Rechtswissenschaften

1. new markets

2. USA/EU consume products which are produced in Asia

3. Technology canceled trade barriers

- Globalization of Market

 - Interenational Trade

 - International Investment

- International Risk

- Participants (firms, intermediaries, facilitators, government)

- Foreign Market entry Strategy

1. Seek opportunities for growth through market diversification

2. Earning higher margins and profits

3. gaining new ideas about products, services and business nethods

4. To better serve key customers that have relocated abroad

5. Bein closer to supply sources, benefit from global sources advantage, or gain flexibility in product sourcing

--> Dell has facilities in Asia, EU, USA, that allow mngt to shift production quickly (flexibility = comp. advantage)

6. Gaining access to lower-cost or better-value factors of production, marketing and R&D

7. To develop economies of Scale in Sourcing, production, marketing and R&D

8. To confront international competitors more  effectively or thwart (entgegenwirken) the growth of competition in the home market

9. To invest in a potentially rewarding relationship with a foreign partner

1. Cross Cultural Risk

2. Country Risk (=political)

3. Currency Risk

4. Commercial Risk

firms gradually intensify their  activities in foreign markets. they first gain their experience in the home market before going abroad in a similar market (culturally etc). Then they first export before going trough a subsidiary (Tochterfirma).

Steps:

1. Irregular Export activities

2. Export via independent sales representative

3. Establishment of overseas sales subsidiary

4. Establishment of foreign manufacturing subsidiaries

firm enjoys direct relationships with foreign actors. which can lead to furhter linkages with other actors and so on.

degree of internationalisation at both micro and macro levels can be listed in 4 broad firm level international situations:

1. Early Starter (low degree of int. of the firm and low degree of int. of market)

2. Late Starter (high of market and low degree of int firm)

3. Lonely International (high int. of firm and low intg. of market)

4. International among Others (high int. of firm and high int. of market)

Born Global Firms also called International Entrepreneurship 

- born global firm internationalize rapidly.

- After a short time they export at least a quarter of total production.

- Tend to be small

 - usually have a significant breakthrough in a process or technology

Multinational Enterprises

Firms that have HC in one country but have operations in others.

HC in developed countries

Small & Medium International Enterprises

Smaller than MNEs, usually are the suppliers of MNEs (backbone)

annual sales less than 5 Mio

since they are small, quicker to respond  to global business opportunities

can compete with MNEs bc they are innovative, well traines work forces, efficient, good technology

are integrated into the production process of larger MNEs

World Trade Organistion

aims to regulate & ensure fairness & efficiency in global trade & investment

1. solid legal & political system

2. low taxes

3. no corruption

4. education system

5. great in research

rapidly developing economies

eg Asia, Latin America, Eastern EU

By Paul Krugmann

foreign trade arise ALSO between similar countries.

Making use of economies of scale (large volumes bc of world market)

creating welfare through increase product variety and lower prizes

Porters Diamond: Theory of Competivive Advantage of Nations (CAN)

F1: Factor Conditions : Basic factor (cannot be changed) and Advanced Factors (Communication, Education, Technology)

F2: Demand Conditions: The nature of home demand for domestic products /services (

F3: Related and Supporting Industries (firms that are surroundeed by networks which mutually benefit from each other and increase competitiveness of all)

F4: Firm Strategy, Structure and Rivalry (intense domestic rivalry improves the worldwide competitiveness of domestic firms)

M1+2: Government and Chance: both influence the factors F1-F4  (eg Tax incentives, education system, ensure stability)

--> Countries should be exporting products from industries where all four components of the diamond are favorable, while importing where the components are not.

refers to the gradual integration and growing of national economies, driven by factors such as falling trade barriers, market liberalization or technological progress.

- bring participants together as a whole

- reduce problems of fluctuating exchange rates

- support trade and price comparisons

diff. countries adopt the same currency (EU)

you buy gold for your reserves

Put your money into $

mix of different exchange rates (Yen, Euro, $)

- Currency values determined by market  forces

- most advanced economies use it

- $, Euro, Yen

+ automatic stabalizers, monetary policy autonomy

- exchange rate risk, excessive use of expansionary monetary policy

- currency value set relative to the value of another currency at a specific rate (makes only sense when they have a similiar value)

- many developing economies and some emerging use it

+ greater stability and predictability of exchange rate movements ( helps stabilize a nations economy, government can intervene)

- limits a central banks ability to adjust interest rates as needed for economic growth

a mix betweend the floating system and the fixed system

(CH is free floating, but SNB keeps it in line with the big currencies)

1. What are the short- and long-term determinants of foreign exchange rates? (komisches e, Wahlen, New laws)

2. What currency exchange risk do we face?

3. What hedging (Absicherung mit Deckungsgeschäft) or exchange risk management strategy should we do?

4. Which of the various tools and techniques of the foreign Ex. Market should be employed (options, Termingeschäft)

1. Transaction Risk: risk associated with the time delay between entering into a contract and settling it (exchange rates fluctuate significantly over a short period of time) --> ongoing process

2. Translation Risk: translate currency into the parent currency (consolidating) --> doesnt affect direct cash flow

3. Economic Exposure: results from exchange rate fluctuations that affect pricing of products and inputs & value of foreign investment. It makes the firms products less or more pricy for foreign buyers. --> long term effet and therefore in financial  statements

Manages exposure (ausgesetzt) to currency risk

Locking in guaranteed foreign-exchange positions.

1. Forward Contrac

2. Futures Contract

3. Currency Option

4. Currency Swap

1. Centralize currency management with the MNE

2. Decide on the level of risk the company can tolerate

3. Monitor changes in key currencies

4. Monitor long-term economic and regulatory trends

5. Distinguish economic exposure from transaction and translation exposures

6. Emphasize flexibility in international operations

- economic growth

- inflation

- market psychology

- government action

take over a company by the government

Political Factors

Economic Factors

Social Factors

Technological Factors

Environmental Factors

Legal Factors

1. provide protection from external threaths

2. ensure stability based on law

3. govern the allocation of valued resources among the members of a society

4. define how society members interact with each other

.... is a sytem for interpreting & enforcing law. Law, regulations and rules establish norms for conduct (Führung):

- Ensure order

- resolve disputes in civil & commercial activities

- tax economic output

- provide protection for private property, incl. intellectual property & other company assets

Changes in the legal system affects the political system and vv.

1. Totalitarianism (North Korea, Zimbabwe, Eritrea)

- one strong leader/party (Dictator)

- controllls all aspects of life

- reulation of free speech

-terror

2. Democracy (Japan, EU, Australia, CH)

- power lays mainly with the citizens

- choose their government

- vote on diff. public referendums

- property rights

- Economic freedom & Transparency

- often connected to capitalism

Socialism (China, Russia, Venezuela)

- collective welfare over individual welfare

- state will distribute the wealth to each in a fair way

Liberalism:

- invisible hand

- private properts rights are protected

- Capitalism