Group 1 - Historical Context of Global Trading

Human Needs
 something that is necessary to live and function
 these needs are universal and apply to all individuals, regardless of culture or society
 food, water, clothing, and shelter are all needs

Maslow’s Hierarchy of Needs

Maslow's hierarchy of needs is a framework designed to provide insight into the motivations driving human behavior. It
arranges these motivations in a pyramid structure, with each tier signifying a different human need. And he categorizes them into
five distinct levels.

Human Wants
 something that an individual desires, but would be able to live without.
 wants might change over time
 these can range from luxuries like designer clothes and fancy cars, to more simple
 pleasures like a good book or a relaxing bath.

How Do Human Needs Affect the Economic Needs of The Early Civilization?
1. Agriculture and food Product
 shift from hunting and gathering to agriculture
 created irrigation systems
 domestication of animals
2. Shelter and Agricultural Advancements
 built remarkable structures like the Pyramids of Giza, the Great Wall of China, and the temples of Angkor Wat
 architectural wonders served not only as shelter but also as symbols of cultural and religious significance
3. Clothing and Security
 spun and wove fabrics from materials satisfying the need for clothing
 creation of armies, fortifications, and strategic military tactics
4. Transportation and Infrastructure
 development of essential components like roads, canals, and writing systems
5. Healthcare and Sanitation
 sanitation systems were developed to address public health concerns, addressing the need for health and well-
being.
6. Trade and Commerce
 prominent trade networks like the Silk Road and the Trans-Saharan trade routes, facilitated the exchange of goods
like spices, silk, and precious metals.
Trading
 Trading is the act of exchanging goods or services and it is extremely important to today's global society.
 The development of trade connects to other important systems in society, such as transportation, economy, and
communication.

3000 BCE - Ancient Civilizations

 1st Trade Happen
 Different materials such as spices, metals, and cloth, were traded.
Ancient Greek Trade
 first civilizations to trade by sea routes
 Greeks primarily traded pottery, jewelry, wine, olive oil, and glass cups.
Silk Road 130 BCE
 5000 mile trade route connecting China, India, the Roman Empire, and Persia
 Horses were used for transportation to travel and carry goods across long distances
Age of Exploration: 15th to 17th Centuries
 “NEW LAND”
 Technology developed during this time as well, such as more sophisticated shipbuilding, the mariner's compass and the
sextan
Mercantilism and Colonialism: Trade as National Policy
 Mercantilism is an economic policy designed to increase a nation's wealth through exports
Industrial Revolution: Technological Advancements Transform Trade
 Technological advancements, such as the steam engine, mechanization, and improved transportation infrastructure,
facilitated mass production and trade on a global scale.
Digital Era: E-commerce and Global Supply Chains
 The rise of the internet and e-commerce platforms has revolutionized the way businesses conduct cross-border
transactions.
 Global supply chains have become intricately interconnected, allowing for efficient production, distribution, and
consumption of goods

Historical Evolution of Global Trade That Lead to Colonial Imperialism

 Industrial Revolution
 National Security
 Nationalism
 Balance of Power
 Discover of New Routes
 Growth Population
 State Anarchy
Religious Beliefs
 A religion is a set of beliefs and rituals practiced by a group of people.
 Religious beliefs can have both positive and negative impacts on the development of global trading.
Positive Impacts
1. Ethical Framework
 Ethical principles such as honesty, fairness, and compassion.
 Positively influence business practices and trade interactions, fostering trust and cooperation among traders.
2. Social Capital
 Religious communities often provide social networks and trust-building mechanisms.
 Networks can be valuable for expanding global trade connections.
3. Charitable Initiatives
 Religions often encourage charitable activities and philanthropy.
 Religious organizations may engage in charitable work that benefits disadvantaged communities.
4. Cultural Exchange
 Religion can be a significant aspect of cultural identity.
 Global trade allows for cultural exchange and the sharing of religious practices and artifacts.
Negative Impacts
1. Intolerance and Conflict
 Some religious beliefs can promote exclusivity and intolerance, leading to conflicts and trade barriers.
 Discrimination against certain religious or ethnic groups can hinder global trade by creating hostile environments.
2. Regulatory Obstacles
 Religious laws or customs may clash with international trade regulations and norms.
 For example, restrictions on certain products, such as alcohol or pork.
It can hinder trade in regions with strict religious guidelines
3. Influence on Economic Policies
 In some cases, religious institutions or leaders may have significant influence over a country's economic policies.
 This can lead to protectionism or trade restrictions that negatively impact global trade
4. Cultural Barriers
  Religious differences can sometimes create cultural barriers.
 To make it challenging for traders to understand and navigate local customs.
 To potentially lead to misunderstandings and failed business transactions.
5. Lack of Innovation
 In some instances, strict adherence to religious doctrines may discourage innovation.
 And modernization in trade practices, hindering economic development.

Period of Colonization
 The period of colonization, which roughly spans from the late 15th century to the mid-20th century.
 Saw major colonial powers from Europe expanding their empires across the globe.
 These colonial relationships were complex and multifaceted, with various dynamics at play among the world's leading
countries during this time.

1. Imperialism and Colonialism

 European powers such as Britain, France, Spain, Portugal, the Netherlands, and Belgium pursued imperialistic
ambitions to acquire overseas territories.
 The competition for colonies often led to conflicts and tensions among these leading countries.
2. Economic Exploitation
 Colonizers sought to exploit the resources of their colonies, including minerals, agricultural products, and labor.
 Economic interests drove colonial expansion, as colonizers aimed to enrich themselves at the expense of their
colonies.
3. Competition and Rivalry
 The competition for colonies led to rivalries and tensions among the colonial powers.
 For example, the scramble for Africa in the late 19th century resulted in increased diplomatic tensions and
sometimes even armed conflicts.
4. Treaty Systems and Alliances
 Colonial powers often established treaties and alliances with each other to secure their colonial interests and
protect their territories.
 The Triple Entente (France, Russia, and Britain) and the Triple Alliance (Germany, Austria-Hungary, and Italy) are
examples of such alliances during the
 19th and early 20th centuries.
5. Colonial Trade and Mercantilism
 Colonial powers controlled trade routes and established mercantilist systems that favored the colonizers
economically.
 The colonies provided raw materials to the mother country, which in turn supplied finished goods to the colonies.
6. Cultural Exchange and Hybridization
 The colonial period led to the exchange of ideas, cultures, and technologies between the colonizers and the
colonized.
 This exchange sometimes resulted in the hybridization of cultures, as elements of both colonial and indigenous
cultures merged.
7. Resistance and Independence Movements
 Colonized populations often resisted colonial rule, leading to numerous independence movements and uprisings.
 These movements eventually led to decolonization in the mid-20th century, as many colonies gained
independence from their colonial masters.
8. Legacy of Colonization
 The legacy of colonization is still felt today, as it has left a lasting
 impact on the political, economic, and social structures of many former colonies

Group 2 - Country Competitiveness

Country Competitiveness
 Competitiveness is the relative strength that one needs to win in competition against rivals, it is the extent to which a
country is capable of generating more wealth than its competitors do in world markets.
 The core of a country's competitiveness centers on productivity.
  Productivity is the value of the output produced by a unit of labor or capital. It is the prime determinant of a nation’s long-
term standard of living and is the root source of national per capita income.
 International trade and investment can both improve a nation’s competitiveness and threaten it
Example
 Switzerland's strong suit is its innovative power, strong education system and a flexible labor market.
 Denmark's top ranking is in large part due to an outstanding performance in future readiness Ireland is an established top-
tier investment location for multinationals because of its consistent, stable, pro-business landscape, our high level of
education, ability to attract and retain talent, and the flexibility of our skilled workforce

Country Competitiveness and Multinational Enterprises

 Multinational enterprises (MNEs) reconfigure and coordinate their foreign direct investments (FDIs) in order to grow and
improve their effectiveness and performance.
 National environments influence national competitiveness through the development of specific resources and capabilities
(e.g., Italian footwear and textiles or Japanese semiconductors and electronics)

Impacts of Country Competitiveness on MNEs

1. Country competitiveness affects an MNE’s selection of its global operations location
 Evolution of the location advantage concept in international economics.
2. Country competitiveness affects an MNE’s industry selection
 For diversified MNEs, it is important to choose a foreign industry that will fit with the firm’s global product
portfolio and benefit from industry structure differences between home and host countries.
3. Country competitiveness affects an MNE’s innovation and capability building
 MNE's are affected by a country's favored industries and these patterns promote further expansion and
investment in these capabilities.
4. Country competitiveness affects an MNE’s global strategy.
 Diversity enables MNEs to globally differentiate their dispersed functions and businesses to leverage the
advantages of various countries’ competitiveness

Country-Level Determinants
1. Science, Education and Innovation
 Economies considered technological innovation as essential to increasing productivity and enhancing country
competitiveness.
 Countries should improve their science and education to create and maintain a strong record of innovation.
2. Macroeconomic Soundness
 Macroeconomic soundness, the key economy foundation and major source of country competitiveness.
 Economic soundness includes all the necessary components for long-term economic growth.
3. Finance
 Finance is an important macroeconomic factor that affects economic stabilization and growth, and country
competitiveness.
 Countries that prioritize the development and regulation of financial system can foster an environment that
promotes longterm economic success on an international level.
4. Internalization
 It is associated with country competitiveness, refers to the extent to which the country participates in international
trade and investment.

Industry-Level Determinants
Within a country, different industries are not the same in terms of comparative advantages. Economically, it is neither
necessary nor realistic to expect high competitiveness in every industry of the economy.
1. Factor Conditions
This concerns the nation’s position in factors of production, including basic factors such as labor, capital, land, and
natural resources and sophisticated factors such as skilled workforce, scientific base, infrastructure, and information.
2. Demand Conditions
This involves the nature of market demand for the industry’s product or service. International companies often
enter a foreign market because of promising opportunities arising from strong market demand
3. Related and Supporting Industries
This refers to the presence and support level of a nation’s suppliers or other related industries.
4. Rivalry and Business Practice
 This entails the nature of domestic rivalry in addition to the conditions governing how businesses are organized,
managed, and operated in a nation

Firm-Level Determinants
1. Organizing Principles
The national economic leadership of a country is not driven by technological investments alone but also by the
efficiency of a country’s dominant organizing principles.
2. Technological Innovation
Through technology transfer, foreign direct investment, and global strategic alliances, one nation’s firms can learn
both technologies and organizing principles that were developed and employed by counterparts in another nation.
3. Influencing Factor Creation
Firms can also influence the environment and impact a country's competitiveness. Firms can also join with, or
participate in, the efforts of governmental entities, educational institutions, and local communities to influence factor
Individual-Level Determinants
 Individual-level determinants are People or human resources associated with country competitiveness. They include
workers, entrepreneurs, professional managers, designers and engineers, educators and intellectuals, and politicians and
government officials.
 Country- and industry-level determinants provide an important context in which firms and individuals directly create
national wealth

Role of Individuals
 Workers
Productivity of workers affects country productivity
 Entrepreneurs
Special group of businesspeople taking risks in development of new product
 Educators
Creates and disseminate high quality of education for productivity

Government Role
 Government plays an important role in establishing competitiveness of a country
 Governments can have an impact on investment, savings, and trade through policymaking and intervention.
 Governments may help their countries become more competitive and successful on the international level by recognizing
and fulfilling their responsibilities.

Group 3 - International Business Environments: Cultural Environment

Culture and International Business
Culture - sum of the beliefs, values, practices, and attitudes that influence how organizations operate and interact with each
other in a global context. This inludes:
 How people communicate and negotiate
 How decisions are made
 How teams are organized
 How people dress and behave in the workplace
 How relationships are built and maintained
Significance
1. Entry into New Markets
Understand the local beliefs and values when dealing with foreign clients or planning marketing campaigns for
foreign subsidiaries.
2. Business Negotiations
Understand how your counterpart views the purpose of the negotiation and adjust your approach accordingly.
3. Personal Styles
Be aware of the cultural norms for dress and behavior in business settings.
4. Team Organization
Understand how teams in different cultures are organized and participate in decision-making.
5. Inclusion and Diversity
Create an inclusive and diverse workspace by welcoming people, ideas, and customs from different cultures.
Addressing the Cultural Barriers in International Business
1. Create a culturally aware workplace
2. Promote open communication
3. Engage in diversity training
4. Cultivate a shared company culture
5. Understand the local culture
Correlates of Culture
1. Values
Cultural values - shared beliefs and attitudes that guide people's behavior in a given culture.
It can influence:
 Negotiation styles
 Decision-making processes
 Customer behavior
 Workplace culture
2. Business Practices
Direct vs. indirect communication
 Some cultures prefer direct and explicit communication, while others prefer indirect and implicit
communication.
High-context vs. low-context communication
 High-context cultures rely heavily on nonverbal cues and shared understanding, while low-context
cultures rely more on explicit language.
3. Communication
Business practices can also vary widely between cultures. This can include things like:
 Legal and regulatory environment
 Infrastructure
 Workplace etiquette
 Gift-giving customs
 Religious holidays and other cultural observances

National Culture Classification

1. Hofstede's Cultural Dimensions Theory
A framework for cross-cultural psychology, developed by Geert Hofstede. It shows the effects of a society's culture
on the values of its members, and how these values relate to behavior, using a structure derived from factor analysis.
 Hofstede’s 6 Dimensions of National Culture
1. Power Distance Index (PDI) : The extent to which the less powerful members of organizations
and institutions accept and expect that power is distributed unequally.
2. Individualism vs. Collectivism (IDV) : The degree to which people in a society are integrated into
groups.
3. Uncertainty Avoidance Index (UAI) : A society’s tolerance for ambiguity.
4. Masculinity vs. Femininity (MAS) : Stresses different expectations for men and women.
5. Long-Term Orientation vs. Short-Term Orientation (LTO): Associates the connection of the past
with the current and future actions/challenges.
6. Indulgence vs. Restraint (IVR Index): The degree of freedom that societal norms given to citizens
in fulfilling their human desires.
2. Trompenaars’ Cultural Dimensions
How people from different cultures differ from one another, in order to establish a relationship with them more
effectively.
1. Universalism vs. Particularism
Rules vs. Relationships
 Universalists: Canada, the U.S., the U.K., and Australia
 Particularists: Latin America, Korea, China, and Russia.
2. Individualism vs. Communitarianism
Working as a Team or as an Individual
 Individualists: Canada, the U.S., the U.K., and Australia.
 Communitarian Cultures: Africa, China, and Latin America
 3. Neutral vs. Affective
Emotional Openness
 Neutral Cultures: Germany, Netherlands, and the U.K.
 Affective Cultures: Italy, Spain, and Latin America.
4. Specific vs. Diffusive
Personal vs. Professional Life
 Specific Cultures: Germany, the U.S., the U.K., and the Netherlands.
 Diffusive Cultures: China, India, Argentina, and Spain.

5. Achievement vs. Ascription

Status Recognition
 Achievement Cultures: The U.S., the U.K., Germany, and Scandinavia.
 Ascription Cultures: Japan, Italy, and France.
6. Sequential Time vs. Synchronous Time
How Things are Done
 Sequential Time Culture: U.S., the U.K., and Germany.
 Synchronous Time Culture: Japan, India, and Mexico.
7. Internal Direction vs. External Direction
Environmental Control
 Internal Direction Culture: The U.S., the U.K., and Australia.
 External Direction Culture: China, Russia, and Saudi Arabia.
3. Corporate Culture
The shared beliefs, values, traditions, and behaviors of an organization. It includes an emphasis on customer
service, a positive work environment, and ethical practices.
Four Characteristics of Company Culture
1. Innovative
A culture focused on innovation and creativity where employees are encouraged to think outside the box
and come up with new ideas.
2. Results-Oriented
A culture focused on achieving results and hitting targets.
3. Collaborative
A culture where employees work together to achieve a common goal.
4. Entrepreneurial
A culture focused on taking risks, trying new things, and embracing failure.

Building A Global Corporate Culture

1. Cultural Diffusion
The process of transferring, adopting, and merging cultures from one to another due to globalization.
2. Cultural Homogenization
The reduction in cultural diversity from the popularization of cultural symbols of physical products, values,
customs, and ideas.
3. Cultural Erosion
Sudden change and reduction to their own culture.

Key Cultural Issues

Four Types of Cultural Culture
1. Clan Culture
Operates in a friendly, cooperative culture, like large families where individuals have a lot in common. Great bonds
of tradition, commonality, and loyalty often develop.
2. Adhocracy culture
Focuses an emphasis on getting results. It empowers workers to use their creativity, adaptability, and versatility to
discover the best solutions to issues.
3. Market Culture
Promotes developing an environment of intense competition. Profit margins and staying ahead of the competition
are key to market culture.
4. Hierarchy culture
 This prioritizes structure, discipline, and rules. An organization has a specific hierarchy system that outlines job
titles, roles, and organizational levels.

Cross-cultural Negotiation
understands the need of overcoming the gaps that exist between business people from various countries, backgrounds, and
ethnicities.
> Understand the Blind Spots
> Identify the Cultural Gaps
> Adjust and Refine the Negotiation Strategy

Conflict resolution
a way for two or more parties to find a peaceful solution to a disagreement among them.
The disagreement may be:
1.Personal
2.Financial
3.Political
4.Emotional

Culture marketing
refers to promotional messages and materials that marketing teams curate for a specific group of potential customers.

Cultural Branding
when a business markets its brand by engaging to the lifestyle of its target market

Managing a Diverse Workforce in International Business

 Eliminate communication barriers
 Provide training
 Establish policies and procedures
 Diversify your workforce

Ethics and Cultural Considerations

The major cultural factors that significantly impact international businesses are culture, etiquette, religion, language,
customer preferences, education level, customs and taboos, and attitude towards foreign goods and services.
Seven Principles of Business Ethics
 Accountability
 Care and Respect
 Honesty
 Healthy Competition
 Loyalty
 Transparency
 Respect for the Rule of Law.

Group 4 - International Business Environments: Political Environment

Political Environment
The political environment includes all the rules and regulations, laws, and the role of the government in the day-to-day
operations of the organizations.

Political System
The two basic systems are Totalitarianism and Democracy.
 Totalitarianism is a type of government where nobody has any individual freedom, and is completely controlled by
the government.
 Democracy is a type of government where the power is in the hands of the people.

Trade Agreements
 Any contractual arrangement between states concerning their trade relationships.Trade agreements may be bilateral or
multilateral—that is, between two states or more than two states.

Political Factors
The political environment consists of a set of political factors and government activities in a foreign market that can either
facilitate or hinder a company's ability to conduct business in the foreign market.
Common Political Factors
 MARKET ECONOMY
Because of the protection of private property and contract rights, a market economy is usually the best economic
environment for a foreign business.
 COMMUNISTIC ECONOMIC SYSTEM
In which the state controls almost all aspects of the economy. In this environment, doing business is difficult to
impossible.
 MIXED ECONOMY
mixed economy is a market system of resource allocation, commerce, and trade in which free markets coexist with
government intervention.

Why Do Governments Intervene in Trade?

 POLITICAL
 ECONOMIC
 CULTURAL
 SOCIAL

How Do Governments Intervene in Trade?

 Tariffs
 Subsidies
 Import Quotas and VER
 Currency Controls
 Local Content Requirements
 Antidumping Rules
 Export Financing
 Free Trade Zone
 Administrative Policies

The MNE Government Rlationship

What is a Multinational Enterprise?
 Enterprise that has facilities and other assets in ate least one country (host country) other than its home country
 United States is the country that has the most multinational corporations, numbering 719 companies.
 BDO, Accenture, Nestle, San Miguel Corporation, Apple, Mcdonald’s and Coca-Cola
What is a Political Risk?
Political risk is generally defined as the risk to business interests resulting from political instability or political change.

Two Types of Political Risk Facing International Companies

 MICRO RISK
Related to the multinational companies which have businesses in the country and the adverse effects faced by
those companies.
 MACRO RISK
Arise from internal conflicts such as corruption, poverty, cynical manipulations, etc.

Political Risk in International Business

To better understand the prevalence and causes of political risks, it is prudent to examine a few real-life scenarios. Some
examples of these risks include:
 Expropriation
 Nationalization
 Changes in Tax Policies
 Political Violence
Common Issues in Their Host Countries
 LIMITATIONS TO STRATEGIC FREEDOM
Host governments have move toward the closer regulation of entire industrial sectors which primarily affect
MNE’s
 THREATS TO MANAGERIAL AUTONOMY
Forcing MNCs subdiaries to share their strategic decision making with representatives of local constituencies.
South America, West Africa, and Far East countries regularly request joint ownership of local multinational
companies subsidiaries.

Potential Drawbacks on Host Countries

 Domestic businesses may not be able to compete with MNCs and some will fail
 MNCs may not feel that they need to meet the host country expectations for acting ethically and/or in a socially-responsible
way
 MNCs may be accused of imposing their culture on the host country, perhaps at the expense of the richness of local
culture.
 Profits earned by MNCs may be remitted back to the MNC's base country rather than reinvested in the host economy.
 MNCs may make use of transfer pricing and other tax avoidance measures to significant reduce the profits on which they
pay tax to the government in the host country

Legal Issues in The Host Countries

Rule of Origin Laws
 To implement measures and instruments of commercial policy such as anti-clumping duties and safeguard measures;
 Knowing to determine whether imported productsshall receive most-favoured-nation (MFN) treatment or preferential
treatment.
Competition Laws
 Antitrust Legislation and Enforcement
 Subsidies
 Marketing and Distribution Laws
 Product Liability Laws
 Intellectual Property Laws
 Environmental Laws
 Transfer Pricing & Earning Stripping

The Legal Environment

Role of Legal Environment in International Trade and Foreign Investment
The legal environment of business is the activities of the respective government towards the trade and commerce of that
country. It also includes the current trends of economic controls, policies of taxation, historical development reports of business, and
also regulating the competition of the market.

Agencies Focusing on International Trade

 UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE (UNCITRAL)
 WORLD TRADE ORGANIZATION (WTO)

Legal Systems in International Trade

 COMMON LAW
it is based on traditions, past practices, and legal precedents set by the courts. Ex. United Kingdom
 CIVIL LAW
it is based on a comprehensive set of written statutes. Ex. France, based on Napoleonic Code.
 THEOCRATIC LAW
the legal system based on religious doctrine, precepts and beliefs. Ex. Saudi Arabia, Islamic Shariah Law(Quran and
Hadiths)

Justification for Trade Restrictions

 National Growth
 Increased Global Production
  Worldwide Consumption
 International Efficiency
 National Security
 Constant Job Creation

Role of Legal Environment on Foreign Investment

 Investment in a foreign country
 Capital flow from a country to another
Direct
Indirect
 On investor
 On investee

Legal Environment
 Laws passed by the government
 All legal surroundings that affect activities in terms of an array of acts, rules and regulations.
 Before investing the following are the most common and basic factors to assess:
Policy
Ease
Expiration of funds
Exit