Marketing 509
Spring 2006
INTERNATIONAL BUSINESS
Instructor: Dr. Sanjeev Agarwal
Office: 3137 Gerdin Business Building
Phone: 294-9822
E-Mail:
Office Hours: Please call for appointment.
Course Prerequisite: Graduate Classification
Course Objectives: The course focuses on cultural, financial, economic, political, legal/regulatory environments shaping an organization’s international business strategy. Broadly speaking, topics pertain to entry (and repatriation) of people, firms, goods, services, and capital. Cultural environment covers aspects of interpersonal etiquette, interpersonal management, and consumption behaviors. Economic environment covers aspects of economic systems, trade and investment barriers, country-economic risk assessment, and economic integration. Financial environment covers aspects of foreign exchange and flow of capital. Political environment covers aspects of political systems, political risk assessment, and risk management. Legal environment covers issues such as bilateral and multilateral treaties, national treatment, and sovereign protection. Besides, it covers rules/regulations involved in conducting business operations. These may include issues such as labeling, product liability, retailing, distribution, pricing, advertising and promotion, taxation, importation, labor laws, contract termination, arbitration, adjudication, permits, etc. The course also focuses on a number of ethical issues facing a manager operating in international context.
Textbook:
1. International Business: Case Packet at University Book Store
2. International Business: Daniels, Radebaugh, and Sullivan
Suggested Readings:
1. The Wall Street Journal
Class Policies/Expectations:
1. Attendance at all classes is expected. Arrival on time is also expected. People arriving late will loose participation points for the day.
2. Readings corresponding to class dates should be read and prepared for classroom discussion in advance. Please read the Wall Street Journal, especially news/coverage of international stories and experiences of companies marketing internationally.
3. Full participation and contribution to group activities/projects is expected. Class discussion is encouraged. However, it should be conducted in a civil manner. Please refrain from intimidation, disruption, violence, and harassment.
4. If you are aware of class dates that you will be absent, please discuss those dates with me in advance. Likewise, if you are unable to attend a class for any reason, please notify me.
5. A student found guilty of academic dishonesty (e.g., cheating on tests, plagiarism, bribery, coercion, misrepresentation, etc.) will receive a failing grade for the applicable assignment/test. In addition, academic dishonesty may lead to suspension, conduct probation, or reprimand by the university.
6. At any time, if you have questions or concerns about the class material, cases, grades, etc. please talk to me.
7. Students are responsible for any changes in class schedule, assignments, etc., announced in class.
8. Students with disabilities needing particular accommodations for the class should make this known to me as soon as possible.
COURSE OUTLINE FOR SATURDAY CLASS AM: 8:30-12:00 PM: 1:00-4:30
DATE SUBJECT BOOK CHPATER QUIZ CASES/READINGS
Mar 18 AM Global Strategy Chapter 1 Case: Komatsu
Mar 18 PM Cultural Issues Chapter 2 Reading-Ohmae
Reading-Levitt
Mar 25 AM Political/Legal Chapter 3 & 12 Reading-Union Carbide
Mar 25 PM Foreign Entry Modes Quiz 1 Case: Metro
Apr 01 AM Economic Issues Chapter 4 & 5 Reading-Brazil
Apr 01 PM Economic Issues Chapter 6 & 7 Case: Hiqual
Apr 08 AM Foreign Exchange Chapter 9 & 10 Reading: Jap Autos
Apr 08 PM Quiz 2 Case: Dozier Industries
COURSE OUTLINE FOR FULL TIME & EVENING CLASSES FT: 8:30-12:00 EV: 5:45-9:15
DATE SUBJECT BOOK CHPATER QUIZ CASES/READINGS
Mar 20 Global Strategy Chapter 1 Case: Komatsu
Reading-Ohmae
Reading-Levitt
Mar 22 Cultural Issues Chapter 2
Mar 27 AM Political/Legal Chapter 3 & 12 Reading-Union Carbide
Mar 29 PM Foreign Entry Modes Quiz 1 Case: Metro
Apr 03 AM Economic Issues Chapter 4 & 5 Reading-Brazil
Apr 05 PM Economic Issues Chapter 6 & 7 Case: Hiqual
Apr 10 AM Foreign Exchange Chapter 9 & 10 Reading: Jap Autos
Apr 12 PM Quiz 2 Case: Dozier Industries
Class participation. Participation is expected not only in the form of class attendance, but also in the form of active participation in class discussions, thoughtful questions, and sharing of ideas. Note: It is not sufficient to just be in the class to earn participation points—you must participate! Assuming perfect class attendance, I will generally assign participation grades ranging from 60% to 100%, with higher participation grades going to those students who have made the more significant contributions to class discussions.
Peer evaluation. At the end of the semester, I will obtain peer evaluation from team members. This evaluation will be used to adjust the grades. However, if you have any concerns with the contribution of team members, please inform me.
Grading
2 Quizzes (Individual) 400
8 Cases (Group) 400
Class Participation (Individual) 200
Assignments:
Each team will submit a written analysis of the four cases. The case analysis should not be more than 2 pages long (appendices can be extra). The case questions are listed below to help you think through the cases.
Komatsu
1. How was Komatsu able to evolve from a $169m company with low-quality products to become a real challenger to Caterpillar by the early 1980s? How would you evaluate Mr. Kawai’s performance?
2. Why did performance deteriorate so rapidly in the mid 1980s? How would you evaluate Mr. Nogawa’s term as CEO?
3. How appropriately has Mr. Tanaka dealt with the problems he inherited? What is your evaluation of his brief tenure as CEO?
4. How effectively has Mr. Katada taken charge? How do you assess his new vision for the company? His new strategy? His new cultural and behavioral objectives? What grade would you give him for his performance?
5. As head of Cat’s construction equipment business, what is your assessment of your current situation? Are the objectives Mr. Katada has set for you reasonable? What are your priorities and how would you implement them? How do you respond to the issues and concerns related to the implementation of the globalization process?
Metro
Analyze the negotiations from each party’s perspective:
1. List what each party is offering and what it hopes to receive.
2. Identify the elements in each list that are “musts” and those where flexibility can be shown, and state why.
3. Describe negotiating tactics or ploys each party used or could have used.
4. Compute net cash flows for each party under several scenarios. For example:
a. Licensee fails to get a single order.
b. Licensee gets one-third market share in Peru for three years, no orders thereafter, and no orders in any other nation.
c. Licensee gets one-third share in Peru for ten years and half as much in other nations, and so forth.
5. Compute the share of net present value of profits that each of the two parties will capture under various market scenarios.
6. Why did the licensee accept the offer (with small changes) without “batting an eyelid”? (Hint: Calculate breakeven sales for both parties.)
7. Should the licensor have threatened to pull out when the government limited the agreement’s life to five years? (Hint: Recalculate Q5 under a 5-year limit.)
8. Do you think the licensee knew about the government’s action?
HiQual Garment Company
1. How does the evolution of the Singapore economy affect HiQual?
2. Is HiQual profitable? What are its real profits?
3. What are the implications if HiQual does not bid for the quota?
4. If HiQual should bid for the quotas, how much should it bid and for how many quota lots of 10,000?
5. Recommend a long-term strategy for HiQual.
Dozier Industries
1. Should Dozier hedge its FX risk?
2. How much money will it receive in USD if it hedged the risk?
3. What is the cost of hedging the risk?
READINGS: (THINK ABOUT FOLLOWING QUESTIONS WHILE READING)
Brazil Embraces Globalization
1. Did import substitution strategy work for Brazil?
2. Can Brazil escape from its problems by strengthening the regional integration initiative called MERCOSUR?
3. Is regional integration good for developing countries?
4. Is globalization good for developing countries?
Union Carbide Bhopal Plant
1. Is Union Carbide responsible for what happened at Bhopal? Is Chairman Warren Anderson personally responsible?
2. Was the judgment handed down by the U.S. Court of Appeals appropriate? Why? Should U.S. or Indian courts have had jurisdiction over this case?
3. What lessons might other companies learn from the disaster at Bhopal?
4. What legal precedence does this case set?
5. Was justice done to the victims?
Japanese Automakers Face Endaka
1. What happened to Japan’s Big four automakers in 1985, and then again in 1994-95? Why did these changes occur?
2. How well did the Japanese firms respond to the changes of 1985? What will they have to do differently in 1995?
3. What lessons, if any, can other firms take from the response of Japan’s automakers to endaka?
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