INTERNATIONAL TRADE

&
COMPETITIVENESS

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 Competition

 Tryto win
 Success or Failure
 Success means Powerful, Efficient
 Powerful is a comparative word
 Depends on Time, Occasion, Product, Place
 Continuous Process

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 International Trade
 Globalization of Markets
– Removing Trade Barriers
 General Agreements on Tariffs and Trade
– Established in 1947
– Membership grow from 19 to 120 Nations
– Tariff Reduction was spread in eight round
 World Trade Organization
– Establish in 1995 under the Uruguay Round
– Membership grow to 148 members by 2005
– General Agreement on Trade in Services

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 International Trade
 Globalization of Markets
– Convergence of Consumers taste & Preferences
 Creating basic global market
– Example Coca-Cola Soft drinks, Visa Cards, Sony Play
Station Video Games, McDonald’s hamburgers
– Removing Geographical Barriers
 Communication Systems

 Internet

 Development of Ports & Sea Routes

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 International Trade
 Globalization of Production
– Advantage in Labour Cost
– Advantage in Capital Cost
– Advantage in Materials Cost
– Innovation
– Technology & Research and Development
– Human Resources
– Government Policies & Incentives

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 International Trade
 Globalization of Production (Examples)
– IBM Think Pad X31laptop computer
 Products Design in USA

 Case, keyboard and hard disk made in Thailand

 Display screen and memory in South Korea

 Built-in wireless card in Malaysia

 Micro processor and sales in USA

 Assembly in Mexico

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 International Trade
 Benefits to Nation
– Rapid Economic Development
– Employment opportunities
– Increase in National Wealth
 Benefits to Firms
– Cost Reduction
– Economic Scale of Production
– Improve Enterprise Value

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 National Differences
 Political Systems
– Democracy
– Communism
– Socialism
 Economic Systems
– Market Economy
– Command Economy
– Mixed Economy

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 National Differences
 Legal Systems
– Property Rights
– The Protection of Intellectual Property
– Product Safely and Product Liability
 Economic Development
– Developed Economy
– Under Developed Economy
– Developing Economy

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 National Differences
 Culture Difference
– Social Structure
– Language
– Religion
– Education
– Political Philosophy
– Economic Philosophy

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 Ethics in International Trade
 Employments Practices
 Human Rights
 Corruptions
 Environmental pollutions

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 International Trade Theory
 Mercantilism
 The Theory of Absolute Advantage
 The Theory of Comparative Advantage
 The Heckscher-Ohlin theory of factor
endowments
 The Product Life Cycle Theory
 New Trade theory

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 International Trade Theory
 Porter’s Theory of National Competitive
Advantage
– Factor endowments
– Domestic Demand Conditions
– Relating & Supporting Industries
– Firm Strategy, Structure, and Rivalry

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 International Trade Theory
 Implication for Manager
– Location
– First Mover Advantage
– Government Policy
 Case Study
– IBM
– LOGITECH
– ArcelorMittal Steel

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 Regional Economic Integration
 Political
Union
 Economic Union
 Common Markets
 Custom Union

Case Study
 European Union
 SAARC

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The Foreign Exchange Market
 Function of Foreign Exchange Market
 Currency Conversion
 Foreign Exchange Risk
 Exchange Rate Determination
– Interest Rate and Inflation
– Foreign Exchange Reserve
– Investor Psychology

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International Monetary System
 Gold Standard
 Fixed Exchange Rate System
 Pegged Exchange Rate System
 Floating Exchange Rate System
 Convertibility
– Partial
– Full

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Strategy of International Trade
 International Strategy

 Localization Strategy

 Transnational Strategy

 Global Standardization Strategy

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Strategy of International Trade
 Strategy Requirement
– Value Creation
– Cost Reduction Pressure
– Local Responsiveness
– Economic Scale of Production
– Leveraging Product & Competencies
– Creating a Value Chain

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Strategy of International Trade
 Entry Strategy
– Which Foreign Markets
– Timing of Entry
– Scale of Entry
 Modes of Entry
– Exporting
– Turnkey Projects, & Greenfield Venture
– Licensing, Franchising, & Joint Ventures

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Strategy of International Trade
 Modes of Entry
– Acquisition & Mergers
– Strategic Alliances
 Core Competencies & Entry Mode
– Technical Know-how
– Management Know-how
– Human Resources Advantage

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 Other Issues
 Global Research & Development
 Human Resources Management
 International Financial Management
 International Accounting Standards
 International Logistics

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