Economics Online Exam (fak: 27/1/2021)

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timer Asked: Jan 27th, 2021

Question Description

2th Feb, 1pm -3pm Sydnye time

This examination consists of a Case Study question (worth 30 marks) and two theory questions (worth 10 marks each) covering work from Weeks 7-12

attached same ppt will give acess after hire

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BSD119 GLOBAL BUSINESS Going International II: Political economy of trade & investment CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e From last week ➢examined various modes of entry ➢including exporting and FDI ➢including advantages and disadvantages ➢this week: closer look at exporting & FDI ➢by examining trade & investment ➢(which were touched on in Week One when looking at globalisation of markets and globalisation of production) CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Trade ➢trade: buying and selling of goods & services • this can take place in any market, anywhere ➢international trade: when a company in one country exports goods & services to buyers in another country ➢free trade: the absence of barriers to the free flow of goods and services between countries ➢allows for: • more efficient utilisation of resources • greater competitive forces • stimulus to economic growth ➢fair trade: provision of a ‘fair’ price to producers in developing countries CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Trade ➢protectionism: government intervention in international trade and investment to protect or advance the interests of certain sections of the economy or the nation as a whole ➢trade barriers: instruments of protectionist policies to inhibit/restrict trade • tariffs, subsidies, quotas, voluntary export restraints • local content requirements, administrative policies • anti-dumping measures ➢problems: • can invite retaliation • may be captured by special interest groups who distort it for their own ends CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Trade ➢in the context of global business ➢international trade is about exports (and imports) ➢exports: positive effects • for the economy: employment, trade balance, GDP • for the company: expanded markets, increased profits • for consumers: greater variety of (cheaper) goods & services ➢free trade important here • fewer barriers to trade, easier for exporters • positive effects of imports & free trade can be realised • GATT/WTO successful in reducing some barriers • particularly tariffs (remember Week One) • but many barriers still exist CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Trade ➢why governments intervene in trade: ➢many, often weak, political & economic arguments • protect workers • protect industries • protect consumers • protect the nation • protect human rights • protect the environment CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Investment ➢foreign direct investment (FDI): a local company investing in physical facilities abroad either through establishing physical operations itself or by acquiring an enterprise abroad • not to be confused with foreign portfolio investment (FPI) • i.e. when a local company takes up interest in financial instruments abroad • e.g. foreign corporate shareholdings, government bonds ➢why do companies do this? • preferred mode to exporting or licensing • strategic behaviour • eclectic paradigm: ownership. location, internalisation CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Investment ➢why governments intervene in FDI ➢can be understand in terms of costs and benefits • to host country • to home country ➢can then examine how governments intervene in FDI • home country: encourage & restrict outward FDI • host country: encourage & restrict inward FDI CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI host-country benefits & costs balance of payments effects national sovereignty & autonomy effect on competition & economic growth resourcetransfer effects employment effects CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI host-country benefits & costs: balance-of-payments effects Balance of payments (BOP) –national accounts summarising payments to & receipts from foreigners Current account – exports and imports and income payments often concern about current account deficits (CAD) – owe too much to rest of the world, foreign ownership FDI can be a substitute for imports – so helps CAD subsidiary might export – also helps with CAD CRICOS No.00213J but after initial capital inflow of FDI, repatriation of profits to parent company – outflows contribute to CAD Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e subsidiary might import inputs – also adds to CAD Government intervention in FDI host-country benefits & costs: resource-transfer effects FDI – positive contribution to economic growth of an economy by supplying capital, technology and management resources that would otherwise not be available evidence that not only was technology being transferred but also existing technology upgraded or new technology created in host country + spillover benefits – local personnel trained by subsidiary might leave & use new skills to improve local business operations or establish new businesses but may not always happen… CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI host-country benefits & costs: employment effects FDI can create jobs – directly, when the MNE employs a number of host-country workers and indirectly, when jobs are created in ‘upstream’ and ‘downstream’ firms in the supply chain but maybe not ‘new’ jobs – eg Toyota might have employed a large number of workers in the US, but Ford and GM laid off workers more weight as criticism when FDI is by acquisition CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI host-country benefits & costs: effect on competition & economic growth can increase competition which means broader choice, lower prices, more capital investments so increased productivity, product and process innovation, and greater economic growth but if subsidiaries have greater economic power than locally owned competitors, adverse effect – can use restrictive practices (eg draw on funds from elsewhere in company to subsidise costs in host market) to lessen or remove competitors if in form of acquisitions that involve mergers & takeovers can exploit its market power CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI host-country benefits & costs: national sovereignty & autonomy concern – loss of economic independence – key decisions made by foreign parent, no real commitment to host & host has no control eg transfer pricing & profit shifting + concern over national sovereignty & autonomy through growth of SWFs (sovereign wealth funds), large number of which controlled by authoritarian governments could mean control over strategically important industries to gain political and financial leverage CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI home-country benefits & costs balance of payments effects reverse resource transfer effect employment effects CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI home-country benefits & costs balance of payments effects benefit from inward flow of repatriated foreign earnings & if foreign subsidiary creates demands for home-country exports but negative – initial capital outflow (though usually less than foreign earnings) & if purpose is more imports from lowcost production location or if FDI is a substitute for direct exports CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI home-country benefits & costs employment effects positive when subsidiary creates demand for home-country exports especially if deliberate government policy to tie aid with conditions that favour home-country firms but negative when outward FDI creates foreign operations that replace domestic production (“exporting jobs”, “offshoring”) CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government intervention in FDI home-country benefits & costs: reverse resource-transfer effects positive when home-country MNE learns valuable skills from its exposure to foreign markets that can be transferred back to home country eg superior management techniques, superior product & process technologies can then contribute to home country’s economic growth rate CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government policy instruments & FDI home-country policies: encouraging outward FDI governmentbacked insurance programs to cover major types of FDI risk elimination of double taxation of foreign income ie taxation in host & in home country eg expropriation, war loss, block on profits transfer relaxed restrictions easier access for inward FDI from using political influence on host countries CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government policy instruments & FDI home-country policies: restricting outward FDI currency movement controls limit outflows due to BOP & exchange rate concerns less likely to happen now manipulation of tax rules sanctions to encourage firms to invest at home prohibit investment in certain countries restricting inward FDI usually for political reasons (eg US & Cuba & Iran) CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government policy instruments & FDI host-country policies: encouraging inward FDI incentives export processing zone (EPZ) tax concessions, government-funded infrastructure, lowinterest loans, grants, subsidies import barriers reduced, variety of concessions compared with rest of the country eg Thailand & foodprocessing industry eg Vietnam CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Government policy instruments & FDI host-country policies: restricting inward FDI ownership restraints from specific fields, or only proportion for national security & or unfair competition arguments performance requirements controls over behaviour eg conditions for local content, exports, technology transfer, local participation CRICOS No.00213J help maximise benefits & or mandatory joint minimise costs, more common ventures to maximise in less developed countries resource-transfer & employment benefits Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Trade & FDI liberalisation ➢strong economic arguments for unrestricted trade & for free movement of investment across borders to occur in optimal locations ➢moves to increase liberalisation – varying degrees of success ➢can be unilateral – less common ➢bilateral – free trade agreements between two countries ➢regional – free trade agreements within regions ➢multilateral – GATT/WTO CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Trade & FDI liberalisation ➢WTO ➢key functions: • provision of a global forum in which to negotiate lower trade barriers • application of principle of non-discrimination to negotiations to avoid a complex of different trading regimes among nations • provision of rules-based system for the orderly means of resolving trade disputes ➢unresolved issues: • anti-dumping measures • agricultural protection • intellectual property protection • market access CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e BSD119 GLOBAL BUSINESS Going International II: International Marketing Introduction CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Introduction tension in strategy between reducing costs and responding to local conditions is present here key debate: degree to which marketing mix is standardised or customised in market segmentation, product attributes, distribution strategy, communication strategy and pricing strategy CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Globalisation of markets? similar world markets so no need to customise? • Levitt’s argument but not so simple • at least for consumer products • though there is a convergence of tastes & preferences to some extent continuing persistence of cultural & economic differences stops standardisation • may never occur ‘global’ brands perceived, promoted & used differently in different countries • + still trade barriers & different standards still a constraint CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Globalisation of markets? one issue for globalisation – market segmentation identifying distinct groups of consumers whose purchasing behaviour differs from others in important ways, • based on criteria such as geography, demographics, sociocultural factors, psychological factors another issue: product attributes • products sell well when attributes match consumer needs & when needs vary… CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Market Segmentation different segments – different patterns of purchasing behaviour • marketing mix has to be adjusted from segment to segment • e.g. product design, pricing, distribution & communication strategy goal – optimise fit between consumers’ purchasing behaviour in given segment & the marketing mix • thereby maximising sales to the segment • e.g. Toyota – Lexus division to sell high-priced luxury cars to high-income consumers • & entry-level models, (Corolla) to lower-income consumers two main issues to be aware of: • differences between countries in structure of market segments • existence of segments that transcend national borders CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Market segmentation: Q: why? in international markets structural differences between countries important in one country but no parallel in home country therefore need to develop unique marketing mix segments that transcend national borders enhances standardisation possibilities global youth? eg Rip Curl A: because not all can transcend those national borders CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Product Attributes a product can be viewed as a bundle of attributes • e.g. car: power, design, quality, performance, fuel consumption, comfort products sell well when their attributes match consumer needs (& prices are appropriate) • e.g. BMW cars sell well to people who have high needs for luxury, quality & performance – because BMW builds those attributes into its cars if consumer needs were the same the world over, a company could simply sell same product worldwide • but needs vary from country to country, depending on culture, level of economic development, product standards CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Product attributes: differences here cultural differences countries differ along range of dimensions economic development highly developed countries – extra attributes in products eg religion & tradition particularly important in marketing foodstuffs & not willing to go without these for lower prices product & technical standards can be government -mandated product standards or differences in technical standards CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e Conclusion ➢Therefore, due to differences with market segmentation and product attributes ➢adjustments have to be made with marketing mix ➢will see examples of these differences in: • distribution strategy • communication strategy • pricing strategy ➢and will then see how the marketing mix is often configured CRICOS No.00213J Copyright © 2019 McGraw-Hill Education (Australia) Pty Ltd . Hill, Global business today: Asia-Pacific Perspective, 5e ...
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