Principles of Global Business MNB3701 September 2018

1. Principles of Global BusinessMNB3701September 2018 Prof Aregbeshola R A

2. Focus of the module • Complexity of Global Business • Business management • Human resources management • Information technology • International marketing • International finance, etc. • Complex operating environment – laws, policies etc. • Instabilities in the global business environment

3. Assessment Formative: Assignment 01: 30 multiple choice questions (MCQ) (30 marks) Assignment 02: 3 Essay-type questions (70 marks) Summative: 20 multiple choice questions (20 marks) Any 2 of 3 essay-type questions (50 marks)

4. TOPICS Topic 1: Globalisation – The context of international business Topic 2: Institutional framework – governance and leadership Topic 3: Culture in global business environment Topic 4: Ethics and corporate governance Topic 5: Technology and innovation in global business Topic 6: The global monetary system and foreign exchange markets Topic 7: Evolution of global markets and African imperatives Topic 8: Financial management and strategies in global environment Topic 9: Cross-border investment and trade Topic 10: Foreign direct investment and institutional framework Topic 11: Regional economic integration, trade blocs and free trade areas

5. Approach to the module • Understanding of relevant trade theories • Understanding of relevant concepts • Relational understanding of the topics (micro and macro) • A strong integration between theory and practice • Extensive use of practical examples

6. Topic 1Globalisation – The context of international business • What is globalisation? • Perspectives on globalisation • Types and forms of globalisation • Globalisation and the global business environment • What we know • What we don’t know • Does globalisation work?

7. …Globalisation Perspectives: Sociological – slavery, socio-political incursion Business – advent of MNCs Economic – combination of scarce global resources Types and forms of globalisation: Market and production

8. Faces of globalisation • The good • The bad • And the ugly

9. Topic 2Institutional framework – governance and leadership • Global institutional frameworks • World Bank • International Monetary Fund (IMF ) • The World Trade Organisation (WTO) • Corruption Perceptions Index • Corruption is seen as an enormous hindrance to growth and development across the world, more especially in developing countries.

10. Topic 2 cont…Institutional framework – governance and leadership • Worldwide governance indicators • Voice and accountability • Political stability and absence of violence • Government effectiveness • Regulatory quality • Rule of law • Control of corruption

11. Topic 2 cont…Institutional framework – governance and leadership… • World bank investment climate survey database • Firms’ perceptions • Infrastructure and services • Finance • Government policies • Conflict resolution and crime • Capacity and innovation • Labour relations

12. Topic 2 cont…Institutional framework – governance and leadership • Doing business: regulations and their enforcement • Public Integrity Index • The role of government • Respect for the rule of law • Adjudication and enforcement • Civil liberty and fundamental human rights • Peaceful electioneering and transfer of power • Transparency in governance and polity

13. Topic 3Culture and international business • What is culture? • The elements of culture • Values • Norms • Moral standards (ethics) • Attitudes and beliefs • Demographic trends • Lifestyle preferences and skills orientation

14. Topic 3 cont…Culture and international business • Characteristics of culture • Philosophicalcharacteristics • Social structures • Social stratification • Religious systems • Levels of culture • National cultures • Organisational cultures • Occupational cultures

15. Topic 3 cont…Culture and international business • Cross-cultural literacy • The extent to which a culture is willing to accept the introduction of anything foreign • Whether key cultural differences are small or great • The ability of individuals to adjust to what they find in a foreign culture • The managerial orientation of MNC’s doing business in a foreign culture.

16. Topic 3 cont…Culture and international business • Culture in the workplace • Hall’s low-context/high context paradigm • Ronan and Shenkar’s cultural clusters • Hofstede’s cultural dimensions • Culture: change and conflict

17. Topic 4Ethics and corporate governance in international business • International business, government and societies: ethical implications • Theories of business ethics • Friedman’s doctrine • Cultural relativism • The righteous moralist • The naïve immoralist • Utilitarian and Kantian ethics • Rights theories • Justice theories

18. Strategic Linkage • Business ethics and corporate governance • The concept of sustainability • Ethical dilemma in governance • The role of corporate social responsibility in business

19. Topic 4 cont…Ethics and corporate governance in international business • Corporate social responsibility and sustainable development • Corporate social responsibility reporting: the problem of disclosure • Multinational enterprises and global governance

20. Topic 5The global technological, innovation and information • The “T” in SLEPT • Technology in a global business • Border-in/border-out technology • Product technology versus production technology • Technology versus quality • Technology and productivity • Technology versus human intervention • Business technology • Technology needs to be approrpriate

21. Topic 5 cont…The global technological, innovation and information • Technology needs to be affordable • Technology as a product • Tracking technology development • Technologies changing the global business space • Innovation in a global business • Innovation versus research and development • Innovation and competitiveness • Innovation and blue ocean, blue sky and greenfield strategies • Disruptive innovation

22. Topic 5 cont…The global technological, innovation and information • Information in a global business • From information to an information system • A global information system: merits and challenges

23. Topic 6The global monetary system and foreign exchange market • Evolution of the global monetary system • The gold standard • The Bretton Woods Agreement and the fixed exchange rate system • The floating exchange rate system • The global monetary organisations • Currency conversion/convertibility • Currency/exchange rates determination

24. Topic 6 cont…The global monetary system and foreign exchange market • Foreign exchange markets • The role of foreign exchange markets • Exchange rates and domestic price levels • The law of one price and purchasing power parity • Exchange rates forecasting • Foreign exchange exposures/risks • Managing foreign exchange exposures/risks

25. Topic 7Evolution of global markets and African imperatives • Evolution of the global capital markets • The role of the capital market in an economy • Dynamics of the African capital market • Challenges that hinder capital market development in Africa • Endemic corruption is a major hindrance to capital market efficiency • Low household savings

26. Topic 7 cont…Evolution of global markets and African imperatives • Africa’s adoption of import substitution industrialization which According to the West, was counterproductive. • The new thinking on capital market development - Africapitalisation

27. Topic 8Financial management and strategies in the global context • What is financial management? • Approaches to financial management • The traditional approach • Arrangement of funds from lending bodies • Arrangement of funds through various financial instruments • Scanning for various sources of funds • Working capital management • Optimisation of operating costs

28. Topic 8 cont…Financial management and strategies in the global context • Transfer pricing • Multilateral netting • Centralised depository • Capital budgeting • Payback period • Net present value • Internal rate of return (IRR)

29. Topic 8 cont…Financial management and strategies in the global context • Risk factors in capital budgeting • Political/fiduciary risks • Economic risks • Financial risks in capital budgeting • Transaction exposure • Translation exposure • Economic exposure

30. Topic 8 cont…Financial management and strategies in the global context • Risk management in capital budgeting • Spot transactions • Hedging strategies • Forward exchange contracts • Currency swop • Currency option

31. Topic 9Cross-border investment and trade • Patterns and types of international investments • Barriers to international investments • Capital controls • Recent developments in international trade • International trade theories • Absolute advantage • Comparative advantage • Heckscher-Ohlin theory of factor proportions

32. Topic 9 cont…Cross-border investment and trade • Mercantilism • Product life cycle theory • National competitive advantage • New trade theory • Trade barriers • Reasons for trade barriers • Trade control • Tariff barriers • Non-tariff barriers

33. Topic 9 cont…Cross-border investment and trade • Local content requirements • Technical barriers • Free trade • The rationale for free trade is rooted in the practice of nations trying to minimise imports, leading to an inevitable waste of much of its national resources in the production of goods that is not suited to produce efficiently by the home market. • Free trade provides an antidote to such waste of resources

34. Topic 10Foreign direct investment and the institutional framework • What is FDI? • The philosophical approach to FDI • The radical view • Pragmatic nationalism • The free market view • Theories of FDI • Impediments to exporting • Imperfect market behavior (internationalization) theory

35. Topic 10 cont…Foreign direct investment and the institutional framework • Trends in FDI flows • Types of FDI • Mergers • Acquisition • Brownfield investment • Wholly-owned subsidiary • Drivers/determinants of FDI flow/direction

36. Topic 10 cont…Foreign direct investment and the institutional framework • The advantages of FDI to the home and host economies • Merits of FDI to the home country • Challenges to home countries posed by FDI • Advantages of FDI to the host economy • Negative effects of FDI on the host nation • The institutional determinants of FDI • African imperative

37. Topic 11Regional economic integration, trade blocs and free trade areas • Difference between regional economic integration, trade blocs and free trade areas • Levels of regional economic integration • The importance and challenges of regional economic agreement • Importance of regional economic agreement • Challenges posed by regional economic integration

38. Topic 11 cont…Regional economic integration, trade blocs and free trade areas • Economic integration in Africa • The African Union • The new partnership for Africa’s Development(NEPAD) • Economic community of West Africa States (ECOWAS) • The Southern African Development Community (SADC) • The Common Market for Eastern and Southern Africa(COMESA) • The East African Community (EAC)

39. Topic 11 cont…Regional economic integration, trade blocs and free trade areas • Economic integration in the America and Asia • North American Free Trade Agreement (NAFTA) • El Mercado Comun del Sur (MERCOSUR) • Association of Southeast Asian Nations (ASEAN) • Economic integration in Europe • The European Union (EU)

40. Conclusion

41. Contact Details aregbra@unisa.ac.za 012 4298505 Komape Refilwe emaduart@unisa.ac.za 0124294769