Kirti Mishra
PhD student
Department of Management
(MGX3100, MGF1010, MGF5020)
[email protected] (Best way to contact me)
9903 4654,Room N5.33
Slideshare: www.slideshare.net/kirtimishra11
IMPORTANT THINGS
Assessment:– Essay: 30 % Due on or before 5.00 pm, Friday,
September 18, 2015
LOOSE 10% each day late
– Group presentations Weeks 4-11, 20% (assessed individually) 20 minutes to present, 10 minutes Q&A, hard copy and reference list to be submitted in tutorial.
– Exam- 50% (HURDLE)
EXPECTATIONSI EXPECT:
Engage in all classes
Complete the readings and activities
Put effort into your assignments.
REFERENCING!!
If your having difficulties see me EARLY
Help me help you
WHAT DO YOU EXPECT FROM ME???
Housekeeping
Turn off our phones.
RESPECT
On time and prepared for tutes. This is not a lecture.Tutes are for critical thinking and discussion!
Feedback
Objectives
Any Questions from last week?
Group allocations: Get Excited!!!
Tutorial Program Week 2
– various legal systems, transition economies and determinants of economic development that are relevant to international business.
International Business Environment
Political Economy: The political economy of a nation refers to how the political, economic, and legal systems of a country are interdependent
Legal systems
Determinants of economic development
Transition economies
Legal System The rules that regulate behavior along with the
processes by which the laws are enforced and through which redress for grievances is obtained.
Types:
Common Law: tradition, precedent, custom
Civil Law: set of detailed laws, codes
Theocratic Law : religion
Why is it important for IB? Regulates business practice
Defines how business transactions can occur e.g. Sharia law no bank interest
Sets out rights and obligations of parties to a business transaction
Contract Law, Property Rights and Corruption, Protection of Intellectual Property and Product Safety and Liability
Economic Development Different countries have dramatically different
levels of economic development (GNI, PPP)
Human development Index: Amartya Sen
Life expectancy at birth
Educational attainment
Whether average incomes are sufficient to meet the basic needs of life (PPP based average income)
Transition Economies Those economies which have been
characterised by a move towards greater democracy and economic liberalization.
Often from centrally planned economic systems to market based (e.g. BRICS nations, former USSR countries, Central Asian Republics and some African States).
Implications for international business based on attractiveness, costs, and risks.
Q1. The Nobel prize-winning economist Amartya Sen argues that the concept of development should be broadened to include more than just economic development. What other factors does Sen think should be included in an assessment of development? How might adoption of Sen’s views influence government policy? Do you think Sen is correct that development is about more than just economic development? Explain.
Amartya Sen :Human Development Index Eco life should lead to development Development: Freedom (tyranny, social deprivation) Eco development is ONE factor Political freedom will lead to prosperity E.G. Poverty line http://hdr.undp.org/en/countries http://chartsbin.com/view/5352 Facilitate innovative activity and lead to Economic Vitality.
Rampant bribe taking in some countries, however shunned in Australia
Subordination of the interest of their country to the personal gain.
Reduction in the level of transparency in business interactions.
Many nations with rampant bribery appear to be among the most economically underdeveloped.
OK in some countries
China vs India
http://www.youtube.com/watch?v=20gs9aN8stM
http://www.youtube.com/watch?v=lGud_WBWpnE
Q 2.What is the relationship between corruption in a country (e.g., bribe- taking by government officials) and economic growth? Is corruption always bad?
Q 3.What is a country's legal system? Why is it important to international businesses? Compare and contrast the three main types of legal systems in use around the world. What implications do each of these raise for international business?
The rules, or laws, that regulate behaviour along with the processes by which laws are enforced through which redress for grievances are obtained.
It regulates business practice, defines the manner in which business transactions are to be executed, and sets down the rights and obligations of those involved in business transactions.
Case Study: Japan’s Eco Malaise Stagnation of Japanese economy
1980’s: Growth, Economic boom, surpass USA
Bubble burst- Stock market crash, recession, bank debt
Consequences: no lending by banks, no spending, deflation, vicious cycle (negative), job cuts
Stimulation of economy: Infrastructure development, lower/no interest rates, NOT WORKED
Demography: Aging population
Group 1: In the 1980s Japan was viewed as one of the world’s most dynamic economies. Today it is viewed as one of its most stagnant. Why has the Japanese economy stagnated?
Group 2: What lessons does the history of Japan over the last 30 years hold for other nations? What can countries do to avoid the kind of deflationary spiral that has gripped Japan?
Group 3: What do you think would be required to get the Japanese economy moving again?
Group 4: What are the implications of Japan’s economic stagnation for the benefits, costs, and risks of doing business in this nation?
Q1. In the 1980s Japan was viewed as one of the world’s most dynamic economies. Today it is viewed as one of its most stagnant. Why has the Japanese economy stagnated?
The stock market collapsed.
Property prices plunged.
Banks sharply curtailed the easy lending practices that had helped to finance the boom.
Consumers stopped spending pushing the country into a recession. Consumers and businesses expect prices to continue to fall and so continue to delay their purchases despite newly lowered prices pushing the cycle forward.
So far, government efforts to stimulate the economy have been ineffective.
Q2. What lessons does the history of Japan over the last 30 years hold for other nations? What can countries do to avoid the kind of deflationary spiral that has gripped Japan?
– There are similarities between the situation in Japan that led to its economic collapse and continued malaise to the situation that led to the 2008-2009 recession in the United States and its continued fallout today.
– Sufficient regulation of money lending might have prevented the situation.
– The role of the government in attempting to spend its way out of its economic slump. With Japan’s debt now at 200 percent of its GDP the country has few options left to get back on track.
Q3. What do you think would be required to get the Japanese economy moving again?
– Focus on innovation and the government might make it a national priority by supporting entrepreneurs and think tanks.
– Open its doors to immigrants. This could expand the market and help support Japan’s aging population.
Q4. What are the implications of Japan’s economic stagnation for the benefits, costs, and risks of doing business in this nation?
– Japan’s economic malaise offers both opportunities and challenges for companies interested in doing business in the country. On one hand money is cheap and wages are relatively low. On the other hand, consumers are unwilling to spend money and the future government policies to spark economic growth could make could make it more difficult for businesses.
Debate: Group I: Japan Group 2: India
– Despite some problems with laws governing business in India, the country’s long term potential makes it a more attractive destination for investment.
– Japan’s problems cannot continue indefinitely and that now is a great time to gain a competitive advantage in the market and be in a position to capture even more market share when the economy begins to grow again.
– Japan is likely to pose fewer political and legal risks as compared to India making it a more attractive investment location.
– http://in.reuters.com/assets/print?aid=INDEE96700820130708– http://economictimes.indiatimes.com/news/news-by-company/cor
porate-trends/mncs-find-it-tough-to-do-business-in-india-due-to-corruption-and-uncertain-laws/articleshow/21581460.cms
Group Allocations Groups of 3 students, Peer evaluation
TOPICS
Culture in International Business (W 4)
Theories of International Trade and Investment (W 5)
The Regulatory Framework (W 6)
FDI and the MNE (W 7)
Cooperation among Nations (W 8)
Foreign Exchange and the International Monetary System (W 9)
The Structure and Strategy of IB (W 10)
Entry Strategies for Internationalising (W 11)
Any Questions?