9/10/20151 INTERNATIONAL TRADE & COMPETITIVENESS.

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INTERNATIONAL TRADE INTERNATIONAL TRADE &&

COMPETITIVENESSCOMPETITIVENESS

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CompetitionCompetition

Try to win Success or Failure Success means Powerful, Efficient Powerful is a comparative word Depends on Time, Occasion, Product, Place Continuous Process

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International TradeInternational Trade

Globalization of Markets– Removing Trade Barriers

General Agreements on Tariffs and Trade – Established in 1947

– Membership grow from 19 to 120 Nations

– Tariff Reduction was spread in eight round

World Trade Organization – Establish in 1995 under the Uruguay Round

– Membership grow to 148 members by 2005

– General Agreement on Trade in Services

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International TradeInternational Trade

Globalization of Markets– Convergence of Consumers taste & Preferences

Creating basic global market– Example Coca-Cola Soft drinks, Visa Cards, Sony Play

Station Video Games, McDonald’s hamburgers

– Removing Geographical Barriers Communication Systems Internet Development of Ports & Sea Routes

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International TradeInternational Trade

Globalization of Production– Advantage in Labour Cost– Advantage in Capital Cost– Advantage in Materials Cost– Innovation– Technology & Research and Development– Human Resources– Government Policies & Incentives

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International TradeInternational Trade

Globalization of Production (Examples)– IBM Think Pad X31laptop computer

Products Design in USA Case, keyboard and hard disk made in Thailand Display screen and memory in South Korea Built-in wireless card in Malaysia Micro processor and sales in USA Assembly in Mexico

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International TradeInternational Trade

Benefits to Nation– Rapid Economic Development – Employment opportunities– Increase in National Wealth

Benefits to Firms– Cost Reduction– Economic Scale of Production– Improve Enterprise Value

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National DifferencesNational Differences

Political Systems– Democracy– Communism – Socialism

Economic Systems– Market Economy– Command Economy– Mixed Economy

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National DifferencesNational Differences

Legal Systems– Property Rights– The Protection of Intellectual Property– Product Safely and Product Liability

Economic Development– Developed Economy– Under Developed Economy– Developing Economy

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National DifferencesNational Differences

Culture Difference– Social Structure– Language– Religion– Education– Political Philosophy– Economic Philosophy

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Ethics in International TradeEthics in International Trade

Employments PracticesHuman RightsCorruptionsEnvironmental pollutions

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International Trade TheoryInternational Trade Theory

MercantilismThe Theory of Absolute AdvantageThe Theory of Comparative AdvantageThe Heckscher-Ohlin theory of factor

endowmentsThe Product Life Cycle TheoryNew Trade theory

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International Trade TheoryInternational Trade Theory

Porter’s Theory of National Competitive Advantage – Factor endowments– Domestic Demand Conditions– Relating & Supporting Industries– Firm Strategy, Structure, and Rivalry

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International Trade TheoryInternational Trade Theory

Implication for Manager– Location– First Mover Advantage– Government Policy

Case Study– IBM– LOGITECH– ArcelorMittal Steel

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Regional Economic IntegrationRegional Economic Integration

Political UnionEconomic UnionCommon MarketsCustom Union

Case Study European Union SAARC

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The Foreign Exchange MarketThe Foreign Exchange Market

Function of Foreign Exchange MarketCurrency ConversionForeign Exchange RiskExchange Rate Determination

– Interest Rate and Inflation– Foreign Exchange Reserve– Investor Psychology

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International Monetary SystemInternational Monetary System

Gold StandardFixed Exchange Rate SystemPegged Exchange Rate SystemFloating Exchange Rate SystemConvertibility

– Partial– Full

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Strategy of International TradeStrategy of International Trade

International Strategy

Localization Strategy

Transnational Strategy

Global Standardization Strategy

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Strategy of International TradeStrategy of International Trade

Strategy Requirement– Value Creation– Cost Reduction Pressure– Local Responsiveness– Economic Scale of Production– Leveraging Product & Competencies– Creating a Value Chain

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Strategy of International TradeStrategy of International Trade

Entry Strategy– Which Foreign Markets– Timing of Entry– Scale of Entry

Modes of Entry– Exporting– Turnkey Projects, & Greenfield Venture – Licensing, Franchising, & Joint Ventures

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Strategy of International TradeStrategy of International Trade

Modes of Entry– Acquisition & Mergers– Strategic Alliances

Core Competencies & Entry Mode– Technical Know-how– Management Know-how– Human Resources Advantage

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Other IssuesOther Issues

Global Research & DevelopmentHuman Resources ManagementInternational Financial ManagementInternational Accounting StandardsInternational Logistics

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