UNIT 1:

1. Why would government impede free trade? (3 motives)

2. Ways government intervene in trade (6 ways)
3. Study “balance of trade”, “balance of payment”

UNIT 2:
1. Compare FPI and FDI

FDI FPI

Set up: establishment of a plant or a Set up: No establishment of business

network abroad. interest.
Liquidity: Capital fund will be tied up for a Power: Investors do not aim to take control
long time of a corporation
Power: Investors can acquire part or all Liquidity: They can liquidate their market
equity of a current foreign corporation to value at any time.
take control or share control over sales,
production, development, research

2. Objectives of FDI?
Resource seeking
Market seeking
Efficiency seeking
Strategic assets/ capabilities seeking

3. Types of investment incentive?

Cash grant; lower taxes; accelerated depreciation; training allowances; research subsidies;
interest rebates on loans.

4. What are some financial considerations in making FDI?

ROI - What is the expected Return on Investment?
Interest rate - What are interest rates?
Cash flow projection - What is the cash flow projection
What are sources of working capital?

5. When is a foreign project said to be viable? What is a nonviable project?

Viable: Only when reliable access to outside financing are available.
Non-viable: When the expected ROI, profits realized on assets employed are lower than from
a comparable investment in the host country.

6. Study “cash flow”

The total amount of cash that remains in a company after it has paid taxes and other cash
expenses.

UNIT 3:
1. What are the main functions of a central bank?
● Regulating commercial bank
- Supervising Being the banker’s bank
- banking industry
- Implementing the monetary policy
● Controlling the nation’s entire supply
- Set the interest rate which is used to manage inflation and the country’s exchange rate.
● Holding gold and currency reverse
 2. What are the ways to make money in foreign exchange market?
Arbitrating: transferring one currency to another to benefit from rate differentials.
3. Briefly describe the Gold Standard
The gold standard system determine the value of all currencies based on gold. This meant
the values of different currencies could be compared in terms of one another.
4. Describe Long and Short position
Long: Dealers buy currency forward without selling forward at the same time
Short: Dealers sell currency forward without buying forward at the same time.

UNIT 4:
1. Why is L/C the popular method of payment in international trade?
Minimizes the risks for both exporters and Importers.
Ex: It makes sure that he will get money for the exported goods provided that he presented all
corrects documents
Im: It ensures that he will get the goods bought if he paid or agreed to pay on a fixed date in
the future.
It’s greatly supportive involvement of the bank in the transaction process.

2. What is the difference between D/A and D/P?

D/A D/P

Documents are released to the importer Documents are released to the importer only
against acceptance of a draft, which means when payment have been done.
control of the goods is lost and the
acceptance bill of exchange may be
dishonoured at maturity.

3. How does a documentary collection differ from a letter of credit as a means of financing
international trade?

4. How does an L/C protect both Buyer and Seller?

5. Describe the procedure for documentary collection
6. Active and passive role of Bank

UNIT 5:
1. Distinguish need, want and demand
2. Study “market research, market segmentation, point of sales”
3. Study 08 types of Marketing
4. Study “product life cycle”

UNIT 6:
1. List some major factors to consider when choosing a mode of transport

UNIT 7:
1. Why do Sellers and Buyers insure their cargoes? (Why do we have to buy Marine Insurance
on Goods?)
2. What is the actual insurance contract?
3. Compare cargo insurance A, B, C
4. The calculation of Marine Insurance Premium depends on what?

UNIT 8:
 1. What are reasons for companies look for foreign market? (Why do the companies go
international/go global?)
2. Study global + multinational strategy
3. Study “decentralization + centralization”

UNIT 9:
1. Types of M&A
2. What are the reasons behind a horizontal merger?
3. Reasons for mergers
4. Reasons of failure of mergers
5. Problem with mergers
6. Study Page 101

UNIT 10
1. What are the advantages of arbitration over litigation?
2. Which are the main arbitration centers?
3. What do clients look for from the arbitration service?

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ESSAY
1. “While a country as a whole will gain from trading with other nations, this does not mean that all
sections of the community within the country will benefit.” Discuss.
2. Advantages and disadvantages of open account method.
3. Why is “word of mouth” an effective way of advertising?
4. What are advantages and disadvantages of Air transport?
5. Why do businesses insure their goods against risks?
6. What are the advantages and disadvantages of one of the ways that multinational companies use
to break into a new market? (Export/Set up a new factory in the foreign market)
7. Why is there a high percentage of failure of mergers?
8. Why do companies merge with each other?
9. What are the advantages of arbitration over litigation?

Đọc thêm:
1. Advantages and disadvantages of FDI to host countries. (mid-term)
2. Why is L/C the popular method of payment in international trade? (mid-term)
3. Documentary credit is often used to finance international trade. Why is it chosen so widely?
Are there any risks or disadvantages for the exporter and the importer when they decide to
use documentary credit?
4. What are advantages and disadvantages of sea transport?
5. Advantages and disadvantages of Advertising
6. What are the advantages of international trade to businesses?

ESSAY 1: “While a country as a whole will gain from trading with other nations, this does not
mean that all sections of the community within the country will benefit.” Discuss.

1. A country as a whole will gain from trading with other nations:

Specialisation:
Foreign trade leads to specialisation and encourages production of different goods in different
countries. Goods can be produced at a comparatively low cost due to advantages of division of
labour.

Advantages of large-scale production:

Due to international trade, goods are produced not only for home consumption but for export to other
countries also. Nations of the world can dispose of goods which they have in surplus in the
international markets. This leads to production at large scale and the advantages of large scale
production can be obtained by all the countries of the world.

International cooperation and understanding:

The people of different countries come in contact with each other. Commercial intercourse amongst
nations of the world encourages exchange of ideas and culture. It creates co-operation,
understanding, cordial relations amongst various nations.

2. This does not mean that all sections of the community within the country will benefit

The clear losers of globalization are workers in traditional economic sectors. For example, in the
United States, according to a study by economists David Autor, David Dorn, the increase in imports
from China alone has resulted in the loss of 1.5 million manufacturing jobs since the early 1990s. In
total, some 6.9 million industry jobs were lost in the US between the early 1990s and 2011.
Economists often point to the advantages such developments bring to a nation's economy as a whole
-- lower prices for goods and new foreign markets for products manufactured domestically, for
example -- but that doesn't help those who have lost their jobs. They feel as though their political
representatives have forgotten them.

ESSAY 2: ADVANTAGES AND DISADVANTAGES OF OPEN ACCOUNT METHOD

Open account means the goods, and relevant documents are sent by the exporter directly to the
overseas buyer, who will have agreed to remit payment of the invoice back to the exporter upon
arrival of the documents or within a certain period after the invoice date. This method of payment
brings both advantages and disadvantages for the parties involved in the sales contract.

Open account trading offers several advantages – particularly that it is simple to administer and
involves minimal banking fees or other costs. Firstly, the system is attractive to buyers because it
affords them the opportunity to examine the goods before they have to make payment, thus avoiding
risks such as non-delivery, late delivery, failure to receive goods or faulty goods. In terms of the
sellers, they would be able to land a sale easier since offering open account terms will increase
competitiveness in the global market and increase the number of transactions. Furthermore, not
relying on documentation to the same extent as bills for collections or documentary credit, open
account transaction could reduce cost and save time for both parties when they deal directly with
each other without too much involvement of banks, The only involvement by banks in open account
trading is in the transfer of funds on behalf of the buyer to the seller

However, open account is not a popular method of payment and can only be used for transactions
between exporters and importers who have already established a trust-worthy and long-term business
relationship. This is because while open account is the most secure payment method for importers, it
places the risks of non payment on exporters who obtain no security for payment, and have to rely
entirely on the creditworthiness and good faith of the buyer. If the corresponding party defaults, the
exporter might incur extra costs for debt collection or even litigation and arbitration, which is more
difficult with the absence of documents and banking channels.

In conclusion, open account is the form of settlement that offers the least risk to the buyer, but a high
level of risk to the seller. Though open account terms will definitely enhance export competitiveness,
exporters should thoroughly examine the political, economic, and commercial risks as well as cultural
influences to ensure that payment will be received in full and on time.

Pros

- simple to administer and involves minimal banking fees or other costs (reduce cost, save
time)

- Boosts competitiveness in the global market

- Helps establish and maintain a successful trade relationship

Cons

• Significant exposure to the risk of non-payment

• Additional costs associated with risk mitigation measures

ESSAY 3: WHY IS “WORD OF MOUTH” AN EFFECTIVE WAY OF ADVERTISING

Advertising provides a direct line of communication to call the public's attention to a business usually
for the purpose of selling products or services to existing and potential customers, through the use of
media. Especially in the age of information, people are exposed to various forms of advertising every
day from a variety of sources such as newspapers, TV broadcasts, public events, social media.
Among these, word of mouth is becoming increasingly and a must-have component of any ambitious
brand’s marketing strategy.

Word-of-mouth occurs when a consumer's interest in a company's product or service is reflected in

their daily dialogues. This free advertising is triggered by customer experiences, usually something
that goes beyond their expectation.

The first advantage of word of mouth is high level of reliability. According to HubSpot show that
75% of people don’t believe adverts, yet 90% trust suggestions from family and friends and 70% trust
consumer reviews. In addition, word of mouth marketing could create brand loyalty because of
building an engaged fan base rather than a buy and bolt customer. Higher engaged customers buy
more often and recommend their friends more often, extended your return on time spent on the
strategy and generating a high customer lifetime loyalty

Apart from that, word of mouth help grow sales without the ad spend. People who have used the
product are not paid to express their opinions and feelings from personal experience and evaluation,
which save costs for companies compared to investment in other massive and expensive means of
media. Many brands from The Hustle to Bangs Shoes and more use word of mouth marketing instead
advertising spend to increase sales and fanbase.
When case studies were analyzed, researchers found that increase in word-of-mouth could translate
into a specific percentage of sales lifts, which motivates companies to find ways to master this
method of advertisement for their marketing campaigns. For example, foody, KOL.

In conclusion, a word-of-mouth approach costs little while it effectively spreads recommendations for
our business.

ESSAY 4: WHAT ARE ADVANTAGES AND DISADVANTAGES OF AIR TRANSPORT?

Advantages:

- High speed delivery

- Cheap insurance because goods are at risk for shorter periods

Disadvantages:

- High freight rates

- Delays due to bad weather

- Restrictions on weight and size

With the light of globalization, the demand for delivery of goods and passengers between countries is
has been increasing significantly. Among 4 modes of transport including road, rail, air and sea
transport, although air transport is only responsible for 1% of the total volume of freight, it accounts for
30% of the total turnover of international trade.

Transportation of cargoes by air plays a crucial role due to its various advantages. The biggest to
mention is that air transportation is the fastest means of transport and one can travel from one part
of the world to another part of the world within hours. Hence if one wants to transfer lightweight
perishable goods or due to medical emergency one has to travel from one part of the world to another
part of the world, then air transportation is the only option as other modes of transportation will be
useless in such circumstances. Moreover, another benefit of air transport is lower insurance
premium, calculated based on risks of loss or damage during transit, thanks to its high speed. To be
more specific, the less time the consignment spends on the plane, the shorter periods during which it
is at risk, which results into cheaper insurance.

On the other hand, there are drawbacks to consider that make transportation by air a less suitable
option compared to other modes of transport. Firstly, in return for fast speed and high quality services,
freight rates of air transport are the most expensive, which could be explained by high operating
maintenance costs of planes. In addition, Air transport is uncertain and unreliable as it is controlled to
a great extent by weather conditions. Unfavourable weather such as fog, snow or heavy rain etc. may
cause cancellation of scheduled flights and suspension of air service. Furthermore, it has small
carrying capacity which limits its use because it can carry a maximum of 300 to 500 passengers and
also it is not suitable for transportation of bulky and heavy goods.

In conclusion, in order to have control over the transport of consignments it is essential to understand
the relative advantages of various modes of transport available concerning factors such as nature of
the goods, delivery time and freight rates to choose the most favourable mode of transport.

(Aviation is one of the most profitable means of transport for humankind, shortening the distance
between all the countries of the world, allowing commercial exchange to be carried out in a safe and
timely manner. It has facilitated the delivery of commodities in many places on the planet. However,
there are some disadvantages of air transport that must also be considered)

ESSAY 5: WHY DO BUSINESSES INSURE THEIR GOODS AGAINST RISKS?

With the light of globalization, the demand for delivery of goods and passengers between countries
has been increasing significantly. However, transporting goods around the world is not without certain
risks. When the goods are shipped somewhere internationally, there would be many things which
could go wrong while they are in transit. That’s where cargo insurance comes in.

As we all know, the handling and transportation of goods always involves the risk of loss or damage.
Especially when it takes a long period of time to move cargo from one place to another, many events
can occur during transit that may cost the owner substantial sums of money. For example, loss and
damage could arise from: fire or explosion; collision of vessels; pirate, theft or non-delivery; rough
handling; natural disasters; washing overboard; contamination; entry of water into vessel or place of
storage, etc.

Therefore, owners of the goods can protect themselves against these risks by insuring their goods in
transit, thus minimizing such impacts as loss of profits, productivity and goodwill.

Without insurance, the goods only have the minimum protection because freight forwarders and
carriers typically have limited liability in the event of loss, damage or delay thanks to internationally
ratified conventions and the standard trading conditions of transport associations. (Coverage for
limited carrier liability)

Thanks to the insurance policy, an insurance company undertakes to indemnify the insured if loss or
damage is suffered due to the risks insured against.

Moreover, who will be responsible for insuring the goods and for what part of their journey will depend
on the delivery term that the seller and the buyer stated in the sale contract. (The party responsible for
insuring the goods and the part of the journey insured will be determined by the terms of the purchase
contract between seller and buyer based on risks, compensation and liability) For example, for FOB
contracts the buyer will take the risks of the goods after they are loader on board at the port of
loading, therefore the buyer will be the one responsible for buying insurance. Otherwise, if the terms
are CIF the seller has to provide minimum insurance cover to the port of destination.

Besides: Buying insurances for goods is often a contractual requirement. It also frees the traders from
anxiety and worries when moving their cargos to somewhere thousands of miles away, especially
cargos of high value.

In conclusion, insurance is used depending on the commercial terms of the agreement, to protect
cargo owners from the risk of lost or damaged goods by financially compensating for partial or total
loss according to the terms of insurance policy.

ESSAY 6: What are the advantages and disadvantages of one of the ways that
multinational companies use to break into a new market? (Export/Set up a new
factory in the foreign market)

Along with the fast pace of globalization, a lot of business owners pursue the ambition of increasing
market power by going international. There are a diversity of ways to achieve a new market and
enhance profitability, such as exporting, licensing, setting up new factories abroad, etc. In recent
decades, both direct and indirect exporting activities have been conducted dynamically all over the
world. This essay will comprehensively weigh up the pros and cons of exporting.

ADVANTAGES

- Extending the Product Life Cycle: In the domestic market, your product might be
approaching the end of its life cycle. In such an instance, finding an export market, usually
less developed countries, would be ideal in order to extend the life cycle of the product.
- Higher Profits: No company would export unless it intends to make a profit. Generally
speaking, larger orders not only increase revenues, but also decrease the production costs
thanks to economies of scale. The companies also save the costs of establishing whole new
factories in foreign markets. Some rare products (such as certain specialty foods) may also
be able to command a higher price in an overseas market. All these factors can positively
affect the profit margins of a firm.
- Being less dependent on a single domestic market: When you export, then your company
is no longer solely dependent on sales within the local market. Therefore, if economic
conditions become unfavourable domestically, the impact on your operations might not be too
drastical if you have been able to expand your business to foreign markets. In other words,
exporting reduces the vulnerability of any trading company.

DISADVANTAGES

- Lack of market information: Finding information on some markets can be extremely difficult,
especially when the exporters manage remote relationships from thousands of miles away.
Lack of information would means that you do not have sufficient knowledge about your
competitors and the trends related to your specific product and similar items. This can
negatively affect your ability to do well in the target market.
- Trade barriers: Almost every government have protectionism to conserve local
manufacturers. They tend to impose tariffs, quotas and complicated technical requirements
on imported goods to their countries. Furthermore, Export Licenses and other documentations
have to be obtained.
- Cultural differences: The tastes of customers in different areas can be totally contradictory.
One product may successfully occupy its local market, but it may experience failure when
served in other nations. For instance, we should not export canned foods with beef
ingredients to India. Sometimes, the exporters need to modify their items to meet the
requirements of importing markets, incurring more financial burdens.

In a nutshell, every coin has two sides and exporting activities are no exception. This way of going
global costs less time, money and effort. However, it also hides many risks that owners should
consider carefully before growing their businesses.

ESSAY 7: WHY IS THERE A HIGH PERCENTAGE OF FAILURE OF Mergers?

Along with the fast pace of globalization, a lot of business owners have the ambition of breaking into
new markets worldwide. One of the most effective ways to overcome entry barriers and expand
markets is merger. However, merging with another entity is always a risky venture no matter how
extensively the negotiating process is conducted. In fact, a high rate of mergers have experienced
failure due to the following main reasons.

First and foremost, a clash of cultures may gradually lead to the breakdown of mergers. Even
companies in the same industry, serving the same customer segments, and possessing the same
core values can suffer from cultural differences. The employees are unable to communicate and
convey the ideas efficiently to others. As a result, a lack of synergy in teams is marked and a low
productivity is observed.

The second cause of mergers’ failure is unrealistic expectations about the future success of the new
company. When business owners set over-confident financial targets, they tend to tensely fight
over limited resources. Any negative economic outcome can lead to frustration and, more seriously,
result in a steady decline in the share price.

Last but not least, a high percentage of mergers are unsuccessful because of the ways the
companies are integrated. Two businesses often have very different strategies and growth models.
This requires the board of directors to comprehensively understand the aim of merger then combine
strategies suitably. Weakness or over-optimism in management can push a new enterprise into a
common trap.

In conclusion, seemingly good deals can go bad and merger is no exception. The success of mergers
depends on how realistic the deal makers are and how well they can integrate two companies while
maintaining day-to-day operations.

ESSAY 8: WHY DO COMPANIES MERGE WITH EACH OTHER?

In recent decades, rather than relying on organic growth alone, commercial enterprises tend to
exercise merger and acquisition. Despite the seemingly high risks attached, the number of combined
corporations has gradually increased. This essay provides details on four main reasons for this
tendency as follows.

- Increased market power: Avoid excessive competition and achieve larger market
share - the potential growth of the business when breaking into new markets worldwide.
Companies may decide to merge in order to gain better distribution channels or marketing
network.This distribution or marketing network gives both companies a wider customer base
overnight.
- Overcome entry barriers. Mergers can also be a solution for larger companies looking
to lower their tax burden. For example, if the larger company is in a country with a high
corporate tax rate, they could merge with a company in a location with a lower rate. While this
action is often criticized, it is very effective in lowering a company's taxes.
- Increased diversification: Another reason for merging companies is to complement a
current product or service. Two firms may be able to combine their products or services to
gain a competitive advantage over others in the marketplace.
- Reduce the cost of new product development: Product development is expensive and
risky. For instance, in the pharmaceutical industry where small start-ups developing one or
two new products are unable to fund research, testing and regulatory compliance. By
merging, the smaller companies benefit from the research and finances of the larger
companies to develop new items.

In a nutshell, merger is a potential way for businesses to pursue fast growth and other targets.
However, seemingly good deals can go bad and merger is no exception. Besides the attractive
prospect of a merger, a deal of risks are waiting simultaneously. Business owners have to carefully
weigh up the pros and cons before making a deal.

ESSAY 9: WHAT ARE THE ADVANTAGES OF ARBITRATION OVER LITIGATION?

In order to satisfy the incredible increase in human demands, there has been a diversity of
commercial activities worldwide. However, commercial disputes have also become more complicated,
especially international-related cases. Arbitration and litigation are two legal techniques for the
resolution of disputes. In the past few decades, the former has been commonly used because of a
number of perceived advantages over judicial proceedings.

First and foremost, it takes less time to settle a dispute by arbitration than to file it in court. While
litigation officially goes through lots of procedures, arbitrators examine evidences then render awards
as fast as possible. The awards are final and binding, there are very limited opportunities for either
party to appeal. In contrary, the court often allows appeals and retrials, which prolong the resolution
time.

Secondly, arbitration is generally cheaper than a court proceeding/than court litigation. Basically, with
a quicker and less complicated process, resolving cases by arbitration costs a smaller amount of
money for both sides. However, arbitration fees can be raised depending on the value of commodities
disputed and the sophistication of arbitrators.

Thirdly, one of the most compelling strengths of arbitration is the ability to keep disputes away from
the public eye. Unlike litigation in the court, arbitration takes place in private, so that both parties do
not get troubles with rumors or bad reputation. The confidentiality provides terrific values to
companies which prefer to avoid publicity or involve commercially sensitive matters.

Last but not least, reliability contributes to the popularity of arbitration. The arbitrators, who are
specialists in that business field, tend to be more knowledgeable than juries. Moreover, there is no
fear of home-bias advantages because arbitrators are appointed by both parties according to specific
international rules.

In conclusion, arbitration has appeared to repel the drawbacks of judicial proceedings. Thanks to
four main advantages mentioned above, arbitration deserves to become a mainstay in resolving legal
disputes.

TITLE: What are the advantages and disadvantages of sea transportation?

The globalization progress has paved the way for goods to be exchanged beyond
national borders conveniently. Along with this development of free trade, there has been a
significant increase in the demand of global transportation. Each means of transportation has
its particular advantages and disadvantages. However, ocean freight, the oldest means of
international transportation, remains its popularity until now. This essay will provide a
thorough analysis of sea transportation’s pros and cons.

On the first side, sea freight comes with many strong points in comparison to other
means of transportation. It provides trading companies with a cost-effective means of
shipping goods. The sea freight rate is quite low, approximately four to six times cheaper than
air freight delivery. By opting for transportation through ships, the companies can save a
great amount of money and reduce their total operational cost. This helps them to sell their
products to international users at very affordable and competitive prices. The second main
advantage of sea transportation is its high capacity of load. To illustrate, heavy and bulky
items such as furnitures, automobile parts, industrial machines, etc. can be transported with
ease by ocean vessels without incurring enormous costs. However, air freight, another
popular means of transportation, is not capable of dealing with these heavy shipments due to
the limitation of airplanes’ cargo compartments.
 On the other side, sea transportation also has some inherent weaknesses. The biggest
downside of this means is slow speed. Ocean delivery is quite time-consuming as it may take
several weeks to move your goods while other transportation options like air freight can
deliver items in maximum two or three days. Hence, this means of transportation is only
suitable for any goods with long lead time. Furthermore, heavier packaging also makes ocean
freight a less attractive mode. Because the goods delivered by sea are often prone to roughly
handling, the exporters have no choice but covering their goods with stronger and heavier
packaging. This may increase the costs and trigger some problems in goods hand-over.

In conclusion, every coin has two sides and sea transport is no exception. There are
many factors to consider while choosing the best method of transportation whether by sea,
air, rail or road.