International Business (Case Study)
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Advanced Diploma in Business Administration Study Manual INTERNATIONAL BUSINESS (CASE STUDY) The Association of Business Executives William House • 14 Worple Road • Wimbledon • London • SW19 4DD • United Kingdom Tel: + 44(0)20 8879 1973 • Fax: + 44(0)20 8946 7153 E-mail: [email protected] • www.abeuk.com © Copyright assigned to ABE All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form, or by any means, electronic, electrostatic, mechanical, photocopied or otherwise, without the express permission in writing from The Association of Business Executives. ABE Advanced Diploma in Business Administration Study Manual INTERNATIONAL BUSINESS (CASE STUDY) Contents Study Title Page Unit Syllabus i 1 The Importance and Nature of International Business 1 The Importance and Growth of International Business 3 International and Domestic Business 8 Types of International Business Involvement 10 2 Understanding the World Trading Environment 17 The Changing World Trading Environment 18 The Big Three – The Triad 22 Classifying the World 23 A New Focus – Global Convergence 26 3 Understanding International Trade 29 The Reasons for International Trade 30 Trade Barriers 34 World Trade Bodies and Institutions 36 World Regional Groups or Trading Blocs 39 4 Understanding the International Business Environment 45 Social/Cultural Factors 47 Legal Factors 52 Economic Factors 54 Political Factors 56 Technological Factors 57 The “C” Factors 60 The Use of Slept and C Factors in International Business Planning 62 Social Responsibility and International Business 64 5 Understanding Consumer Behaviour 67 Consumer Buyer Behaviour 68 Business-to-Business Buyer Behaviour 70 Government Buyer Behaviour 72 Buying Behaviour in Lesser-Developed Countries 73 Buying Behaviour in Newly Industrialised Countries 75 Buying Behaviour in Highly Industrialised Countries 76 6 International Marketing Research and Analysis 79 Defining the Research Problem 82 Secondary Data 84 Primary Data 86 Managing the Research 88 Developments and Trends in International Marketing Research 90 Comparative Analysis 92 Absolute and Competitor Analyses 98 7 International Business and Marketing Strategies 101 Business Planning 102 Strategy Development 107 Strategy and Company Factors 111 Strategy and Competition 116 Strategy and Level of Economic Development 119 Strategy and Finance 122 8 Organisational Structures, Cultures and Capabilities 125 Organisational Structures 126 Organisational Culture 133 Staffing and the International Business 135 9 International Strategy: Standardisation, Adaptation and Globalisation 143 Standardisation 144 Adaptation 147 Globalisation 149 10 Market Entry Strategies 157 Choices of Market Entry 158 Selection of Market-Entry Routes 162 The Market-Entry Decision 167 11 International Product Management 171 Products 172 Techniques and Concepts in International Product Management 174 Branding Issues 177 New Product Development 179 Product Adaptation and Standardisation Issues 182 12 International Pricing Policies 189 Pricing Strategies 190 Countertrade 194 Specific Pricing Methods 197 Quoting Export Prices – Incoterms 198 13 International Promotion Policy 201 The Context of International Marketing Communications 202 Marketing Communications Strategies 205 Using Agencies and Consultancies 207 14 International Distribution and Logistics 211 Distribution Channels 212 Distribution Channel Relationships 215 Planning and Managing International Channels of Distribution 217 Trends in International Distribution 223 Distribution Logistics 224 The Total Cost Concept 228 Modes of Transport 228 15 The Extended Marketing Mix 231 Service Product Characteristics 232 The Extended Marketing Mix 235 Relationship Marketing 237 16 Implementation, Evaluation and Control 241 Individual Country Annual Marketing Plans 242 Managing the Implementation Process 246 Performance Evaluation and Control 247 Planning for the Future 253 17 Finance and International Business 257 Finance and the Development of International Business 258 Financing International Trade 262 Finance and the Multinational Company 269 International Investment Decisions 277 18 Risk and the International Business 281 Risk and International Trade/Finance 282 Managing Political Risk 284 Internal Methods of Managing Exchange Rate Risk and Exposure 288 External Methods of Managing Exchange Rate Risk and Exposure 290 Appendix: Example of International Business Case Study and Suggested Answers 299 i Advanced Diploma in Business Administration International Business Syllabus Aims 1. Appreciate that many businesses are no longer operating in the domestic local environment. 2. Develop a sense of urgency that tremendous opportunities exist to develop business if companies can change their mind-sets from domestic to international dimensions. 3. Acquire the expertise to develop strategies for international expansion and, in so doing, to understand how to deal successfully with a range of business issues at an international level. Programme Content and Learning Objectives After completing the programme, the student should be able to: 1. Understand the key questions posed by international business and global operations, and be aware of the main reasons why businesses develop internationally. 2. Define globalisation and, in understanding what it means, appreciate how it impacts on all functions of the business. 3. Understand the changing nature of the international business environment with specific regard to: ! The macro factors that underpin world trade. These are the powerhouses that drive changes in patterns of behaviour; ! The major international bodies, IMF, WTO, World Bank, etc., and their influences on shaping the liberalisation of world trade. 4. Understand the factors that give rise to different behaviour patterns (both buying behaviour and other organisational behaviour) in different countries including culture, stages of economic growth and local environmental conditions. Appreciate a range of cultural factors which impinge on firms doing business in overseas settings. 5. Recognise the strategic role of information gathering in directing international business decisions and be aware of the issues surrounding information gathering in an international environment. 6. Recognise the changing planning framework as companies deepen their international and global commitments, and their impact on production, finance, operations, marketing and human resource management. 7. Understand the implications of international operations for distribution and logistics within the firm. 8. Understand the human resource management implications of operating on an international scale. © Copyright ABE ii 9. Appreciate the range of alternative means by which international market entry may be achieved and the organisational and financial implications of each. 10. Have a clear grasp of the range of tools of the marketing mix in differing economic, political and cultural situations. Method of Assessment By written examination. The pass mark is 40%. Time allowed 3 hours. The question paper will contain: Three compulsory questions. All questions may carry different marks. Notes about the Examination A case study will be provided to candidates which they will be expected to analyse prior to the examination. Candidates will be required to demonstrate their analytical ability with reference to the strategic concerns and issues raised by the case study and to make strategic recommendations based on the outcomes of their analysis. This is an open book examination and you may bring in any material in the form of books or notes to help you answer the set questions. However, you must not hand in any prepared material as this will not be marked by the examiner. Dealing with a case study of this type is quite a complex task and it is strongly recommended that you familarise yourself with the techniques and approaches to analysis required. The reading list below suggests one publication which provides such guidance. Notes about Studying this Subject In answering questions in the examination, you will be expected to draw on and apply concepts, knowledge and skills acquired in all Advanced Diploma subjects. In studying the course materials for this subject, therefore, you should constantly be thinking of the application of your studies in the other subjects to the international issues and context under discussion. In addition, it is important that you are aware of, and able to assess, the implications of recent developments and events in respect of their effect on international business. Of particular relevance here are developments in the contribution of the Internet and the rise of e-commerce, in the introduction of the Euro and in the implications of international terrorism. Further Reading The ABE is keen to encourage students to read around their subjects although your study manual provides complete coverage of the syllabus for the examination. If you have time available once you have worked through the manual, you may wish to consult one or more relevant books from the ABE’s suggested reading list which can be found in each subject syllabus. Advanced Diploma students especially should supplement their study of the manual with wide reading of relevant journals, quality newspapers and contemporary media sources. © Copyright ABE iii Recommended Reading ! C Hill, International Business – Competing in a Global Market Place; 3rd edition, 1999 (McGraw-Hill) ! CIM Tutorial Text 2001/2, Strategic Marketing Management: