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• Module overview
• 1. Introduction to international business
  • 1.1 Part A: Globalisation
  • 1.2 Globalisation and related concepts
    • 1.2.1 Globalisation of markets
    • 1.2.2 Globalisation of production
    • 1.2.3 Drivers of globalisation
    • 1.2.4 Globalisation of business structures
    • 1.2.5 The pros and cons of globalisation
    • 1.2.6 Managing a global enterprise
  • 1.3 Summary: Part A
  • 1.4 Part B: National differences in political economy
    • 1.4.1 Political systems
    • 1.4.2 Economic systems
    • 1.4.3 Legal systems
    • 1.4.4 Determinants of economic development
    • 1.4.5 Global change
  • 1.5 Summary: Part B

• 2. Understanding culture

  • 2.1 Culture defined
  • 2.2 The importance of history in understanding culture
  • 2.3 Cultural dimensions of business
    • 2.3.1 social structure
    • 2.3.2 language
    • 2.3.3 time
    • 2.3.4 religion, ethics and superstition
    • 2.3.5 wealth and material possessions
    • 2.3.6 decision making
    • 2.3.7 bribery
  • 2.4 Interpersonal relations
  • 2.5 Selection and training of expatriate managers
  • 2.6 Barriers to performance in the new culture
  • 2.7 A framework for cultural analysis
    • 2.7.1 Hofstede's value survey model (VSM)
  • 2.8 Summary

• 3. Economic and political aspects of international trade theory

  • 3.1 Part A: International trade theories
  • 3.2 An introduction to trade theories
  • 3.3 Early theories
    • 3.3.1 Theory of absolute advantage
    • 3.3.2 Theory of comparative advantage
    • 3.3.3 Weaknesses of early theories
    • 3.3.4 More recent theories
    • 3.3.5 Criticism of the Heckscher-Ohlin theory and the Leontief paradox
  • 3.4 Modern theories
    • 3.4.1 New trade theory
    • 3.4.2 Theory of competitive advantage: The Porter diamond
  • 3.5 Summary: Part A
  • 3.6 Part B: Political aspects of world trade
  • 3.7 The development of world trading patterns
  • 3.8 Protectionism
  • 3.9 Instruments of trade policy
  • 3.10 The case for government intervention (political)
  • 3.11 The case for government intervention (economic)
  • 3.12 Strategic trade policy
  • 3.13 Development of the world trading system
  • 3.14 Summary: Part B

• 4. Foreign direct investment in the global economy

  • 4.1 Part A: Theories of foreign direct investment
  • 4.2 Extent and significance of FDI
  • 4.3 Horizontal FDI
  • 4.4 Theories of horizontal FDI
    • 4.4.1 Market imperfection theory
    • 4.4.2 Impediments to exporting
    • 4.4.3 Impediments to the sale of know-how
    • 4.4.4 Knickerbocker's theory of oligopolistic competition
    • 4.4.5 Vernon 's product life-cycle theory
    • 4.4.6 Location-specific advantages
  • 4.5 Vertical FDI
    • 4.5.1 Market imperfection theory
    • 4.5.2 Investment in specialised assets
  • 4.6 Summary: Part A
  • 4.7 Part B: Political and economic aspects of FDI
  • 4.8 The politics of FDI
    • 4.8.1 The radical view
    • 4.8.2 The free market view
    • 4.8.3 Pragmatic nationalism
  • 4.9 Benefits of FDI to the host country
    • 4.9.1 Resource-transfer effects
    • 4.9.2 Capital
    • 4.9.3 Technology
    • 4.9.4 Management
    • 4.9.5 Employment effects
    • 4.9.6 Benefits to consumers
    • 4.9.7 Balance-of-payments (BOP) effects
  • 4.10 Costs of FDI to the host country
    • 4.10.1 Adverse effects on domestic firms
    • 4.10.2 Adverse effects on BOP
    • 4.10.3 Surrender of national sovereignty
  • 4.11 Benefits of FDI to the home country
  • 4.12 BOP benefits
  • 4.13 Employment benefits
    • 4.13.1 Reverse resource-transfer effect
    • 4.13.2 Costs of FDI to the home country
    • 4.13.3 BOP effects
    • 4.13.4 Employment effects
  • 4.14 Encouraging and discouraging FDI
  • 4.15 Multicultural agreement on investment (MAI)
  • 4.16 Summary: Part B

• 5. Regional economic integration

  • 5.1 Regional economic integration
    • 5.1.1 Levels of economic integration
  • 5.2 Political and economic effects of integration
    • 5.2.1 Assumption
    • 5.2.2 Explanation
  • 5.3 Regional economic integration in Europe
  • 5.4 Regional economic integration in the Americas
    • 5.4.1 North American Free Trade Agreement (NAFTA)
    • 5.4.2 Summit of all the Americas
    • 5.4.3 Andean Pact
    • 5.4.4 Association of Caribbean States (ACS)
    • 5.4.5 MERCOSUR
  • 5.5 Regional economic integration in Asia Pacific
    • 5.5.1 Australia-US FTA (AUSFTA)
    • 5.5.2 Closer Economic Relations (CER)
    • 5.5.3 Association of South-East Asian Nations (ASEAN)
    • 5.5.4 Asia-Pacific Economic Cooperation Group (APEC)
    • 5.5.5 India
    • 5.5.6 West Pacific Economic Zone (WPEZ)
  • 5.6 Regional economic integration in Africa
  • 5.7 Opportunities and threats posed by regional economic integration
    • 5.7.1 Europe
    • 5.7.2 North America
    • 5.7.3 Asia
  • 5.8 Summary
• 6. The international monetary system
  • 6.1 Part A: The foreign exchange market
  • 6.2 The nature and functions of the foreign exchange market
    • 6.2.1 Terms used in the foreign exchange market
    • 6.2.2 Theories of exchange rate determination
    • 6.2.3 Exchange rate forecasting
    • 6.2.4 Restrictions on currency convertibility
    • 6.2.5 Summary: Part A
  • 6.3 Part B: The international monetary system
    • 6.3.1 The gold standard
    • 6.3.2 The Bretton Woods agreement
    • 6.3.3 Exchange rate systems
    • 6.3.4 European monetary union (EMU)
    • 6.3.5 Recent changes in the international monetary system
    • 6.3.6 Summary: Part B
  • 6.4 Part C: The global capital market
  • 6.5 Structure and functions of the global capital market
    • 6.5.1 Euromarkets
    • 6.5.2 The global bond market
    • 6.5.3 The global equity market
    • 6.5.4 Risk and the cost of capital
    • 6.5.5 Summary: Part C
  • 6.6 Integrative summary: Parts A, B and C
• 7. International business strategy
  • 7.1 Strategy: definition and purpose
  • 7.2 Advantages of going international
  • 7.3 Strategic options
    • 7.3.1 Generic strategies
    • 7.3.2 International strategy
    • 7.3.3 Multidomestic strategy
    • 7.3.4 Global strategy
    • 7.3.5 Transnational strategy
  • 7.4 Summary
• 8. Organisational structure in international business
  • 8.1 Organisation design
    • 8.1.1 Centralisation and decentralisation
    • 8.1.2 The example of Bata Ltd
  • 8.2 Organisation design options
    • 8.2.1 Matrix structure
  • 8.3 International structure options
  • 8.4 Coordinating and integrating mechanisms
    • 8.4.1 Control systems
    • 8.4.2 Examples
  • 8.5 Summary
• 9. Exporting and other modes of entry
  • 9.1 Part A: Entry modes and strategic alliances
  • 9.2 International involvement options
    • 9.2.1 Six entry modes
  • 9.3 Strategic alliances
  • 9.4 Summary: Part A
  • 9.5 Part B: Exporting, importing and countertrade
  • 9.6 Identifying export opportunities
  • 9.7 Trade documentation
  • 9.8 Export assistance agencies
  • 9.9 Countertrade
    • 9.9.1 Barter
    • 9.9.2 Counter purchase or parallel barter
    • 9.9.3 Offset trading
    • 9.9.4 Switch trading
    • 9.9.5 Buyback or compensation trading
  • 9.10 Summary

• 10. International marketing and materials management

  • 10.1 Part A: Optimising the manufacturing location
  • 10.2 Industry requirements
    • 10.2.1 machinery manufacture
    • 10.2.2 electronic products
    • 10.2.3 shipbuilding
    • 10.2.4 textiles
    • 10.2.5 food processing
    • 10.2.6 country facto
  • 10.3 Technological factors
    • 10.3.1 value creation and/or added value
    • 10.3.2 fixed costs
    • 10.3.3 minimum efficient scale
    • 10.3.4 flexible manufacturing system (also called lean production)
  • 10.4 Product factors
  • 10.5 Concentration (centralisation) versus decentralisation
  • 10.6 Make-or-buy decisions
  • 10.7 Materials management
  • 10.8 Production and materials technology
  • 10.9 Summary: Part A
  • 10.10 Part B: International marketing and R&D
  • 10.11 The marketing mix
  • 10.12 The globalisation of markets
  • 10.13 Standardisation
  • 10.14 Market segmentation
    • 10.14.1 segmenting the world
    • 10.14.2 segmenting foreign markets
    • 10.14.3 international market segmentation
  • 10.15 Product attributes
    • 10.15.1 industrial products
    • 10.15.2 consumer products
  • 10.16 Distribution strategy
  • 10.17 Promotion strategy
    • 10.17.1 cultural barriers
    • 10.17.2 source effects
    • 10.17.3 noise levels
    • 10.17.4 push/pull strategies
    • 10.17.5 customer sophistication
    • 10.17.6 channel length
    • 10.17.7 media availability
    • 10.17.8 global advertising
  • 10.18 Pricing strategy
    • 10.18.1 regulatory influences on prices
  • 10.19 Research and development (R&D)
  • 10.20 Summary: Part B

• 11. International human resource management

  • 11.1 The strategic role of international HRM
  • 11.2 Managing international employees
    • 11.2.1 staffing
    • 11.2.2 expatriate managers
  • 11.3 Training and management development
  • 11.4 Performance appraisal
  • 11.5 Compensation
  • 11.6 International labour relations
    • 11.6.1 the concerns of unions
    • 11.6.2 the strategy of unions
    • 11.6.3 approaches to labour relations
  • 11.7 Summary
• 12. Accounting and financial management in international business
  • 12.1 Part A: Accounting in international business
  • 12.2 Country differences in accounting standards
  • 12.3 National and international standards
  • 12.4 Consolidation and currency translation
  • 12.5 Accounting aspects of control systems
  • 12.6 Changes in exchange rates
  • 12.7 Transfer pricing
  • 12.8 Summary: Part A
  • 12.9 Part B: Financial management in international business
  • 12.10 Financial management in MNEs
  • 12.11 Investment decisions
  • 12.12 Financing decisions
  • 12.13 Financial structure
  • 12.14 The objectives of global money management
  • 12.15 Moving money across borders
    • 12.15.1 unbundling
    • 12.15.2 dividend remittance
    • 12.15.3 royalty payments
    • 12.15.4 transfer prices
    • 12.15.5 fronting loan
  • 12.16 Techniques for global money management
    • 12.16.1 multilateral netting
  • 12.17 Managing foreign exchange risk
  • 12.18 Transaction exposure
  • 12.19 Developing policies for managing foreign exchange exposure
  • 12.20 Summary: Part B
  • 12.21 Integrative summary: Parts A and B

4.8.2 The free market view

The general tenor of Chapter 3 was that everybody wins through free trade (that is, the free market view). Impediments to trade such as tariffs and quotas invariably rebound to the detriment of consumers in the country they are supposed to protect. This view has its origins in the work of Adam Smith (absolute advantage) and David Ricardo (comparative advantage).

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