Emphasize collective goals over individual goals.

Example: Socialism

Individuals should have the freedom in economic and political pursuits.

Individual interest is more important than state.

Communist totalitarianism: Socialism with totalitarian dictatorship.

Theocratic totalitarianism: A party, group, or individual governs according to religious principle.

Tribal Totalitarianism: A party, group, or individual governs according to the interest of a particular tribe.

Right Wing Totalitarianism: Grant individual freedom, but restricted political freedom.

Common law: Based on tradition.

Civil law: Based on detailed law code.

Theocratic law: Based on religious teaching.

Innovation and Entrepreneurs.

Weak property rights law.

The Democratic revolution during the late 1980s and early 1990s, leading to a greater commitment to free market capitalism.

Moving toward free market economies.

Shifting back toward greater authoritarianism in some countries creates more restrictions to free market model.

Totalitarian regimes failed to deliver economic progress to their nation.

Mass communication decreases effectiveness of propaganda.

Economic advancement led to a push for democratic reform.

National culture, the dominant set of values and norms that define nation-state.

Business culture, an acceptable way to conduct business in the society that is related back to their norms, values, and beliefs of the society.

Occupational and organizational culture, a set of norms, values, and beliefs that is expected for people in the occupation or organization to have.

Caste system, you are born into a social position and cannot be changed.

Class system, your social status can be changed according to your achievement and luck.

Power distance: The perception of inequality is based on a person’s physical and intellectual capability. High meaning more people belief in inequalities.

Individualism and collectivism: Individualism is more individual based on goal and achievement, but collectivism view more about maintaining relationships and social harmony.

Uncertainty avoidance: How much different culture accept ambiguous situations and tolerate the uncertainty.

Masculinity and Femininity: Achievement and Success oriented (Masculine, achievement. Feminine, quality of life oriented).

Long-term and short-term: Acceptance of gratification either in short term or long term.

The theory of which focuses on exporting more than importing. Where government encourage trade surplus and try their best to advocate for it.

Viewed that trade is a zero-sum game where one party gains are another party loss.

Created by David Ricardo, and the theory suggests that country should produce what they can most efficiently produce and trade for product that they can produce least efficiently.

Believed that trade is a positive sum game where both parties gain from trade.

Market Development: Demand for the product is for the high-income group in the country.

Growth: Prices remain high and sale rise.

Maturity: As products mature, production is optimized, and competition is high.

Decline: Product market share declines due to the high number of competitors, production decreases or reintroducing product with new version of the product.

The idea that nation can still benefit from trade even if there is no difference in resources or technology in production.

Specializing in a narrow range of products and then trade with other countries for goods that are not made within the country to reduce cost of goods and increase variety of products available in the market.

Porter Diamond suggests that one factor is not enough to help a nation to have dominate in international stage.

Firm Strategy, Structure, and Rivalry: Ideology of the firms that affected their growth. Also, the domestic rivalry helps drive firms to be competitive in the industry.

Factor Endowments: The resources that nation has in hand, like natural resources, location, climate, skilled labour, infrastructure, etc.

Demand Conditions: Home demand for the product or services.

Related and Supporting Industries: The amount of supplier and related industries that may affect the contribution that help grow related industries.

Subsidies: A government fund that is given to domestic producers to help compete against foreign producers. Pros: Advantage in export market, Help domestic producers against low-cost foreign producers. Cons: Consumers absorbed the cost of subsidies through tax.

Tariff: Tax imposed on imports. Pros: Act as protection for domestic producers and increases government revenue. Cons: Reduce the efficiency of the world economy.

Import Quotas: Restricted amount of goods that can be imported into the country. Pros: Protect domestic producers. Cons: Reduction in competition and could lead to higher prices for consumers.

Voluntary Export Restraints: A self-imposed restriction on the amount of goods exported. Pros: Avoid trade war. Cons: Increase in price for consumers.

Local Content Requirement: Regulation that demands every good in the industry to use either domestic goods, services, or labour. Pros: Increases revenue for domestic goods, services, and labours. Cons: Discriminate against foreign goods and increase prices for consumers.

Specific tariff, fixed charge for each unit of goods.

Ad Valorem tariff, proportion normally percentage of the total value of good.

It can achieve additional gain from free flow of trade and investment between countries.

Easier to form an agreement between a few countries.

Decreases the likelihood of war or violent conflict.

Giving more influence between countries and making them politically stronger.

It can be costly as a certain group may lose.

Result in the loss of national sovereignty.

Easier to compare prices across Europe

Increases greater efficiency in production because of increases in competition.

Costs

Benefit

Increases in employment, resources, and imports.

Increases competition and growth in the market which stimulates investment and creates a variety of choices for consumers.

Subsidiaries of foreign firms may have more economic power than domestic firms or even create a monopoly in the market.

Benefit

Understanding of foreign market that can be transferred back to home country.

Positive employment effects by creating demand for home-country export.

Cost

Inward flow of foreign earnings toward parent company.

Push

Emphasize personal selling using a short distribution channel and can be costly.

Pull

Emphasize mass media advertisement meaning long distribution and standardized good.

Advantages

Economic advantages, global brand name, and shortage of creative talent.

Disadvantages

Cultural differences and differences in regulation of different countries.

Price elasticity is usually found in countries with low income and high level of competition as small prices changes happened, there will be a larger change in demand.

Price inelastic are usually found in countries with high income and are not affected by prices changes as much, this may be because of the product being considered luxury good.

When firms compete with other firms in more than two national markets. Pricing with a competitive response can be aggressive, where one country’s pricing can affect another.

Experience Curve Pricing

Multipoint Pricing

Pricing goods at a lower price to drive out competition and then increases the price and operates in monopoly position.

Predatory Pricing

Convert payment received from international venture.

Make payment to foreign company

Investing in currency fluctuations

Invest cash for short terms in foreign money market.

Appreciate

It is when the value of one currency is increasing compared to another, meaning now the amount of money you get from converting to another currency has increased. Example if 1 USD is worth 30 THB and USD is appreciating, now 1 USD will be able to exchange to 33 THB.

Depreciate

It is when the value of one currency is decreasing compared to another, meaning now the amount of money used to buy another currency is increasing. Example if 1 USD is worth 30 THB and THB is depreciating, now 33 THB is needed to buy 1 USD.

Anyone can convert to the currency.

Only nonresidents can convert the currency to foreign currency.

Freely Convertible

Nonconvertible

Externally Convertible

Transaction Exposure

Economic Exposure

The value that company faced lost or gained from exchanging currency in individual exchange.

Translation Exposure

The value that company lost or gained from exchange currency in the accounting-based report.

Using forward exchange rate contract

Buying swaps

Lead strategy

Advance collection of foreign currency receivable

Lag strategy

Localization Strategy

Avoid customization in order to standardize and gain economies of scale for lower cost.

Global standardization strategy

Selling products that are made for domestic and sell them internationally with minimal customization.

International strategy

Advantages

Disadvantages

Capturing demand and establishing strong brand before others.

Build sales volume and ride the experience curve before competitors.

Creating switching cost for customers to prevent them from changing brand.