Introduction to International Business

International Business Spring 2013 GSIS, Ajou University - A Survival Toolkit in the HOT, FLAT, CROWDED and VOLATILE WORLD

Stay Hungry, Stay Foolish?
Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

- Steve Jobs (1958-2001)

International Business Spring 2013 GSIS, Ajou University - A Survival Toolkit in the HOT, FLAT, CROWDED and VOLATILE WORLD

Stay Hungry, Stay Foolish? First, Stay Alive. Or you could stay even ‘Antifragile’ Don’t become a cold turkey.

Herman Hyunmin Kim
Contact: hermank@naver.com, hermanhmkim@gmail.com, Mobile: 010-8932-5047 Academic Background Seoul National University BA in Business Administration, Class of 1982 MBA, Class of 1984 Experiences Expertise: Cross-border Investment Banking, M&As DKME Daikyung Machinery & Engineering, Chief Financial Officer KERR Asset Management, Executive VP, Overseas Energy/Resources Investment Soulbrain Eng , CFO/Head of Overseas Business,

Herman Hyunmin Kim
Kiwoom Securities Co., Ltd , Investment Banking
Tong Yang Securities/Tong Yang Cement Group(1986-2000) Head of Tong Yang Asia (Hong Kong) Inc Representative, Tong Yang Securities Gevena Office Head of Derivatives , Tong Yang Europe (London) International Finance Division, Tong Yang Securities Co., Ltd

International Marketing Division, Samsung Electronics others CPA (Delaware, US) Areas of interest: Sustainable Growth, Conscious Economy

How we came this far? - Brief History of the Human Race
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Contact: of Humans around the World The Spread
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Seoul National University BA in Business Administration, Class of 1982 MBA, Class of 1984

hermank@naver.com, hermanhmkim@gmail.com, Mobile: 010-8932-5047

[Guns, Germs, and Steel –The fates of human societies, Jared Diamond] Academic Background

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Experiences

Expertise: Cross-border Investment Banking, M&As Internal Auditor, Daikyung Machinery & Engineering CFO, Huneed Technologies, TSC Memsys Investment Banking, Kiwoom Securities Co., Ltd Head of Tong Yang Asia (Hong Kong) Inc Representative, Tong Yang Securities Gevena Office Head of Derivatives , Tong Yang Europe (London) International Finance Division, Tong Yang Securities Co., Ltd International Marketing Division, Samsung Electronics
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others CPA (Delaware, US)

Areas of interest: Sustainable Growth, Conscious Economy, Happiness

A Brief History of The Human Race - The Ultimate Factor

The most dramatic encounter of ultimate factors

Collision of Old World and New World at Cajamarca Plateau When: November 16, 1532 Where: Peruvian highland town of Cajamarca What happened? - Pizzaro’s handful of soldiers defeated Atahuallpa’s Imperial Army of 40,000. Pizzaro took Atahuallpa hostage and received ransom of pile of gold and after then killed Atahuallpa. This incident eventually resulted in the demise of Inca. - The pile of gold ransom measures 22 feet *17 feet *8 feet [6.7m*5.2m*2.4m=83.6CM]. When multiplied by a factor of *19.3(specific gravity of gold), it weighs about 1,613m/t, worth about U$90 billion at current price.

The most dramatic encounter of ultimate factors

Collision of Old World and New World at Cajamarca Plateau

Atahuallpa Emperor of Inca
40,000 Soldiers No horses

Fransisco Pizzaro Spanish conquistador
168 Soldiers 62 Horse Mounted Soldiers Guns & Germs Good Enough Intelligence

Swords & Spears Not enough Information

Are some nation superior/inferior in intelligence?

Here is a question: Is civilization created out of superior intelligence? or Is it the result of a chain of developments, each made possible by certain preconditions, or in short by chances ?

Answer?

And then the era of globalization came at three stages

1. The first era involved countries globalizing from around 1400 to 1800. 2. In the second era companies or multinationals were globalizing from 1800 to 2000. 3. The third era is when the world became flat as individuals and small groups from all nationalities began globalizing themselves after 2000. -From ‘World is Flat’ by Thomas Friedman

And now we are going into “the Third Industrial Revolution”

1. The First Industrial Revolution started around the end of 18th century when steam-powered engine was invented. 2. The Second Industrial Revolution started around the first decade of the 20th century when electrical communication converged with the oil-powered internal combustion engine to open the era of mass-production goods. 3. Now, The Third Industrial Revolution is just about to start owing to 1) Energy Revolution (Jeremy Rifkin’s TIR) and 2) 3D Printer (Additive Manufacturing)

Power Shift?
In the year 2025, China’s GDP size finally surpasses that of United States and EU combined. As US and EU went default on their sovereign debt, China asks a G20 summit to discuss about new world monetary system and new world economic order. In the historical G-20 summit, member states agree on 1. abolishing all national monetary systems and currencies of all member states and 2. integrating all national monetary systems to build a one and global monetary system to issue one global currency called GYD (Global Yuan Dollar) and 3. establishing the New World Bank to replace all national banks.

Power Shift – GYD: Global Yuan Dollar?

Is Globalization Good or Bad?
Positive Aspects of Globalization
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As more money is poured in to developing countries, there is a greater chance for the people in those countries to economically succeed and increase their standard of living. Global competition encourages creativity and innovation and keeps prices for commodities/services in check. Developing countries are able to reap the benefits of current technology without undergoing many of the growing pains associated with development of these technologies. Governments are able to better work together towards common goals now that there is an advantage in cooperation, an improved ability to interact and coordinate, and a global awareness of issues. There is a greater access to foreign culture in the form of movies, music, food, clothing, and more. In short, the world has more choices.

Is Globalization Good or Bad? Negative Aspects of Globalization
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Globalization is widening the gap between the rich and the poor. Outsourcing, while it provides jobs to a population in one country, takes away those jobs from another country, leaving many without opportunities. Although different cultures from around the world are able to interact, they begin to meld, and the contours and individuality of each begin to fade. There is little international regulation, an unfortunate fact that could have dire consequences for the safety of people and the environment. Large Western-driven organizations such as the International Monetary Fund and the World Bank make it easy for a developing country to obtain a loan. However, a Western-focus is often applied to a nonWestern situation, resulting in failed progress.

Is Globalization Good or Bad?
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Bad Samaritans
23 Things They don't tell you about Capitalism

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Professor Ha-Joon Jang - The rogue economist

What we are going to learn?
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You will get knowledge about macro and micro factors involved in international business and will develop understanding of the fundamentals of international business. You will be able to develop an understanding of the international environment in which firms operate and how this environment impacts firms’ decisions. We will also study nature and scope of international trade and investment, the role of international institutions, how the international monetary system and exchange markets function, You will study functional aspects of international business such as marketing and logistics. Future managers will have an opportunity to grasp understanding how firms operate in the globalized business world in practical senses, and government officials who will regulate as well as promote international business for the benefit of nation states will get insights or know-how to get insights on these issues.

How we are going to learn?
The lecture will basically follow the textbook contents. - The Fundamentals of International Business, 1st Asia-Pacific Edition by Czinkota, Ronkainen and others., Wiley Discussions about major issues of each lecture theme will follow the lecture, utilizing cases in the textbooks and practical materials such as current articles from international journals such as WSJ or Financial Times. There will be also team/group discussions. Topics and assignment for the team discussions will be given prior to each lecture session.
You will be asked to submit Global Business Leadership Analysis Report with minimum length of 10 pages of A4, and will be asked to present the summary power point report to the class.

Grade Evaluation?
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Class participation: 20%  Case Analysis and Presentations: 10%  Midterm Exam: 20%  Comprehensive Final Exam: 30%  Global Leadership Analysis*: 10% *Global Leaders could be persons, enterprises, and nation states
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Discretionary/Bonus Points

10%

Syllabus
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Week 1. Part I. Orientation and Introduction to international business (Chapter 1) To live in the Hot, Flat, Crowded, and Globalized World… What is international business? Opportunities and challenges of international business Lecture/Team assignment of case study discussion
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Week 2. Part II. Environmental Drivers (1) Culture Environment(Chapter2)/ International Trade Environment (Chapter3) Case Discussions, Lecture
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Week 3. Part II. Environmental Drivers (2) International Trade Environment (Chapter3)/Politics and Laws (Chapter4) Case Discussions, Lecture

Syllabus
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Week 4. Part II. Environmental Drivers (3) Economic Integration (Chapter5)/Part II Summary and Discussions Case Discussions, Lecture
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Week 5 Part III. International Trade and Investment Trade Theories (Chapter 6) Case Discussions, Lecture
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Week 6 Part III. International Trade and Investment Investment Theory and international transactions (Chapter 7) Case Discussions, Lecture
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Week 7 Part IV. International Finance Foreign Exchange (Chapter 8) ase Discussions, Lecture

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Week 8 Mid-term Exam
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Week 9 Part IV. International Finance International Financial Markets (Chapter 9) Case Discussions, Lecture
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Week 10 Part V. International Operations Market Entry Strategies (Chapter 10) Case Discussions, Lecture
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Week 11 Part V. International Operations Market Development Strategies (Chapter 11) Case Discussions, Lecture

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Week 12 Part V. International Operations International Marketing Strategies (Chapter 12) Case Discussions, Lecture
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Week 13 Part V. International Operations International Logistics (Chapter 13) Case Discussions, Lecture
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Week 14 Part V. International Operations International Management (Chapter 14) Case Discussions, Lecture
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Week 15 The Insight/Your Dream
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Week 16, Dec. 15 Final Exam