Presenters were Did the were were not occasionally all very presenters unconfident consistent confident with confident in Speak clearly? and with the level their delivery and Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 34 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Did the engage demonstrated of confidence/ presentation they did an the audience? little evidence preparedness however the excellent job of Was it obvious of planning they showed presentation engaging the the material prior to the classroom was not as class. had been presentation. but had some engaging as it Preparation is rehearsed? strong could have been very evident. moments. for the class. MODULE 3 PACKET BA 412: INTERNATIONAL BUSINESS AND TRADE MODULE 3 OVERVIEW: Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 35 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Welcome to Module 3 – CULTURE, MANAGEMENT STYLE AND BUSINESS SYSTEMS! Many of the additional complexities and problems faced by international marketers stem from differences in the cultural and social environment which the marketer faces when marketing internationally. Influences of cultural differences when marketing across national boundaries take on a heightened importance. We know how people consume, their needs and wants, and the ways in which these wants are satisfied are determined by culture. Culture is the human-made part of environment that includes knowledge, beliefs, morals, laws, customs and other elements acquired by humans in society. Because cultures are so different between countries, cultural forces and factors take on a particular significance for the international marketer. In this Module, we will highlight some of the possible areas or aspects of culture where there may be important differences when marketing in foreign markets. You are set for an incredible journey! Have fun in the world of marketing! CONSULTATION HOURS: Phone or Messenger: 3 – 5:00 PM Wednesdays Virtual time: 11:00 – 12:00 Monday, Tuesday, Thursday & Friday MODULE 3 LEARNING OBJECTIVES: By the end of this module, the students will be able to: 1. The necessity for adapting to cultural differences 2. How and why management styles vary around the world 3. The extent and implications of gender bias in other countries 4. The importance of cultural differences in business ethics 5. The differences between relationship oriented and information oriented cultures COURSE CONTENT FOR MODULE 3: CULTURE, MANAGEMENT STYLE AND BUSINESS SYSTEMS ACTIVITY DESCRIPTION TIME TO COMPLETE Lecture The necessity for adapting to cultural 20 minutes discussion differences Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 36 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Lecture How and why management styles vary 10 minutes discussion around the world Film Showing Film Title: GungHo (Cultural Differences) 2 hours Lecture The extent and implications of gender 10 minutes discussion bias in other countries Lecture The importance of cultural differences in 10 minutes discussion business ethics Lecture The differences between relationship 10 minutes discussion oriented and information oriented cultures Activity Case Study 2 hours Quiz Summative quiz 30 minutes LECTURE DISCUSSIONS 3.1 Culture - refer first to the betterment or refinement of the individual, especially through education, and then to the fulfillment of national aspirations or ideals. (Early 19th century) - To refer to a universal human capacity. ( Mid 19th century) - In the 20th century, "culture" emerged as a central concept in anthropology, encompassing the range of human phenomena that cannot be attributed to genetic inheritance. Specifically, the term "culture" in American anthropology had two meanings: o (1) the evolved human capacity to classify and represent experiences with symbols, and to act imaginatively and creatively; and o (2) the distinct ways that people living in different parts of the world classified and represented their experiences, and acted creatively. Adaptation - is a key concept in international marketing and willingness to adapt is a crucial attitude. It as an accommodation required on small matters as well as large ones. 10 Basic Criteria as guide to Adaptation 1. open tolerance 2. flexibility 3. humility 4. justice/fairness Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 37 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 5. ability to adjust to varying tempos 6. curiosity/interest 7. knowledge of the country 8. liking for others 9. ability to command respect 10. ability to integrate oneself into the environment Business Customs 1. Cultural imperatives -are the business customs and expectations that must be met, conformed, recognized and accommodated if relationships are to be successful. Sample words known by successful business people Chinese – Guanxi Japanese – NingenKankei Latin American - Comapdere 2. Cultural electives - relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required. Sample Customs: Greet another man with a Kiss (some countries) Eat food that are disagree with the digestive system Drink alcoholic beverages (cheers for good health….) Japanese Symbolic bow Czech Republic aperitif (drinking liqueur at the beginning of the meeting Arab business associates will offer coffee as part of important ritual of establishing a level of friendship 3. Cultural exclusives - are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred and must not participate. The Impact of American Culture Ways in which U.S. culture has influenced management style include, but are not limited to, the following: 1. “Master of destiny” viewpoint – people can substantially influence future 2. Independent enterprise as the instrument of social action – as an entity that has rules and continuity of existence 3. Personnel selection and reward based on merit 4. Decisions based on objective analysis – that the management strived to be scientific towards objectivity in decision making and accuracy of data. 5. Wide sharing in decision making 6. Never-ending quest for improvement – the ability to innovate to provide quality life for people in the future Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 38 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 7. Competition yielding efficiency– improvement and regeneration 3.2 Management Styles Around the World Because of the diverse structures, management values and behavior encountered in international business, there is considerable variation in the business is conducted. Cross-cultural differences influence management styles in the following areas: 1. Authority and Decision Making – Business size, ownership, public accountability and cultural values that determine the prominence of status and position (PDI – Power Distance Index) combine to influence the authority structure of business. 2. Management Objectives and Aspirations – The training and background of managers significantly affect their personal and business outlooks. Society as a whole establishes the social rank, status of management and cultural background dictates patterns of aspirations and objectives among businesspeople. Example includes: Security & mobility, personal life & affiliation and social acceptance and power and achievement. 3. Communication Styles – The ability to communicate, understand and translate in the different language face-to-face or using technology. 4. Formality and Tempo - The breezy informality and haste that seen to characterize American business relationships appear to be American exclusives that business people form other countries not only fail to share but also fail to appreciate. A German executive commented that he was taken aback when employees of his Indiana client called him by his first name. He noted in Germany you don’t do that until you know someone for 10 years – and never if you are at a lower rank. This apparent informality however does not indicate a lack of commitment to the job. Comparing British and American business managers, an English executive commented about the American manager’s compelling involvement in business. At a cocktail party or a dinner, the American is still on duty. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 39 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 https://www.statista.com/chart/12868/the-worlds-most-spoken-languages/ 5. P-Time versus M-Time - TheMonochronic orientation (or "M-Time") views time as sequential and linear. Time is seen as being a limited resource which is constantly being used up, and thus scheduling tends to be "tighter," more rigid, with great importance placed on promptness. From the Monochronic perspective, late arrival for a meeting is viewed as rudeness, and events and activities are scheduled sequentially, one after another, to avoid overlapping. This perspective is oriented to the future. The Polychronic orientation (or "P-Time") views time in a more "circular" fashion, as the turning of the seasons, and time is seen as renewing itself each year. Scheduling tends to be "loose" and flexible, with many last-minute changes to even highly significant events and activities. Often many activities are juggled simultaneously, and promptness is not considered important. This perspective is oriented to the past and/or present. Monochronic people are more likely to be task-oriented than relationship-oriented, and may be viewed bypolychronic observers as "valuing things over people." In contrast, polychronic people are more relationship-oriented than task-oriented and thus may be viewed by monochronic observers as not taking their work and goals seriously. Monochronic people are likely to feel insulted when a polychronic acquaintance or colleague is late for a meeting; Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 40 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 polychronic people are likely to be offended when a monochronic acquaintance or colleague seems too focused on their work to swap stories about their families or what is going on in the world around them. " 6. Negotiations Emphasis - A core leadership and management skill is the ability to negotiate effectively in a wide range of business contexts, including deal-making, employment discussions, corporate team building, labor/management talks, contracts, and handling disputes.But it is important to remember that negotiation process is complicated and the risk of understanding increases when negotiating with someone from another culture. 3.3 Gender Bias in International Business The gender bias against women managers exists in some countries, coupled with myths harbored by male managers, creates hesitancy among US multinational companies to offer women international assignments. Women are not accepted in upper level management roles in Asian, Middle Eastern, and Latin American – women are not typically found in upper levels of management and men and women are treated very differently. Gender bias poses significant challenges in cross-cultural negotiations. Hofstede Measures of Culture Power distance - The extent to which less powerful members within a society accept that power is unevenly distributed o High power distance societies o Children expected to be obedient to parents o Subordinates are less likely to contradict bosses Individualism-collectivism - The world is viewed as in-groups and out-groups o Individuals are identified by group allegiance and role o Groups are established, strong, and cohesive – You don’t just choose which group to join! o Non-group members may eventually become “trusted” outsiders o Individualistic cultures are more open to outsiders and foreign ideas Masculinity-feminity o Masculinity is associated with assertiveness o Masculine societies value ambition, competitiveness, and high earnings o Femininity is associated with modesty and nurturing Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 41 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 o Feminine societies are concerned with public welfare and caring for the underdog Uncertainty avoidance - The state of being uneasy or worried about what may happen in the future. o Anxious in general o Uncertainty avoidant societies o Don’t like ambiguity o Consider the different to be threatening o Tend to be better implementers than innovators Hofstede Scores Business ethics - is complex in the international marketplace because value judgments differ widely among culturally diverse groups. It is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Generally Condemn Practices (Unethical) 1. Corruption - varyingly defined from culture to culture. In philosophical, theological, or moral discussions, corruption is spiritual or moral impurity or deviation from an ideal. Corruption may include many activities including bribery, fraud and embezzlement. Government, or 'political', corruption occurs when an office-holder or other governmental employee acts in an official capacity for his or her own personal gain. Methods of Corruption a) Bribery - is the improper use of gifts and favours in exchange for personal gain. This is also known as kickbacks or, in the Middle East, baksheesh. It is the most common form of corruption. The types of favours given are diverse and include money, gifts, sexual favours, company shares, entertainment, employment and Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 42 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 political benefits. The personal gain that is given can be anything from actively giving preferential treatment to having an indiscretion or crime overlooked. b) Embezzlement and theft- involve someone with access to funds or assets illegally taking control of them. c) Fraud - involves using deception to convince the owner of funds or assets to give them up to an unauthorized party. Examples include the misdirection of company funds into "shadow companies" (and then into the pockets of corrupt employees), the skimming of foreign aid money, scams and other corrupt activity. d) Extortion and blackmail -centers around the use of threats. e) Abuse of discretion -refers to the misuse of one's powers and decision-making facilities. Examples include a judge improperly dismissing a criminal case or a customs official using their discretion to allow a banned substance through a port. f) Favouritism, nepotism and clientelism - involve the favouring of not the perpetrator of corruption but someone related to them, such as a friend, family member or member of an association. Examples would include hiring a family member to a role they are not qualified for or promoting a staff member who belongs to the same political party as you, regardless of merit.Some states do not forbid these forms of corruption. g) Improper political contributions - This is the use of contributions to political parties to secure illicit power, not because one favours their policies. An example would be tobacco or alcohol companies funding major political parties as a means of influencing the policing of their industry. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived level of public sector corruption on a scale of 0 - 100, where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean. A country's rank indicates its position relative to the other countries and territories included in the index. This year's index includes 180 countries and territories. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 43 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 https://vajiramias.com/current-affairs/corruption-perceptions-index-cpi-2019/5 e2a74d21d5def517fec7a83/ 3.4 Ethical and Socially Responsible Decisions Areas of decision making where ethical issues arise: 1. employment practices and policies, 2. consumer protection, 3. environmental protection, 4. political payments and involvement in political affairs of the country, and 5. basic human rights and fundamental freedoms Three Ethical Principles Utilitarian Ethics Does the action optimize the "common good" or benefits of all constituencies? Rights of the Parties Does the action respect the rights of the individuals involved? Justice or Fairness Does the action respect the canons of justice or fairness to all parties involved? Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 44 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 MODULE 3, ACTIVITY: ACTIVITY OUTPUT 1. Simple Case Scenario You have been asked to attend a meeting with Belgian, Turkish, and Japanese colleagues to develop a global plan for a new Deodorant. a. Using the Hofstede scores for these countries, discuss the challenges you would face in the meeting. Assume your native culture. (Note: Different countries may be substituted.) b. Give at least 2 Strategies using 4P’s that you think will be applicable for these countries based on the cultural differences you have seen in the movie. For purposes of discussion, I will assume a U.S. culture: United States Belgium Turkey Japan Power Distance 40 65 66 54 Individualism 91 75 37 46 Masculinity 62 54 45 95 Uncertainty Avoidance 46 94 85 92 2. Based on the Movie Gung-ho, Identify cultural differences based on the 6 Management Styles Around the World RUBRIC FOR ACTIVITY GRADING RUBRIC FOR WRITTEN ASSIGNMENTS LEVELS OF ASSESSMENT BELOW STANDARD – 2 MEETS STANDARD – 3 EXCEEDS STANDARD – 4 EXEMPLARY – 5 PTS. SC PTS. PTS. PTS. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 45 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 ORGANIZATION Writing lacks logical Writing is coherent and Writing is coherent and Writing shows high organization. It shows logically organized. Some logically organized with degree of attention to some coherence but ideas points remain misplaced transitions used between logic and reasoning of lack unity. Serious errors. and stray from the topic. ideas and paragraphs to points. Unity clearly Transitions evident but create coherence. Overall leads the reader to the not used throughout unity of ideas is present. conclusion and stirs essay. thought regarding the topic. LEVEL OF Shows some thinking and Content indicates Content indicates original Content indicates CONTENT reasoning but most ideas thinking and reasoning thinking and develops ideas synthesis of ideas, are underdeveloped and applied with original with sufficient and firm in-depth analysis and unoriginal. thought on a few ideas. evidence. evidences original thought and support for the topic. DEVELOPMENT Main points lack detailed Main points are present Main points well developed Main points well development. Ideas are with limited detail and with quality supporting developed with high vague with little evidence development. Some details and quantity. quality and quantity of critical thinking. critical thinking is Critical thinking is weaved support. Reveals high present. into points degree of critical thinking. GRAMMAR AND Spelling, punctuation, and Most spelling, Essay has few spelling, Essay is free of MECHANICS grammatical errors create punctuation, and punctuation, and distracting spelling, distraction, making grammar correct grammatical errors punctuation, and reading difficult; allowing reader to allowing reader to follow grammatical errors; fragments, comma splices, progress though essay. ideas clearly. Very few absent of fragments, run-ons evident. Errors Some errors remain. fragments or run-ons. comma splices, and are frequent. run-ons. FORMAT Fails to follow format and Meets format and Meets format and Meets all formal and assignment requirements; assignment assignment requirements; assignment incorrect margins, spacing requirements; generally margins, spacing, and requirements and and indentation; neatness correct margins, spacing, indentations are correct; evidences attention to of essay needs attention. and indentations; essay is essay is neat and correctly detail; essay is neat and neat but may have some assembled. correctly assembled TO assembly errors. with professional look. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 46 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 MODULE 4 PACKET BA 412: INTERNATIONAL BUSINESS AND TRADE MODULE 4 OVERVIEW: Welcome to Module 4 – POLITICAL AND REGULATORY CLIMATE In this module, the legal/political aspect is very important in global marketing. "International law" can be defined as rules and principles that states and nations consider binding upon themselves. This raises two interesting characteristics of international law. The first is that "law" belongs to individual nations and international law only exists to the degree that individual nations are willing to relinquish their rights. The second is the lack of an adequate international judicial and administrative framework or a body of law which would form the basis of a truly comprehensive international legal system. The international business is also subject to political decrees made by governments both in "home" and "host" countries. Home governments can apply pressure not to deal with disapproved parties. These measures may take the refusal to grant an export licence, or withdrawal of export guarantee cover. The host government may take measures like taxation, ownership controls, operating restrictions or expropriation. You are set for an incredible journey! Have fun in the world of marketing! CONSULTATION HOURS: Phone or Messenger: 3 – 5:00 PM Wednesdays Virtual time: 11:00 – 12:00 Monday, Tuesday, Thursday & Friday MODULE 4 LEARNING OBJECTIVES: By the end of this module, the students will be able to: 1. List and explain the political motivations behind government actions that promote or restrict international marketing. Identify pressure groups that affect international marketing. 2. Discuss specific government actions salient to international marketing, such as boycotts and takeovers. 3. List and compare the four basic legal traditions that marketers encounter worldwide. 4. Cite examples illustrating how national laws can vary and change. 5. Differentiate between the steps involved in managing political risk and those involved in planning for regulatory change. COURSE CONTENT FOR MODULE 4: POLITICAL AND REGULATORY CLIMATE Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 47 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 ACTIVITY DESCRIPTION TIME TO COMPLETE Lecture Host country political climate 30 minutes discussion Lecture Home country political forces 30 minutes discussion Activity Group Research Task Instruction 15 minutes Group Legal Environments 1 hour Presentation Group National Regulatory Environments 30 minutes Presentation Political Risk, Peace Corps, Repatriation, Movie 2 hour Presentation Global Marketing and Terrorism Quiz Summative quiz for module 4 30 minutes Reaction Paper (With Guide Questions in Deadline: September Task Relation to the Movie Presentation) 7, 2020 LECTURE DISCUSSIONS POLITICAL AND REGULATORY CLIMATE 4.1 Host country political climate A host country is any country that contains an operational unit (marketing, sales, manufacturing, R&D) of an international company. So let us look at a more technical definition of an MNC. A multinational corporation is a company incorporated in its home country (country of origin) but it carries out business operations beyond that country in many other foreign countries, we call the host countries. Its head office will be in the home country. (https://www.toppr.com/guides/business-environment/scales-of-business/multinational-corporat ions-mnc/) Political Motivations of Host Countries Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 48 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 Self-preservation Security Prosperity Prestige Ideology Cultural identity Host Country Pressure Groups Labor unions Political parties Environmental groups Local business community 4.2 Home country political forces Host Country Actions Government subsidies Ownership restrictions Operating conditions – Work permits – Local content requirements Operating Conditions Operating conditions can also be affected by what governments fail to do – Kidnappings! Boycott - an act of voluntary and intentional abstention from using, buying, or dealing with a person, organization, or country as an expression of protest, usually for moral, social, political, or environmental reasons. Government boycotts (Arab Boycott of Israel Products) Ad-hoc consumer boycotts (The new Arab Boycott of USA Products) Takeovers - Host-government actions that result in a firm’s loss of ownership or direct control An expropriation is a formal seizure of an operation A confiscation is an expropriation without compensation Example of Expropriation In January 2010, Hugo Chavez expropriated 6 hypermarkets and 35 supermarkets owned by French Casino, because they raised prices after the Venezuelan currency devaluated. Later Chavez said he would consider a partnership with Casino. Module Packets for BA (International Business and Trade) Sta Rosa City, Philippines Page 49 of 86 Lectures -Dr.Paraluman L. Veloz 1st sem 2024-25 The Venezuelan government forced Banco Santander to sell their its stake in Banco de Venezuela for $1.05 billion in mid 2009. 4.3 Legal Environments (International Legal Traditions) The

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