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Themes and Resources for Teaching International Business S. Tamer Cavusgil University Distinguished Faculty John W. Byington Endowed Chair in Global Marketing Michigan State University 7th Biennial International Business Institute for Community College Faculty

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Themes and Resources for Teaching International Business

S. Tamer Cavusgil

University Distinguished Faculty

John W. Byington Endowed Chair in Global Marketing

Michigan State University

7th Biennial International Business Institute for Community College Faculty

East Lansing, Michigan, May 2007


The Agenda

  • Globalization and its implications
  • Key Trends in Global Business
  • Implications for Management
  • Learning resources
  • Teaching tips and classroom exercises
  • Course design
  • Helpful publications

Themes for Teaching IB
















Firms in IB

International Entrepreneurship


What is Globalization?

  • At the macro level…
  • Greater integration and interdependency of national economies
  • Freer movement of goods, services, capital, and knowledge
  • Prevalence of regional trading blocs
  • Emergence of monetary unions
  • Convergence of customer lifestyles, requirements, etc.

What is Globalization?

  • For business enterprises…
  • Foreign market entry and expansion
  • Selective externalization of value chain
  • Collaborative ventures with foreign partners
  • Integration of operations on a global scale
  • Building global capabilities and a global organization
the many dimensions of globalization
The Many Dimensions of Globalization
  • Value-adding activities
  • Companies – The business enterprise
  • Products and brands
  • Economic assets
  • Business risks
  • Industries
  • Countries, markets
  • Regulations, laws, standards
  • Cultural values, mindsets, consumer behavior
  • Business practices

Phases of Globalization

1st Phase: 1830, peaking around 1880

Aided by railroads, ocean transport, rise of manufacturing and trading companies

2nd Phase: 1900, peaking around 1920s

Fueled by electricity and steel

3rd Phase: 1948, peaking around 1970

GATT, end of WW II, Marshall Plan…

4th Phase: 1980, peaking around 1997

Tech. advances, Internet, Emerging Markets…


Globalization Trends

  • Global economic realignment
  • Geography made redundant by technological connectivity
  • Consolidation of industries on a worldwide scale
  • Strains on natural resources and the environment
  • Remarkable growth and potential of Emerging Markets…
emerging market dynamics
Emerging Market Dynamics
  • Source of customers, suppliers, ideas, and human capital.
  • One billion new consumers will enter the global markets in the next decade!
  • Household income will reach threshold level of $5,000 in EMs.
  • Consumer spending will increase from $4 trillion to more than $9 trillion by 2015, nearly matching Western Europe.

Attractions and Challenges of EMs

  • Dynamic, rapidly transforming
  • Low competitive intensity
  • Dominated by family conglomerates
  • Political instability
  • Bureaucracy, redtape, lack of transparency
  • Legal, institutional vacuum
  • Safeguarding intellectual property
  • Cultural distance…

The Aspiring Consumer in EMs

  • Young demographics
  • Rapidly urbanizing
  • Middle class coming into its own
  • Engaged in technological leapfrogging
  • Exposed to Western brands
  • Rising expectations
  • Eager to consume material things
  • Highly brand conscious
why gdp per capita is a poor indicator of market potential for ems
Why GDP Per Capita is a Poor Indicatorof Market Potential for EMs?
  • Need to adjust for Purchasing Power Parity
  • Informal economy is often as large as the formal economy in developing countries
  • The “mean” is a poor indicator since income distribution is typically bi-modal in EMs
  • Household income several times larger than per capita income because of multiple wage earners
  • Developing country statistics may be unreliable
  • Typical exporter is more interested in a large enough “market niche” than huge potential

Implications for Management

  • Building interconnectedness: ‘global orchestration’ of value-chain activities
  • Exploiting knowledge
  • Search for maximum flexibility in manufacturing, sourcing and other value- adding activities
  • Relentless search for productivity gains and operational efficiency
  • Recognizing, cultivating, and measuring key global strategic assets of the organization
  • Gaining and sharpening partnering capabilities…

Stage in Value Chain

Types of Collaboration

Company Examples

Strategic alliances

Licensing/cross licensing

Design contracting

Global procurement

Contract manufacturing

Equity joint ventures (FDI)

Agency agreements


Exporting to distributors/



Exporting to end-users

Business format franchising



Telecoms, computers, drugs,

aircraft, satellite communication systems…

Dow, Pharmacia-Upjohn

Software, autos,

fashion goods, shoes,



Gerber (Novartis)

IKEA, Guardian Industries

Kmart, Manpower, Banks,

Courier Services, Amway

Research & Development

Product Design




Sales & Service

2 companies the business enterprise
2. Companies-The Business Enterprise

Diagnostic tools from MSU CIBER: CORE, Distributor, Partner, Freight forwarder

Business Week’s Global 1000; Fortune’s Global 500

Fortune Global Most Admired Companies

Financial Times World’s Most Respected Companies

UNCTAD World’s Largest Transnational Corporations


Nestle, Unilever,

Asea Brown Boveri, Sony, Coca-Cola

Global or



National or



  • Planning and resource allocation
  • Dependence on global markets
  • Worldwide manufacturing capability
  • Standardized products
  • Globally integrated strategy
  • Centralized structure and decision-making
  • Uniform operational policies and routines
  • Global organization and culture
  • Strong national identity
  • National endowments: talent pool, skills, capabilities
  • Unique corporate governance/ownership patterns
  • National regulations on employment
  • National patterns of investment in R & D
3 products and brands
3. Products and Brands

Business Week – Interbrand’s Global Brands Scoreboard: World’s Top 100 Global Brands

4 economic assets
4. Economic Assets

Flows of capital (investment, debt, portfolio investment, etc.), technology, know-how, human resources, etc.

Delphion (patents), U.S. Patent Office

5 business risk
5. Business Risk

Economist’s Big Mac Index

The concept of Purchasing Power Parity, the notion that a dollar should buy the same bundle of goods in all countries, is explained. Comparing actual exchange rates with PPP indicates whether a currency is under- or overvalued.

MSU-CIBER’s Market Potential Indicators for Emerging Markets


Four Types of Risks

 Weak Partner

 Operational Problems

 Timing of entry

 Competitive intensity

 Poor execution of strategy

Commercial Risk

Types of Risks

in International


Cross-Cultural Risk

Currency/Financial Risk

 Cultural distance

 Negotiation patterns

 Decision-making styles

 Ethical practices

 Currency exposure

 Asset valuation

 Foreign taxation

 Inflationary and transfer pricing

 Global sourcing

Country (Political and

Legal) Risk

 Social/political unrest and instability

 Economic mismanagement; inflation

 Distribution of income; size of middle class

 Government intervention, bureaucracy, red tape

 Market access; barriers; profit repatriation

 Legal safeguards for intellectual property right

6 industries
6. Industries


Hoover’s Industry Snapshots

U.S. Commercial Service


Market and Country Research

  • International Marketing Insight (IMI) Reports
  • Multilateral Development Bank (MDB)
  • Industry Sector Analysis Reports
  • Best Market Reports
  • Global Agriculture Information Network (GAIN) AgWorld Attaché reports
  • Country Commercial Guides

Aircraft (Civil)


Credit Cards


Soft Drinks

Specialty Chemicals

Pharmaceuticals (Ethical)


Electric Insulation

Commercial Banking

Pharmaceuticals (OTC)

Book Publishing



Strength of Competitive

Globalization Drivers

7 countries markets
7. Countries, Markets

IMD World Competitiveness Scoreboard

World Economic Forum Global Competitiveness Report

A.T. Kearney/Foreign Policy Globalization Index

Heritage Foundation and WSJ Index of Economic Freedom


The World Competitiveness Scoreboard 2005

Source: IMD World Competitiveness Yearbook 2004



Economic Freedom and Wealth

  • Economic freedom explains from 54 to 74 percent of the variation in income among countries.
  • A 10% increase in economic freedom in a country can produce an increase in GNP per capita of 7.4% to 13.6%.


The message is clear: enhancing economic freedom can lead to significant improvements in living standards.

8 regulations laws standards

8. Regulations, Laws, Standards

8. Regulations, Laws, Standards

Harmonization is a slow process when it comes to these…

9 cultural values mindsets consumer behavior
9. Cultural Values, Mindsets, Consumer Behavior

Mercer HR Consulting Quality of Life Survey

Freedom House Freedom in the World Survey

Euromonitor Market Research Monitor

10 business practices
10. Business Practices

Property rights, ethics and bribery, negotiation styles, entrepreneurial initiative, collective bargaining, labor-management relations.…


Is Globalization a Good Thing?

The Critics

  • Benefits of globalization are not evenly distributed
  • Globalization causes dislocation of jobs
  • Wages for unskilled labor are declining
  • Manufacturing moves offshore to avoid workplace safety and health regulations
  • MNCs fail to protect the environment

Is Globalization a Good Thing?

The Critics (cont.)

  • Power shifts to multinational corporations and supranational organizations; nations loose sovereignty
  • Concentration of power by multinational corporations leads to monopoly
  • International financial markets are inherently unstable
  • Globalization results in loss of national cultural values and identity

Skills for Global Manager

  • Cultural empathy / Open-mindedness
  • Tolerance for ambiguity
  • Perceptiveness
  • Premium on personal relationships.
  • Flexibility/Adaptability/Self reliance 
  • A good sense of humor
  • Warmth in human relationships
  • Curiosity
learning resources
Learning Resources
  • The World is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman, New York: Farrar, Straus and Giroux, 2005.
  • The Next Global Stage: Challenges and Opportunities in Our Borderless World by Kenichi Ohmae, Pearson Education, Inc./ Wharton School Publishing, 2005.
  • Tectonic Shift: The Geoeconomic Realignment of Globalizing Markets by Jagdish N Sheth and Rajendra Sisodia, New Delhi:Response Books
  • The Culture Code: An Ingenious Way to Understand Why People around the World Live and Buy As They Do by Clotaire Rapaille, Broadway Books, 2006.
learning resources 2
Learning Resources 2
  • One Billion Customers: Lessons from the Frontlines of Doing Business in China by James McGregor, A Wall Street Journal Book published by Free Press, 2005.
  • The Asian Mystique: Dragon Ladies, Geisha Girls, and our Fantasies of the Exotic Orient by Sheridan Prasso, Public Affairs, 2005.
  • China Shakes the World: The Rise of a Hungry Nation by James Hynge, forthcoming.
  • Doing Business in Emerging Markets, S.T. Cavusgil, P. Ghauri & M. Agarwal, Thousand Oaks, CA: Sage Publications, Inc., 2002.
knowledge portals
Knowledge Portals
  • IB course modules at globalEDGE: urses.asp
  • Diagnostic Tools available from MSU CIBER:

  • CIBER Web:
  • CKR Educators Consortium and Portal
  • Academy of International Business:
knowledge portals con t
Knowledge Portals (con’t)
  • McKinsey Quarterly
  • AT Kearney
    • Globalization Index Data,4,1, 116,1
    • 2004 FDI Confidence,3,1,89
    • Offshore Location Attractiveness Index,3,1,75
    • The 2005 Global Retail Development,3,1,110
knowledge portals con t1
Knowledge Portals (con’t)
  • World Bank’s Doing Business portal, Benchmarking Business Regulations:
  • Human Development Index commissioned by UNDP, see especially Chapter 4 on International Trade:
  • Top 100 Global Brands from Interbrand Consultancy:
knowledge portals con t2
Knowledge Portals (con’t)
  • US Government’s Export portal:
  • US Department of Commerce’s National Trade Data Bank (STAT-USA):
  • Knowledge @ Wharton:
  • Harvard Business Online for Educators: harvardbusinessonline.hbsp.harvard.e du/b02/en/academic/edu_home.jhtml
  • International Commercials
other online sources
Other Online Sources
  • A Detailed Study Tour of Retailing in China and India: awebinar_files/default.htm
  • Jim Lehrer News Hour on Offshoring
  • Globalization by New American Dream:  
  • The Economist: The Big Mac Index, to illustrate purchasing power parity:
  • The Internet Center for Corruption Research, offered by Transparency International:
faculty development programs sponsored by cibers
Faculty Development Programs Sponsored by CIBERs
  • Globalization Seminars sponsored by several CIBERs and held at the University of Memphis: obalization_Seminars.htm
  • Indiana University CIBER’s Pedagogy for International Business
  • MSU CIBER’s International Business Institute for Community College Faculty, offered every other year at MSU: &SectionRecordID=552
  • Other CIBER

Themes for General Business

  • Market entry, expansion, segmentation
  • Standardization /adaptation
  • Global brand success
  • Joint ventures/alliances/partnerships
  • Product liability laws; retail regulations
  • Global supply chain management
  • Emerging Markets; Family Conglomerates
  • Offshoring

Globalization Themes for Economics

  • Comparative advantage; gains from trade
  • Drivers of globalization
  • Purchasing Power Parity
  • Global Competitiveness Index
  • Index of Economic Freedom
  • Culture and IB
  • International entrepreneurship
  • Attitudes toward work and leisure
  • Unionization; collective bargaining

Themes for Culture

  • The Iceberg Principle of Culture
  • Cultural stereotypes, idioms, metaphors
  • Cultural Dimensions (High Context; Collectivism, Power distance, Uncertainty avoidance, Masculinity)
  • Language as the expression of culture
  • Self Reference Criterion
  • Critical incidence analysis
  • Negotiation patterns

Themes for Accounting

  • Exchange rates and trade
  • Currency risk; Euro in the E.U.
  • Harmonized accounting practices
  • Transfer pricing; Taxation of foreign income
  • Foreign Corrupt Practices Act
  • Operating in: High-inflation countries; Free Trade Areas
  • Listing in foreign stock markets

Themes for Information Systems / Technology

  • Internet and Information Technology as a driver of globalization
  • eBusiness /On-line strategies
  • Virtual interconnectedness in the multinational corporation
  • Globalization of IT sector; India’s advantage in this area
  • Globalization of related industries such as office furniture industry (Steelcase, Herman Miller, etc.)
helpful publications on pedagogy
Helpful Publications on Pedagogy
  • Robert Boice, Advice for New Faculty Members: Nihil Nimus, 2000, Allyn and Bacon: Needham Heights, MA.
  • Wilbert J. McKeachie, Teaching Tips, 1999, Houghton Mifflin Company: Boston, MA.
  • Ilan Alon and Nancy Cannon, “Internet-Based Experiential Learning in International Marketing: The Case of,” Online Information Review, Vol. 24, No. 5 (2000), 349-356.
  • R. F. Scherer, S. T. Beaton, M.F. Ainina and J. F. Meyer (eds.), A Field Guide to Internationalizing Business Education, Second Edition, 2003, Lakeshore Communications: Euclid, Ohio.
  • Case collections from business schools at Western Ontario, IMD, Harvard, Virginia, etc.

Publications on Internationalizing Business Education

  • Internationalizing Business Education: Toward Meeting the Challenge, (Cavusgil), East Lansing, Michigan, MSU Press, 1993.
  • Internationalizing Business Education: Toward Meeting the Challenge, (Cavusgil), East Lansing, Michigan, MSU Press, 1993.
  • “Expanding Horizons with E-Learning” in A Field Guide to Internationalizing Business Education, R. F. Scherer, S. T. Beaton, M.F. Ainina and J. F. Meyer (eds.), Second Edition, 2003, 183-194, Cavusgil, I. Kiyak and T. Kiyak.
  • Study Abroad Programs in Business Schools, Issues and Recommendations by Leading Educators, East Lansing, MI, MSU Press, 2002.