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International Banking and Trade Finance

International Banking and Trade Finance. Chpt 1. Overview. Management’s goal Hurdles to achieving goal Theories of international business Globalization and trade. Multinational Challenges. Management’s goal increase shareholder wealth new international markets

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International Banking and Trade Finance

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  1. International Banking and Trade Finance Chpt 1

  2. Overview • Management’s goal • Hurdles to achieving goal • Theories of international business • Globalization and trade

  3. Multinational Challenges • Management’s goal • increase shareholder wealth • new international markets • small and large companies benefit • Hurdles to achieving goal • agency problem • constraints to business

  4. Theories of International Business • Comparative advantage • e.g., shoes vs. computers & software • Imperfect markets • goods and labor: not easily transferred • Product cycle • domestic production • export to foreign market • foreign production

  5. Globalization • Reasons for increased linkages • international trade and investment • standardization of products and services • privatizations • national airlines, phone companies, mines, power plants, etc.

  6. International Business Methods • 1. International trade • importing and exporting • 2. Licensing • MNC provides technology in exchange for goods and services (soft drink companies)

  7. International Business Methods • 3. Franchising • MNC provides expertise and support for a fee • 4. Joint Venture • operations owned by complementary firms • e.g., products of one meshes with distribution channels of another

  8. International Business Methods • 5. Acquisitions • a quick method to obtain market share • 6. Subsidiaries • establishing new operations

  9. Increased Globalization • International trade • Direct foreign investment • Globalization and profitability

  10. International Opportunities and Risk • Opportunities • Europe, Mexico, other places • Risk • exchange rate fluctuations • foreign economies • political risk

  11. Summary • Main goal of MNC is to maximize shareholder wealth • Three theories justify international business • comparative advantage • imperfect markets • product cycle • Five common methods exist for conducting international business

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