International Business

MGT480
 COURSE BASICS
• Course Code : MGT 480
• Course Title : International Business
• Credit Hours : 3
• Labs/Practical : No
• Lectures : 2 per week
 Assessment Scheme
• Mid-term examination I 10%
• Mid-term examination II 15%
• Assignements 10%
• Quizes 10%
• GDB 5%
• three hour examintion 50%
 Reading Materials
• International Business Management by
Charles W.L. Hill
• International Financial Management by Jeff
Madura
 An Introduction
• International Business introduces students to multinational
corporations (MNCs), businesses that now impinge on the
lives of almost everyone on earth . These organizations
undertake most of the world’s trade and an increasingly large
share of its economic output. MNCs distinguish themselves
from domestic firms by taking control over industrial activities
beyond the borders of their own countries.
• The main purpose of the course is to provide a non-technical
introduction to the internationalized firms , with which we all
eventually engage as customers, employees, shareholders,
regulators, or concerned citizens.
 Multinational Corporations
• Goals of MNC
• What is MNC
• Business Combinations
• Classes of Business Combinations
• Defensive tactics against Hostile takeover
• Business combinations: Why and How?
• Types of Business Combinations
• Methods for Arranging business combinations
• Parent company-subsidiary relationship
• Financial Statements/Consolidated financial statements
• Constraints interfering with the MNC’s Goal
• Managing within the constraints
 International Business
• Theories of International Business
• International Business Methods
• International opportunities
• Exposure to International Risk
• MNCs Focused on International Trade,
International Arrangements and Direct Foreign
Investment
 Globalization
• What is Globalization
• The Globalization Of Markets
• The Globalization Of Production
• The Emergence Of Global Institutions
• Drivers Of Globalization
• Declining Trade And Investment Barriers
• The Role Of Technological Change
• The Changing Demographics Of The Global Economy
• The Changing Foreign Direct Investment Picture
• Managing In The Global Market place
 Foreign Direct Investment
• Foreign Direct Investment
• Motives for DFI
• Revenue-Related Motives
• Cost-Related Motives
• Benefits of International Diversification
• Decisions Subsequent to DFI
• Foreign Direct Investment In The World Economy
• The Form Of FDI: Acquisitions Versus Greenfield
Investments
• Theories Of Foreign Direct Investment
• Why and Types Foreign Direct Investment?
• Political Ideology And Foreign Direct Investment
• International Institutions and The Liberalization Of FDI
• The Theory Of FDI
• Government Policy
 Capital Budgeting
• Capital Budgeting
• Subsidiary versus Parent Perspective
• Remitting Subsidiary Earnings to the Parent
• Input for Multinational Capital Budgeting
• Multinational Capital Budgeting
• Multinational Capital Formula
• Subsidiary versus Parent Perspective
• Input for Multinational Capital Budgeting
• Capital Budgeting Analysis
• Factors to Consider in Multinational Capital Budgeting
• Impact of Multinational Capital Budgeting on an MNC’s
Value
 Country Risk Analysis
• Political Risk Factors
• Corruption Perceptions Index
• Financial Risk Factors
• Types of Country Risk Assessment
• Techniques of Assessing Country Risk
• Developing A Country Risk Rating
• Incorporating Country Risk in Capital Budgeting
• Reducing Exposure to Host Government Takeovers
 Multinational Restructuring
• Introduction to Multinational Restructuring
• International Acquisitions
– Trends in International Acquisitions
– Model for Valuing a Foreign Target
– Barriers to International Acquisitions
– Assessing Potential Acquisitions in Asia and Europe
• Factors that Affect the Expected Cash Flows of
the Foreign Target
– Target-Specific Factors
– Country-Specific Factors
• International Divestitures
• Impact of Multinational Restructuring on an
MNC’s Value
 Entry Strategy and Strategic
Alliances
• Selecting An Entry Mode
• Core Competencies And Entry Mode
• Pressures For Cost Reductions And Entry Mode
• Greenfield Ventures Or Acquisitions
• Pros And Cons Of Acquisition
• Pros And Cons Of Greenfield Ventures
• Strategic Alliances
• The Advantages & Disadvantages of Strategic
Alliances
• Making Alliances Work
 Exporting, Importing and
Countertrade
• The Promise And Pitfalls Of Exporting
• Utilizing Export Management Companies
• Export Strategy
• Export And Import Financing
• Letter Of Credit
• Draft
• Bill Of Lading
• A Typical International Trade Transaction
• Countertrade
• The Pros And Cons Of Countertrade
 Financing International Trade
• Payment Methods for International Trade
– Prepayments
– Letters of Credit
– Sight Drafts and Time Drafts
– Consignments
– Open Accounts
• Trade Finance Methods
– Accounts Receivable Financing
– Factoring
– Letters of Credit
– Banker’s Acceptances
– Working Capital Financing
– Medium-Term Capital Goods Financing (Forfeiting)
– Countertrade
Financial Management in the International Business
Financial Management in the International Business
1. investment decisions – decisions about what to finance
2. financing decisions – decisions about how to finance those decisions
3. money management decisions – decisions about how to manage the
firm’s financial resources most efficiently
• Minimizing Cash Balances
• Reducing Transaction Costs
• The Tax Objective
• Moving Money Across Borders: Attaining Efficiencies And
Reducing Taxes
• Dividend Remittances
• Royalty Payments And Fees
• Transfer Prices
• Fronting Loans
• Techniques For Global Money Management
 The Strategy of International
Business
• Strategy and Firm
• Value Creation
• Strategic Positioning
• The Value Chain
• Different types of strategies
 Culture and Ethics
• Cultural Differences
• Norms
• Values
• Ethics in Business