COURSE OUTLINE THE OPEN UNIVERSITY OF TANZANIA. OLG 323: INTERNATIONAL BUSINESS MANAGEMENT AND e-commerce FACULTY OF BUSINESS MANAGEMENT

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1 THE OPEN UNIVERSITY OF TANZANIA FACULTY OF BUSINESS MANAGEMENT OLG 323: INTERNATIONAL BUSINESS MANAGEMENT AND e-commerce COURSE OUTLINE Prepared by: Chacha Ryoba Page 1 of 9

2 1. Introduction The growing importance of foreign markets to international firms plus the fact that thousands of concerns were venturing overseas for the first time made it imperative that managers know something about the intricacies of doing business abroad. Management of international business explores the relationship between firms that operate internationally and economic development. A fundamental force driving change in the international business environment is the pace and distribution of economic growth. Governments throughout the world seek to influence living standards through changes in policies, laws and through the institutions that govern business which, in turn, help to attract foreign investment. Investments in developing economies in particular present firms with opportunities to realize substantial financial returns and contribute to economic growth, but are fraught unique challenges and risks. Moreover, these investments raise normative concerns regarding the role of business in society and the nature of globalization. Management of international business delivers frameworks for understanding the nature of economic growth and the role of private firms in promoting rising living standards. Also, the e commerce (i.e.) transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services is important in today business. Hence, students will be introduced to various devices and networks which make e commerce possible. 2. Course Content 2.1. Lecture one: Nature and Scope of International Business This lecture describes the nature and scope of international business and introduces the three environments in which international business managers must operate. How well they perform in their undertakings will depend in great measure on their understanding of the domestic, international, and foreign environments Learning Objectives After the end of this lecture students should be able to: Define international business concepts Explain the need for having international business in the global era Assess the history of international business Explain globalization of production and markets Discuss the advantages and disadvantages of globalization Explain the effects of technology on the worldwide operations of business Outline the reasons behind declining trade barriers Justify why globalization is now proceeding at a rapid rates Recognize both domestic and foreign environments affects international business Examine management of global enterprises Page 2 of 9

3 Key Sub-Topics International business concepts Importance of international business Development of international business Domestic and foreign environment in international business International business model Globalization defined Globalization of Markets and Production Drivers of globalization The prons and cons of globalization Managements of Global enterprises 2.2. Lecture Two: Economic and Political aspects of International Trade Theory Learning objectives After completing this lecture, students should be able to:- Explain the pattern of international trade in the world economy Discuss how global efficiency can be increased through free trade Express the theories of absolute and comparative advantage Describe the factor proportions or endowments theory of trade Express how the product life cycle theory affects trade Identify the instruments of trade policy used by governments Summarize the case for free trade Key-sub topics An introduction to trade theories Theories of International Trade a) Mercantilism b) Theory of absolute advantage c) Theory of comparative advantage d) Heckscher-Ohlin theory of factor endowment e) Leontief paradox f) The product life-cycle theory g) Theory of competitive advantage: The Porter diamond Political aspects of world trade The development of world trading patterns Instruments of trade policy a) Tariffs b) Non Tariff barriers The case for government intervention (political)-arguments against trade barriers The case for government intervention (economic) Page 3 of 9

4 2.3. Lecture Three: Foreign Direct Investment in the Global Economy Learning objectives Define FDI and show how it fits into an MNE's activities; Differentiate between horizontal and vertical FDI; Explain why firms undertake FDI; Evaluate both horizontal and vertical FDI; Discuss how political ideology has influenced government attitude to FDI; and Propose how FDI has benefits and costs for both the host country and the home country Justify how to encourage and discourage FDI Key sub-topics Extent and significance of FDI Types of FDI a) Horizontal FDI b) Vertical FDI Theories of horizontal FDI a) Market imperfection theory b) Impediments to exporting c) Impediments to the sale of know-how d) Knickerbocker's theory of oligopolistic competition Political and economic aspects of FDI The politics of FDI a) the radical, or Marxist view b) the free market view c) pragmatic nationalism Benefits of FDI to the host country a) resource-transfer effects b) employment effects c) balance-of-payment effects Costs of FDI to the host country a) adverse effects on domestic producers b) adverse effects on BOP c) surrender of national sovereignty Benefits of FDI to the home country a) BOP benefits b) employment benefits c) the reverse resource-transfer effect Costs of FDI to the home country a) balance-of-payments b) employment effects Encouraging and discouraging FDI Page 4 of 9

5 2.4. Lecture Four: International Monetary System and Balance of Payments All international trade transactions must take place within the context of the international monetary system in effect. This system is simply the set of procedures for making and receiving international payments. Some international monetary systems have evolved gradually overtime as countries adopted certain practices. Others are the result of formal agreements between countries. An international monetary system is necessary because each country has a different monetary unit, or currency, which serves as a medium of exchange and as a store of value. International legal tender has never existed, although at times gold, pounds sterling, and the US dollars have been widely accepted as such. The absence of a universal currency means that we must have a system that allows for the transfer of purchasing power between countries with different national currencies Learning Objectives After the end of this lecture student will be able to: a) Explain the development of the international monetary system b) Examine the history of Gold standard c) Describe the meaning of balance of payments d) Examine the causes and consequences of the international debt crises to LDCs e) Identify the attributes of fixed and floating exchange rate systems f) Discuss the implications of various monetary systems for policy makers Key sub topics Development of International monetary system a) The international monetary system prior to World war II b) The international monetary system from c) The international financial system from d) Evolution of Gold standard Balance of payments accounts a) Current account b) Capital accounts c) Official reserves account d) Net statistical discrepancy Arguments for and against floating exchange rate Vs Fixed exchange rate Implications of monetary systems to policy makers 2.5. Lecture Five: International Financial Markets It is becoming increasingly difficult to distinguish domestic from international financial markets. In fact, many markets are taking steps to facilitate 24-hrs global trading. The Page 5 of 9

6 rapid globalization of financial markets means that an event that causes an increase in the interest rate in one country will affect the foreign exchange and financial markets in another country in a matter of minutes. The manner in which the market crash of 1987 rippled around the world is a sobering illustration of this globalization. The rapidly changing markets present both risks and opportunities to the international firm Learning objectives After the end of this lecture student will be able to: a) Explain the nature of foreign exchange markets b) Examine the economic forces affecting exchange rates c) Review of the functioning of forward, spot and future markets d) Describe the workings of Euromarkets e) Analyze the scope and structure of international banking Key sub topics Nature and structure of foreign exchange markets Economic factors influencing exchange rates a) Differences in interest rates between countries b) Expected rate of change of currency relative to another currency c) Differences in expected inflation rates between countries Spot, Forward and future markets Nature of the Euromarkets Growth of international banking Structure of international banking 2.6. Lecture Six: Foreign Business Environment Learning objectives To identify the environments of international business Investigate the effects of having cultural differences in international business Distinguish between national monetary policy and fiscal policies Illustrate the importance of inflation to business Explain the importance of having natural resources to international business Explain significance of having culture to international businesses Outline the ideological forces that affect business Key-sub topics Foreign business environments Types of Foreign business environment Culture defined Significance of culture to international businesses Elements of culture Effects of cultural differences to international businesses Importance of country s location to international business Political ideologies affect international businesses Impact of government instability to international businesses Page 6 of 9

7 Strengths used by MNEs to influence political decisions Specific national legal forces (Taxation, Laws, Treaties, contracts Enforcement etc) Importance of taxation in business operations Advantages of patents, trademarks and trade names to international Businesses Implications of different national laws to international businesses 2.7Lecture Seven: e-commerce Strategies in a Global Context The growth, integration, and sophistication of information technology and communications are changing our society and economy.today, computers and other electronic devices increasingly communicate and interact directly with other devices over a variety of networks, such as the Internet. Thus, consumers and businesses have been particularly quick to recognize the potential and realize the benefits of adopting new computer-enabled networks in facilitating both domestic and international business. Moreover, Consumers now routinely use computer networks to identify sellers, evaluate products and services, compare prices, and exert market leverage. Businesses use networks even more extensively to conduct and re-engineer production processes, streamline procurement processes, reach new customers, and manage internal operations. This electronic revolution in our economy is spurring additional investments in facilities, hardware, software, services, and human capital. Ultimately, it may change the structure and performance of the countries economies. Therefore, in a global environment where international businesses are competing with the best in the world, it is essential to ensure that every aspect of a company s activities is on a par with those of its best international competitors. In striving towards this global competitiveness, the internet is a powerful tool in the international firm s armory Learning objectives: After the end of this lecture students should be able to Define the term e-commerce Outline various examples of e-commerce transactions Identify various types of devices and networks facilitating e-commerce to take place Analyze the advantages of using Internet in a global business Describe online transactions Explain the importance of e-commerce in facilitating both domestic and international business Discuss the advantage and disadvantages of e-commerce in today business Key sub topics e commerce defined Advantages of the internet for global business Changing paradigms for e-commerce Page 7 of 9

8 Disintermediation, reintermediation, and cybermediaries E-speed the speed of blur The blurring of size Logistics and instant performance The internet-a new way of doing business Global e-commerce opportunities International market research Global advertising The internet -lowering barriers to trade Electronic s payments and billings Challenges of Adopting E-commerce in Tanzania e-commerce strategy in an international context 2.8 ure Eight: Global Human Resource Management Learning Objectives Outline the prons and cons of different approaches to staffing policy in international businesses Explain why managers may fail to thrive in foreign posting Identify what can be done to increase an executive s chance of succeeding in a foreign posting Examine the best practices model for expatriate and local staffing recruitment and planning Analyse the role that training, management development, and compensation practices can play in managing human recourses within an international business Key sub topics The strategic role of International HRM Staffing Policy a) The ethnocentric approach b) The polycentric approach c) The regional approach d) The geocentric approach Expatriate selection Training, management development, and career planning a) Training of expatriates b) Cross- cultural training Performance management and, international compensation c) Performance evaluation d) International compensation and benefits Approaches to compensation for expatriates a) Negotiation b) Balance sheet approach Cost factors Designing a compensation strategy for multinational Course Evaluation Page 8 of 9

9 One Timed Test 30% Final Examination 70% Total 100% Pass mark shall be 40% Potential reading Brian Daves, et all, (1995), International business. A European perspective, Stanley Thornes, UK Charles T. Hill, (2001), Global Business Today, Mac-Graw Hill, New York Debra Johson and Colin Turner, (2003), International business, Themes and issues in the modern economy, Routledge, London Daniels, J. D and Radebaugh, L. H. (2009) International Business Environments and Operations, 12th International Edition, Prentice-Hall, London Donald Ball and Wendell McCulloch, (1989), International business Introduction and Essentials, 3rd edn, Illinois, USA Frank Mc Donald, et all, (2002), International business, Adjusting to new challenges and opportunities, Palgrave publishers, New York Ian Brooks and Jamie Weatherston, (1997), The Business Environment, Challenges and Changes, Pearson education Ltd, Great Britain Ian W, and Chris B, (1994), The Business Environment, Prentice-Hall, London, 4thedn Johan Hough, (2003), Global Business, Environments and Strategies, Managing for global competitive advantage Michael Czinkota, et all (1992), International business, 2nd edn, Harcourt Brace Jovanovich College, USA Philip Cateora and John Graham, (2005), International marketing, Mc-Graw Hill, New York Parker, Barbar(2005), Introduction to Globalization and Business, Relationships and Responsibilities, Sage publications ltd, London Parker, Barbar, (1998), Globalization and Business practice, Managing across boundaries, Sage publications ltd, London Page 9 of 9