IBM内部培训国际业务管理

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1、International Business ManagementIIBD 0105Dr. TangCourse StructureModule I: Globalization & Information EconomyModule I: Globalization & Information EconomyModule II: Country EvaluationModule II: Country EvaluationModule III: Strategy & Entry ModeModule III: Strategy & Entry ModeModule IV: Control &

2、 HRMModule IV: Control & HRMModule V: Foreign Exchange & Multinational Module V: Foreign Exchange & Multinational Financial ManagementFinancial ManagementModule VI: International Marketing & OperationModule VI: International Marketing & OperationModule I: Globalization & Information EconomyIIBD 0105

3、Dr. TangAgendaGlobalizationGlobalization Concept Concept & & MeasurementMeasurement Driving ForceDriving Force Trade Trade & & Investment BarriersInvestment Barriers Liberalization Liberalization with with WTO WTO & & Regional GroupsRegional Groups ResponseResponseInformation EconomyInformation Econ

4、omy Information GoodsInformation Goods Information EconomyInformation EconomyGlobalization Globalization ofGlobalization of Product: irrelevance of national productProduct: irrelevance of national product Market Market world wide or international mobile customersworld wide or international mobile cu

5、stomers Converging tasteConverging taste Merger of national marketMerger of national market CompetitionCompetition global scale efficiencyglobal scale efficiency Multi-market cross subsidizing Multi-market cross subsidizing As a result of international exchange of goods, As a result of international

6、 exchange of goods, service, capital & human resourcesservice, capital & human resourcesGlobalization of Product Product Life Cycle ModelIrrelevance of the ModelTruncated Life CycleGlobalization of ProductR & DAdvanced ComponentsStandard ComponentsAssemblyMeasurement Trade & FDI as a % of GDPPrice c

7、onvergence As a result of arbitrageInternational Trade & FDI Export As Percentage of GDP Driving Force Transportation & telecommunication technologyLiberalization movement to breakdown trade & investment barriersAverage Tariff Rate 1913195019902000France21185.93.9Germany20265.93.9Italy18255.93.9Japa

8、n30-5.33.9Holland5115.93.9Sweden2094.43.9Britain-235.93.9UnitedStates44144.83.9Tariff Ad valorem: % of valueSpecific: fixed sum per unitCompound:Ad Valorem + SpecificCan Protection Protect? Effective protectionPrice elasticity of demand & supplyEffective Protectiont: tariff ratet: tariff ratew: weig

9、ht of imported componentsw: weight of imported componentsk: the final goods, k: the final goods, i: intermediate goods i: intermediate goods Country ACountry ACountry B Country B TVTV10%10%20%20%TV componentsTV components10%10%40%40%Effective Protection (T)Effective Protection (T)(10-5)*2=10(10-5)*2

10、=10(20-20)*2=0(20-20)*2=0Price Elasticity DemandDemandSupplySupplyElastic: Elastic: P P D D P P S S Inelastic: Inelastic: P P D no changeD no changeP P S no changeS no changePrice before tariffPrice before tariffTariffTariffPrice after tariffPrice after tariff1000100010%10%1100 1100 90990910%10%1000

11、1000Non-Tariff Barrier Quota (VER: voluntary export restraint)Quota (VER: voluntary export restraint)LicenseLicenseCustoms valuation, classification & procedureCustoms valuation, classification & procedureTechnical standardTechnical standardGovernment procurementGovernment procurementAntidumping dut

12、y Antidumping duty Countervailing duty (against subsidy)Countervailing duty (against subsidy)Investment Barrier Entry barriers (e.g. finance, transportation)(e.g. finance, transportation)Ownership limitPerformance requirement(e.g. local content)(e.g. local content)Non-national treatment (e.g. factor

13、 price)(e.g. factor price)WTO Freer trade Freer trade No discrimination (MFN & National Treatment)No discrimination (MFN & National Treatment)GATT GATT (general agreement on tariffs & trade)(general agreement on tariffs & trade)GATS GATS (general agreement on trade in services)(general agreement on

14、trade in services) TRIPS TRIPS (trade related aspects of intellectual property rights)(trade related aspects of intellectual property rights)Quota Quota (MFA phased out)(MFA phased out)Subsidy Subsidy (prohibited & actionable)(prohibited & actionable) Safeguard Safeguard (temporary protection)(tempo

15、rary protection)Regional Integration StagesStages FTA: Free Trade Area FTA: Free Trade Area (low tariff for members)(low tariff for members) Custom Union Custom Union (same tariff on non (same tariff on non members)members) Common Market Common Market (factor mobility)(factor mobility) Economic Unio

16、nEconomic Union Political UnionPolitical UnionRegional Integration NameYearCurrentMemberLiberalization&IntegrationAPEC(21)1989US,Canada,Mexico,Chili,Peru,China,H.K.,Taiwan,Japan,S.Korea,RussiaASEAN7(Indonesia,Malaysia,Philippine,Singapore,Thailand,Brunei,Vietnam)PapuaNewGuinea,Australia,NewZealandFr

17、eetrade&investmentby2010forindustrializedcountriesby2020fordevelopingcountriesASEAN(10)1967Indonesia,Malaysia,Philippines,SingaporeThailand,Brunei,Vietnam,Laos,Myanmar&CambodiaAFTA(ASEANfreetradearea)by2003EU(15)1993(1958)Germany,France,Italy,Belgium,TheNetherlands,Luxembourg,Denmark,UK,Ireland,Gree

18、ce,Portugal,Spain,Austria,Finland,SwedenSinglemarket&CustomsUnionEconomicMonetaryUnionby1999NAFTA(3)1994US,Canada,MexicoFreetradeareaWhat is Comparative Advantage?Absolute Advantage: efficiencyAbsolute Advantage: efficiency Export a good if you can produce more efficientlyExport a good if you can pr

19、oduce more efficientlyComparative Advantage: costComparative Advantage: cost Export a good if you can produce cheaper Export a good if you can produce cheaperEfficient but not cheap:Efficient but not cheap: Because you have higher opportunity costBecause you have higher opportunity cost RCA: Reveale

20、d Comparative Advantage X export, M: import, i: country, W: world, k: product Comparison between: products, countries & PeriodsResponse to Globalization Journal of International Marketing, 5-1, pp9-30Strategy Drift Strategic Management Journal 9 pp75-91INFORMATION ECONOMY INFORMATIONINFORMATION GOOD

21、SINFORMATION ECONOMYInformation Anything with value that can be digitalizedInformation Goods Information embedded in text, number, graph, audio & video materialsValuationValuationPhysical NaturePhysical Nature The Nature of Information Goods ValuationValuation: HeterogeneityHeterogeneity Experience

22、goodsExperience goodsExclusivity vs. PopularityExclusivity vs. PopularityValue added in searchingValue added in searching The Valuation of Information Goodsdemand curve: heterogeneousValueValueCustomersCustomersWhat should we doWhat should we do? ?Customization & Price Discrimination ValueValue P P

23、CustomersCustomersThe Valuation of Information GoodsExperience GoodsValuation after Consumption(e.g. a film, MBA)What should we do?Experience Goods Brand NameFree SamplesThe Valuation of Information GoodsExclusivity higher value when it is scarcehigher value when it is scarcePopularity (Network Exte

24、rnality)Higher value when it is popularHigher value when it is popularwhat should we do? Network Externality ValueValue virtuous circle virtuous circle vicious circlevicious circle UsersUsersExclusivity & Popularity VersioningFree Distribution for a Critical MassValue Added in Searching InternetPort

25、al & LinksArchiveThe Nature of Information Goods Physical NaturePhysical NatureIndestructible vs. PerishableIndestructible vs. PerishableNon-Depletable & ReproducibleNon-Depletable & ReproducibleTransmutable & Non-FixationTransmutable & Non-FixationThe Physical Nature of Information GoodsIndestructi

26、bleLack of normal wear & tearLack of normal wear & tearShrinking market due to resale Shrinking market due to resale PerishableTime dependable Time dependable What should we do?What should we do?Indestructible vs. Perishable Planned ObsolescenceCustomizationReal time applicationThe Physical Nature o

27、f Information GoodsNon-DepletableCan be shared Can be shared ReproducibleNear zero marginal costNear zero marginal costWhat should we do?What should we do?The Physical Nature of Information GoodsTransmutableCan be easily altered Can be easily altered Problem of authenticity & integrity Problem of au

28、thenticity & integrity Non-FixationAlways growing & no final cutAlways growing & no final cutWhat should we do?What should we do?Reproducible & Non-Fixation Continuous UpdatingSelling the connection instead of the informationInformation EconomyAn Economy with super connectivity (communication with n

29、ear zero cost)where information goods become the center of economic activities e-CommerceUse of Internet to enhance communications & transactions with an organizations stakeholders (people who determine its future): e-BusinessA new business approach based on the possibilities provided by the interac

30、tive nature of the InternetThe Nature of Information Economy Business Mode: Mass CustomizationMass CustomizationImmediate & Ubiquitous Immediate & Ubiquitous Business Structure: Hollywood EffectHollywood EffectImmediate & Ubiquitous Todays InternetTodays InternetUbiquitous InternetUbiquitous Interne

31、tIntermediaryIntermediaryDestination Website Destination Website MobilemediaryMobilemediaryAccess PointAccess PointPC with Web browserPC with Web browserPDA, Wireless, Interactive TV, Kiosks, POS PDA, Wireless, Interactive TV, Kiosks, POS terminal, smart card terminal, smart card Reach CustomerReach

32、 CustomerWhen browsing web on PCWhen browsing web on PCWhenever & whereverWhenever & whereverCustomer FocusCustomer FocusPrice conscious shopperPrice conscious shopperImmediate need to be servedImmediate need to be servedStrategyStrategyFocus on contentFocus on contentBuild destination websiteBuild

33、destination websitePersonalize web pagePersonalize web pageWait for customersWait for customersFocus on contextFocus on contextBuild ubiquitous agentBuild ubiquitous agentKnow when you are needed and be thereKnow when you are needed and be thereHollywood Effect: Out Sourcing Transaction cost vs. Eco

34、nomy of scaleTransaction cost: cost of information for Transaction cost: cost of information for search, negotiate & enforce a contractsearch, negotiate & enforce a contractEconomy of scaleEconomy of scaleInternalize vs. ExternalizeHigh transaction cost: internalizeHigh transaction cost: internalize

35、High economy of scale:High economy of scale: externalizeexternalizeModule IICountry EvaluationIIBD 0105Dr. TangAgendaUnderstand SystemUnderstand SystemIdentify Opportunity Identify Opportunity MarketMarket ResourcesResourcesIdentify RiskIdentify Risk Economic RiskEconomic Risk Political RiskPolitica

36、l Risk Legal RiskLegal RiskCountry Selection Country Selection Porters Diamond Porters Diamond & & Eclectic TheoryEclectic Theory Opportunity Risk Grid Opportunity Risk Grid & & BERIBERI Attractiveness & Competence ProfileAttractiveness & Competence ProfileUnderstand System Economic: wealth (volunta

37、ry trade)wealth (voluntary trade) Ownership, Movement & Creation of ResourcesOwnership, Movement & Creation of ResourcesPolitical: power (coercion)power (coercion) Articulate & Aggregate of Individual InterestArticulate & Aggregate of Individual Interest Make, Implement & Adjudicate Public DecisionM

38、ake, Implement & Adjudicate Public DecisionLegal: Reorganization & Enforcement of RulesReorganization & Enforcement of RulesCultural: Shared belief & practice in a group Shared belief & practice in a group Economic SystemPlanned economy vs. Market Economy Ownership: State (SOE) vs. Private (Privatiz

39、ation)Ownership: State (SOE) vs. Private (Privatization) Allocation: Command vs. PriceAllocation: Command vs. PriceRationale Market failure: monopoly, friction, income distributionMarket failure: monopoly, friction, income distribution Government failure: information & incentiveGovernment failure: i

40、nformation & incentive Alienation vs. DependenceAlienation vs. DependenceMixed economy Political System Constitutional democracyConstitutional democracy Constitution, Free Election & Freedom of speechConstitution, Free Election & Freedom of speech Legislature, Executive, JudiciaryLegislature, Execut

41、ive, Judiciary AuthoritarianAuthoritarian Blind submission to authorityBlind submission to authority Totalitarian Totalitarian Subordinate all aspects of individual lifeSubordinate all aspects of individual lifePolitical System: Critique Public Choice: Politician as a vote maximizerPolitician as a v

42、ote maximizer Short term vs. long term interestShort term vs. long term interestCaptive Theory a few gain a lot at the expense of a few gain a lot at the expense of many loosing a little as individualmany loosing a little as individual Personal stake vs. information & organization costPersonal stake

43、 vs. information & organization costDealing With Government AuthorityAuthorityBargaining StrengthBargaining StrengthAvailable ChoiceAvailable ChoicePossible ResponsePossible Response5C of Negotiation5C of Negotiation Conflicted InterestConflicted Interest Common InterestCommon Interest Criteria (obj

44、ective)Criteria (objective) Convincing (impossible to give away)Convincing (impossible to give away) Compromising Compromising Legal System Common Law Common Law Britain & former coloniesBritain & former colonies Tradition, precedent, customTradition, precedent, custom Detailed contact Detailed cont

45、act Civil Law (Codified Roman Law)Civil Law (Codified Roman Law) Continental Europe, Japan etc.Continental Europe, Japan etc. Detailed codesDetailed codes Shorter contractShorter contractReligious Law Religious Law Bureaucratic LawBureaucratic Law Consistency, predictability & appeal procedure? Cons

46、istency, predictability & appeal procedure? Legal System Public lawPublic law: Co: Constitution nstitution & Administrative law& Administrative law Commercial code Commercial code (Uniformed Commercial Code)(Uniformed Commercial Code) Business formationBusiness formation Agent, Corporate & Non-corpo

47、rate Agent, Corporate & Non-corporate Business ConductBusiness Conduct Contract, Sales, Negotiable instrument, Secured transactionContract, Sales, Negotiable instrument, Secured transaction RegulationsRegulations TaxationTaxationAccounting StandardAccounting StandardDispute Settlement Dispute Settle

48、ment RegulationsProtection of consumerProtection of consumer Advertising, inspection & certification, labeling, safety, Advertising, inspection & certification, labeling, safety, warranties, consumer credit warranties, consumer credit Protection of propertyProtection of property (Possess & transfer)

49、(Possess & transfer) Protection of public investorProtection of public investor: : (information disclosure, (information disclosure, inside trading)inside trading)Protection of laborProtection of labor (compensation, leave, safety, social (compensation, leave, safety, social security, discrimination

50、, labor relation)security, discrimination, labor relation) Protection of competitionProtection of competition: : antitrust antitrust Protection of environmentProtection of environmentDifferences in Legal Systems Vulnerability of defective productsUSA vs. Britain: case law differenceUSA vs. Britain:

51、case law difference Public scrutiny USA vs. Britain: Statutory law differenceUSA vs. Britain: Statutory law differenceLegal expenses (plaintiff or defendant)USA vs. Britain: law administration differenceUSA vs. Britain: law administration differenceTaxation Direct tax (income)Direct tax (income) Cor

52、porateCorporate PersonalPersonalIndirect taxIndirect tax VAT or Business taxVAT or Business tax Excise taxExcise tax Property taxProperty tax Stamp dutyStamp duty TariffTariffInternational Taxation Tax jurisdiction (residential vs. territorial)(residential vs. territorial)Withholding tax (dividend,

53、royalty interest)(dividend, royalty interest)Double taxation & tax credit (35% = 10% + 25%)(35% = 10% + 25%)Transfer Pricing (vs. arms length: no relationship)(vs. arms length: no relationship)Branch vs. Subsidiary (tax to home country)(tax to home country)Foreign Tax CreditAccounting Standard (IAS

54、vs. GAAP)(IAS vs. GAAP) Revenue recognitionRevenue recognition (Critical path) (Critical path) Accrual method & Front end loading (premature recognition) Accrual method & Front end loading (premature recognition)Inventory valuationInventory valuation FIFO, LIFO, HIFO FIFO, LIFO, HIFO Amortization &

55、depreciationAmortization & depreciation Straight line vs. Double decline balance: Straight line vs. Double decline balance: Length of estimated lifeLength of estimated life Asset capitalization & Rear end loadingAsset capitalization & Rear end loading: : underestimate of current period expense: (Wor

56、ldCom)underestimate of current period expense: (WorldCom)Asset impairment & revaluationAsset impairment & revaluation Off-balance sheet debtOff-balance sheet debt Unconsolidated debt of subsidiaries (Enron)Unconsolidated debt of subsidiaries (Enron) Accounting Standard Buckley, A. 2000: Multinationa

57、l Finance, Prentice Hall, p49Dispute Settlement Which countrys law appliesIn which country the issue be resolvedWhich technique: litigation, arbitration.How will the settlement be enforced Cultural System Value & NormValue & Norm Belief of being good & right Belief of being good & right Reflected in

58、 & re-enforced by Reflected in & re-enforced by Behavior Behavior (pattern of response)(pattern of response) & Ritual & Ritual (formal & repetitive)(formal & repetitive) Information & media of informationInformation & media of information Artifacts (objects)Artifacts (objects) Institute (stratificat

59、ion & mobility)Institute (stratification & mobility)Value & NormVirtue Virtue True True (honest)(honest) Kind Kind (golden rule)(golden rule) Beautiful Beautiful (right proportion)(right proportion)4 Cardinal virtue4 Cardinal virtue 仁仁( (renren) ) 义义( (yi yi) ) 礼礼( (li li) ) 智智( (zhizhi), ), 信信( (xi

60、nxin) )Differences in Cultural SystemsHofstedeHofstede 5 orientations 5 orientations Power orientation (distance)Power orientation (distance) Uncertainty orientation Uncertainty orientation Social orientation (individualism)Social orientation (individualism) Goal orientation (material possession)Goa

61、l orientation (material possession) Time orientation (short term gain)Time orientation (short term gain)Eastern vs. WesternEastern vs. Western Patience Vs. ActionPatience Vs. Action Harmony Vs. FreedomHarmony Vs. Freedom Hierarchy Vs. EqualityHierarchy Vs. EqualityMarket Potential GDP p.c. The probl

62、ems of Commercialization of economic activitiesCommercialization of economic activitiesIncome distributionIncome distributionMarket exchange rateMarket exchange rateMarket Potential Trade Statistics (UN Trade Statistics Year Book)(UN Trade Statistics Year Book)Market Index (Cross Border Monitor)(Cro

63、ss Border Monitor)ProxyComparable Segment UN trade Statistics Market Index Cross Border Monitor (Business International) EIU: 40 indicatorsCross Border Monitor (Business International) EIU: 40 indicatorsPop: population, Pop: population, upop: urban population; upop: urban population; pc$: private co

64、nsumptionpc$: private consumptionKWH: electricity;KWH: electricity;stl: steel consumptionstl: steel consumptioncem: cement productioncem: cement productionTele: telephone in useTele: telephone in usecars in usecars in useTV in useTV in useProxy Tire purchase = 1.6 x Car registrationSatellite dish, i

65、mported car in street for other luxury goodsRefrigerators = 0.2 marriage+0.3 divorce+0.1 house start Comparable Income Segment PPP Exchange rate Big Mac Index1S$ = 25 Baht 1S$ = 25 Baht S$5000 = 125,000 BahtS$5000 = 125,000 Baht1 big Mac 1 big Mac = 1 big Mac= 1 big Mac5S$5S$= 50 Baht = 50 Baht 1S$1

66、S$= 10 Baht= 10 BahtS$5000 = 50,000 BahtS$5000 = 50,000 BahtBig Mac IndexPPP Exchange RateResources Availability, Cost, ReliabilityInfrastructure, Human, Capital, Raw Materials, Intermediate Goods, Machinery & Equipment, Geographic proximity Economic Risk Internal BalanceInternal Balance Recession o

67、r inflationRecession or inflation Demand misalignment or structural problemDemand misalignment or structural problemExternal BalanceExternal Balance BOP Balance (trade & capital)BOP Balance (trade & capital) Exchange rate Exchange rate Economic Risk Foreign debt default MoratoriumMoratoriumdebt serv

68、ice ratio debt service ratio (interest + principal due)/exports (interest + principal due)/exports Foreign exchange riskInterest rate riskInflation risk Internal & External BalanceInternal & External BalancePolitical Risk Change in leader or policiesChange in leader or policiesCivil disorderCivil di

69、sorderAnimosity between host & other countriesAnimosity between host & other countries Sanction (restraint against commerce: technology, tariff, loan etc.) Sanction (restraint against commerce: technology, tariff, loan etc.) Embargo (comprehensive sanction) Embargo (comprehensive sanction) Ownership

70、 riskOwnership riskOperation riskOperation riskTransfer riskTransfer riskPolitical Risk PerceptionOwnership RiskIn 1960s to 1980sAnalysis Of Political RiskManaging Political Risk Integral part of the host countryIntensive use of local resourceIntensive use of local resourceContributionContributionJo

71、int ventureJoint ventureInsurance coverageLegal Risk Uncertainty of law & law enforcementUncertainty of law & law enforcementExtraterritoriality (outside boarders)Extraterritoriality (outside boarders) Burma sanctionBurma sanction FCBAFCBAIncomparable legal requirementIncomparable legal requirement

72、Property right protectionProperty right protection Product safety & liabilityProduct safety & liability Environment & workplace standard Environment & workplace standard Corruption Corruption (Foreign Corrupt Business Act)(Foreign Corrupt Business Act) Porters Diamond Management IdeologyIndustrial S

73、tructureSupporting Industry(component & tool) Demand Condition(size & sophistication)Factor Condition(natural & advanced)GovernmentChanceEclectic Theory of Entry Mode Ownership AdvantageOwnership AdvantageCompetitive advantage over the rivalsCompetitive advantage over the rivalsLocation AdvantageLoc

74、ation AdvantageWhy host countryWhy host countryInternalization AdvantageInternalization AdvantageIn source or out source In source or out source Location Advantage Low input cost Market R & D facilitiesLogistic AdministrationEconomic, political, legal & cultural systemOpportunity Risk Grid CountryVa

75、riablesWeightA BCDAcceptable/UnacceptableAllow 100% ownershipUAAAOpportunity (H: preferable)Size of investment needed 0-5-433Direct cost0-3-312Tax rate0-2-212Market size (now)0-4-324Market size 3-10 years0-2-212Risk (H: Preferable)Loss making0-4-421Exchange rate0-3-023Political unrest0-3-312Total211

76、319BERI (Business Environment Risk Index)(Business Environment Risk Index) CriteriaCriteriaweight weight Multiply 0-4Multiply 0-4OVERALLOVERALLPolitical stabilityPolitical stability3 3Economic growthEconomic growth2.52.5Currency convertibilityCurrency convertibility2.52.5Labor cost/productivityLabor

77、 cost/productivity2 2Short-term creditShort-term credit2 2Long-term creditLong-term credit2 2Attitude towards foreign investmentAttitude towards foreign investment1.51.5NationalizationNationalization1.51.5Monetary inflationMonetary inflation1.51.5BOPBOP1.51.5Enforceability of contractEnforceability

78、of contract1.51.5Bureaucratic delaysBureaucratic delays1 1CommunicationsCommunications1 1Local ManagementLocal Management1 1Provisional Service & Contractors Provisional Service & Contractors 0.50.5TOTALTOTAL2525Max=100Max=1001=poor, 2=average3=above average4=superior80: favorable70-79: not so favor

79、able55-69: immature with potential40-54: high riskimport: appreciate)(exportimport: appreciate)Capital movement (inflowoutflow: appreciation)(inflowoutflow: appreciation)Inflation (higher domestic inflation: depreciation)(higher domestic inflation: depreciation)Speculation Government interventionBas

80、ic Relationships Future Standard contract Standard contract (size & maturity)(size & maturity)LessLess counterparty counterparty risk risk (the exchange guarantee)(the exchange guarantee)Margin account Margin account & marking to market & marking to market 10% margin, 75% maintenance, Future contact

81、: $1000, B40/$10% margin, 75% maintenance, Future contact: $1000, B40/$ Margin account: 1000 x 40 x 10% = 4000Margin account: 1000 x 40 x 10% = 4000 Baht Baht Maintenance: 4000 x 75% = 3000Maintenance: 4000 x 75% = 3000 Baht Baht If spot rate 38If spot rate 38 Baht Baht/$: loss 2x1000=2000/$: loss 2

82、x1000=2000 Baht Baht: margin call: margin callFuture Contract Margin of Future Contract International Monetary Market, Chicago Mercantile ExchangeApplication Of Future Contract An American firm has to pay 250,000 SF on An American firm has to pay 250,000 SF on March 1March 1stst. Analyze his decisio

83、n to buy a future . Analyze his decision to buy a future contract on February 1contract on February 1stst with the following data with the following data DateDateSpot rateSpot rateFuture 15/3Future 15/3February 1February 1stst$0.6667/$0.6667/SFSF$0.6655/$0.6655/SFSFMarch 1March 1stst$0.7658/$0.7658/

84、SFSF$0.7650/$0.7650/SFSFApplication Of Future Contract February 1st: buy future (0.6655 x 250,000 = $166,375) (0.6655 x 250,000 = $166,375) March 1st: Sell future Sell future (0.7650 x 250,000=$191,250)(0.7650 x 250,000=$191,250)Buy spot: Buy spot: (0.7658 x 250,000 = $191,450)(0.7658 x 250,000 = $1

85、91,450)Profit: Foreign exchange gain: Foreign exchange gain: 191,250-166,375=$24,875191,250-166,375=$24,875Foreign exchange loss Foreign exchange loss 191,450-166,675=$24,775191,450-166,675=$24,775Net profit: Net profit: 24,875-24,775=$10024,875-24,775=$100 February 1 spot0.6667 x 250000Currency Opt

86、ions OptionOptionBuyer of OptionBuyer of OptionSeller of OptionSeller of OptionCall OptionCall OptionRight to buy foreign currency Right to buy foreign currency at strikeat strikeObligation to sell foreign currency Obligation to sell foreign currency at strike at strike Put OptionPut OptionRight to

87、sell foreign currency Right to sell foreign currency at strikeat strikeObligation to buy foreign currency Obligation to buy foreign currency at strikeat strikePremiumPremiumPay premiumPay premiumReceive premiumReceive premiumPremium:%oftheUSDAmount(ChaseManhattan) Strike=themoneyFWD1month2months3mon

88、thsYENcallUSDPut1.241.872.38USDcallBahtPut1.121.591.93Currency Options Profit & Loss in Options Spotbuyerseller1.2-0.10.11.3-0.10.11.4-0.10.11.5-0.10.11.6001.70.1-0.11.80.2-0.21.90.3-0.32.00.4-0.4Spotbuyerseller1.00.4-0.41.10.3-0.31.20.2-0.21.30.1-0.11.4001.5-0.10.11.6-0.10.11.7-0.10.11.8-0.10.1Stri

89、ke at $1.5 per , and a Premium of $0.1 per CallPut Application Of Currency OptionsAn American firm has to pay 625,000 marks on June 1st. It may purchase a mark call option on February 1st, with a strike price of $0.5 and a premium of 0.03 cents. Analyze its decision if the spot rate on February 1st

90、is $0.49, and the spot rate on June 1st might be $0.6 or $0.48. Application Of Currency OptionsThe premium paid: The premium paid: 0.03/100 x 625,000=$187.50.03/100 x 625,000=$187.5June 1June 1stst spot rate: $0.6 spot rate: $0.6 No option: No option: 625,000 x 0.6 =$ 375,000625,000 x 0.6 =$ 375,000

91、 With option: With option: 625,000 x 0.5 +187.5 = $312,687.5625,000 x 0.5 +187.5 = $312,687.5 Saving: 375,000-312,687.5 = $62,312.5Saving: 375,000-312,687.5 = $62,312.5June 1June 1stst spot rate: $0.48 spot rate: $0.48 No option: No option: 625,000 x 0.48 =$ 300,000625,000 x 0.48 =$ 300,000 With opt

92、ion: With option: 625,000 x 0.48 +187.5 = $300,187.5625,000 x 0.48 +187.5 = $300,187.5 Loss: Loss: 300,000-300,187.5 = -$187.55300,000-300,187.5 = -$187.55Swap Exchanging obligation Chase Manhattan Chase Manhattan March 2 2000 2 2 yearsyears 3 3 yearsyears 5 5 yearsyears6 6 months $ to Baht fixmonth

93、s $ to Baht fix6.306.307.107.107.957.956 6 months $ to $ fixmonths $ to $ fix 7.24 7.247.357.357.437.43Application of SWAPA firm may issue a fixed rate bond with a 12.75% coupon. If this firm could issue commercial paper (CP) at LIBOR plus 0.375%, should this firm enter an interest rate swap, paying

94、 11.27% in exchange for the LIBOR?Application of SWAP12.75-(11.27-LIBOR+0.375+LIBOR)=1.105yes SWAP: Back to Back Loan Firm A (US parent) Firm A (US parent) Firm B (Swiss Parent)Firm B (Swiss Parent)US$US$10%10%11.5%11.5%SFrSFr5%5%6%6%Cost of A (borrow SFr): 10%+5.5%-10.75%=4.75%save 0.25%Cost of B (

95、borrow US$): 6%+10.75%-5.5%= 11.25% save 0.25%AB5.5%10.75%BankBank10%6%Case: 6-1Case: 6-1Tax ManagementArms Length Price Price between unrelated partiesComparable uncontrolled priceComparable uncontrolled priceResale price Resale price (subtract mark up from sale price)(subtract mark up from sale pr

96、ice)Cost plus (plus mark on sellers cost) Cost plus (plus mark on sellers cost) Fronting Loans Deposit $1 millionDeposit $1 millionLoan $1 millionLoan $1 million Pay 8% interest rate Pay 9% interest rate (tax deductible) Pay 8% interest rate Pay 9% interest rate (tax deductible)Parent CompanyIn a lo

97、w taxcountryInternational BankSubsidiary in a high tax countryTransaction Exposure Source: Contractual paymentSource: Contractual paymentManagement:Management: Natural hedging: offsetting inflow & outflowNatural hedging: offsetting inflow & outflow $ debt paid by $ sales $ debt paid by $ sales Contr

98、actual hedgingContractual hedging Currency risk sharing plan Currency risk sharing plan (case 5-1)(case 5-1) Forward ContractsForward Contracts Shot term borrowingShot term borrowing Discounting (B/E)Discounting (B/E) Factoring (P/N)Factoring (P/N)Currency Risk Sharing Plan Forward Contracts Forward

99、 options Forward options (optional date forward)(optional date forward) Optional maturity within specific periodOptional maturity within specific periodForward swap: Forward swap: Forward/forward: Forward/forward: (payment delayed)(payment delayed) May 1: Sell $ matured June 30May 1: Sell $ matured

100、June 30 May 20May 20thth: : Buy $ matured June 30Buy $ matured June 30thth, , Sell $ matured July 31Sell $ matured July 31stst Forward/spot Forward/spot (payment earlier)(payment earlier) May 1: Sell $ matured June 30May 1: Sell $ matured June 30 May 20May 20thth: : Buy $ matured at June 30Buy $ mat

101、ured at June 30thth, , Sell $ spot May 20Sell $ spot May 20ththForward Contracts Example May 1May 1spotspot37.5837.5838.3238.322 months (30/6)2 months (30/6)forwardforward-16-16-12-12May 20May 20spotspot36.0036.0036.7436.7440 day (30/6)40 day (30/6)forwardforward-16-16-12-1271 day (31/7) 71 day (31/

102、7) forwardforward-16-16-12-12July 31July 31spotspot35.0035.0035.7435.74A Thai exporter made a contract on May 1st to A Thai exporter made a contract on May 1st to receive $1000 in future. He sold forward $ matured on receive $1000 in future. He sold forward $ matured on June 30June 30thth. On May 20

103、. On May 20thth, he was confirmed that the , he was confirmed that the payment could be received on July 31payment could be received on July 31stst. Help him to . Help him to arrange forward swap, using the following in arrange forward swap, using the following in formation formation Forward Contrac

104、ts Example May 1May 1spotspot37.5837.5838.3238.322 months (30/6)2 months (30/6)forwardforward-16-16-12-12May 20May 20spotspot36.0036.0036.7436.7440 day (30/6)40 day (30/6)forwardforward-16-16-12-1271 day (31/7) 71 day (31/7) forwardforward-16-16-12-12July 31July 31spotspot35.0035.0035.7435.74May 1:

105、sell 2 month forward: 1000 x 37.42 = B 37420May 1: sell 2 month forward: 1000 x 37.42 = B 37420May 20: buy 40 day forward: 1000 x 36.62 = B 36620May 20: buy 40 day forward: 1000 x 36.62 = B 36620 sell 71 day forward: 1000 x 35.84= B 35840 sell 71 day forward: 1000 x 35.84= B 35840With SWAPWith SWAP

106、Net receipt: 37420-36620+35840=36640Net receipt: 37420-36620+35840=36640Without SWAP: 1000 x 35=35000Without SWAP: 1000 x 35=35000Forward Contracts Example May 1May 1spotspot37.5837.5838.3238.322 months (30/6)2 months (30/6)forwardforward-16-16-12-12May 20May 20spotspot36.0036.0036.7436.7440 day (30

107、/6)40 day (30/6)forwardforward-16-16-12-1271 day (31/7) 71 day (31/7) forwardforward-16-16-12-12July 31July 31spotspot35.0035.0035.7435.74A Thai exporter made a contract on May 1st to A Thai exporter made a contract on May 1st to receive $1000 in future. He sold forward $ matured on receive $1000 in

108、 future. He sold forward $ matured on June 30June 30thth. On May 20. On May 20thth, he received the payment. , he received the payment. Help him to arrange forward swap, using the following Help him to arrange forward swap, using the following in formation in formation Forward Contracts Example May

109、1May 1spotspot37.5837.5838.3238.322 months (30/6)2 months (30/6)forwardforward-16-16-12-12May 20May 20spotspot36.0036.0036.7436.7440 day (30/6)40 day (30/6)forwardforward-16-16-12-1271 day (31/7) 71 day (31/7) forwardforward-16-16-12-12July 31July 31spotspot35.0035.0035.7435.74May 1: sell 2 month fo

110、rward: 1000 x 37.42 = B 37420May 1: sell 2 month forward: 1000 x 37.42 = B 37420May 20: buy 40 day forward: 1000 x 36.62 = B 36620May 20: buy 40 day forward: 1000 x 36.62 = B 36620 sell spot: 1000 x 36.00= B 36000 sell spot: 1000 x 36.00= B 36000With SWAP: Net receipt: 37420-36620+36000=36800With SW

111、AP: Net receipt: 37420-36620+36000=36800Without SWAP: 1000 x 36.00 = 36000 Without SWAP: 1000 x 36.00 = 36000 Economic Exposure Source: NPV of the company Source: NPV of the company Management: Management: Diversification of productionDiversification of production Plant location Plant location (chan

112、ge in production run or relocation)(change in production run or relocation) Input mix Input mix (domestic vs. foreign) (domestic vs. foreign) or Sourcingor Sourcing Diversification of MarketingDiversification of Marketing Product differentiation, diversification, deletionProduct differentiation, div

113、ersification, deletion Price adjustmentPrice adjustment Promotion budgets adjustmentPromotion budgets adjustment Diversified marketsDiversified markets Diversification of FinancingDiversification of Financing Currency denomination & place of issueCurrency denomination & place of issue Maturity struc

114、tureMaturity structure Capital StructureCapital StructureHedging Economic Exposure Translation Exposure Source: Financial statement consolidationSource: Financial statement consolidation Current Rate MethodCurrent Rate Method local currency functionallocal currency functional Assets, Liability: curr

115、ent rate (on the statement date)Assets, Liability: current rate (on the statement date) Equity: historical rate Equity: historical rate Income statement: average rate Income statement: average rate C$C$C$/$C$/$ $AssetsAssets9609601.21.2800800LiabilitiesLiabilities4804801.21.2400400EquitiesEquities48

116、04801.11.1436436Translation adjustmentTranslation adjustment-36-36Total L+ETotal L+E960960800800Case 5-3Case 5-3Covered Interest Rate Arbitrage Interest Rate ParityInterest Rate Parityrdrf+(F-S)/SInvestindomesticBorrowfromforeignSellS$BuySBSellFBBuyF$FtoF*rdrf+(F-S)/SInvestinforeignBorrowfromdomesti

117、cSellSBBuyS$SellF$BuyFBFtoF*Covered Interest Rate Arbitrage ApplicationSuppose the spot and the one year forward rate is $0.2/FF and $0.1923/FF respectively and the US one year interest rate is 6% If the French interest is 12%, what arbitrage If the French interest is 12%, what arbitrage would you p

118、erform?would you perform?What will be your arbitrage profit if you start What will be your arbitrage profit if you start with $ 1 million?with $ 1 million?CoCovered Interest Rate Arbitrage Applicationrdrdrf rf + (F-S)/S + (F-S)/SBorrow $ sell S$ invest in France and buy F$ Borrow $ sell S$ invest in

119、 France and buy F$ (1/0.2)(1.12)*0.1923-1.06=0.01688 m=$16880(1/0.2)(1.12)*0.1923-1.06=0.01688 m=$16880Capital Budgeting 19991999200020002001200120022002Net cash flow in S$Net cash flow in S$-1,660,000-1,660,000300,000300,000600,000600,0001,500,0001,500,000Exchange rate S$/$Exchange rate S$/$1.66001

120、.66001.74301.74301.83021.83021.92171.9217Net cash flow in $Net cash flow in $-1,000,000-1,000,000172,117172,117327,833327,833780,559780,559PV factorPV factor1.00001.00000.86210.86210.74230.74230.64070.6407PV in $PV in $-1,000,000-1,000,000148,377148,377243,633243,633500,071500,071NPV in $NPV in $-10

121、7,919-107,919NPV in S$NPV in S$5,5055,505Capital Structure EquityEquityDebtDebtParentParentParentParentJoint Venture PartnerJoint Venture PartnerJoint Venture PartnerJoint Venture PartnerShare issue in host or home countryShare issue in host or home countryBond issue or bank loan in host or Bond iss

122、ue or bank loan in host or home countryhome countryShare issue in a third countryShare issue in a third countryBond issue or bank loan in a third Bond issue or bank loan in a third countrycountryCase Study 6-2Case Study 6-2Working Capital Management Cash poolingPayable & receivable: leads & lag cont

123、rolRe-invoicing ( (nettingnetting, transfer price), transfer price)US ParentFrench SubsidiaryGerman SubsidiaryLuxembourg Re-invoicing CenterpaymentpaymentmerchandiseNetting FrenchBritishGermanItalian1505020020010020050SubsidiarySubsidiaryTotal receivableTotal receivableTotal PayableTotal PayableNet

124、PositionNet PositionFrenchFrench250250350350-100-100GermanGerman250250100100150150ItalyItaly150150300300-150-150BritishBritish300300200200100100FrenchGermanItalianBritishClearing Center150100100150Module VI:International Marketing & OperationIIBDDr. TangAgenda Marketing StrategyMarketing Strategy ST

125、PSTP Marketing MixMarketing Mix Operation StrategyOperation Strategy StandardizationStandardization CentralizationCentralization OutsourcingOutsourcing International Trade PracticeInternational Trade Practice Term of PriceTerm of Price Method of PaymentMethod of Payment Export Financing Export Finan

126、cing Marketing in the Emerging MarketMarketing in the Emerging MarketSTP Model SegmentationIdentifying distinct customer groups Identifying distinct customer groups TargetingFocusing on a particular segmentFocusing on a particular segmentPositioningCreating favorable imageCreating favorable imageSeg

127、mentation Marketing Mix PhysicalfunctionappearancePackagingAccessoriesManualsBrandProducerImageServiceWarrantiesChannelsCoverageLocationsInventoriesTransportListpriceDiscountAllowancePaymentperiodCreditAdvertisingPersonalsellingSalespromotionPublicityProductProduct PlacePlace PromotionPromotion Pric

128、ePriceThe 7 P model ProductProductPricePricePromotionPromotionPlacePlacePeople: People: educated participation of customereducated participation of customer Motivated & well trained employeesMotivated & well trained employeesPhysical AspectsPhysical Aspects Delivery locationDelivery location Tangibl

129、eTangibleProcessProcess Method of delivery to ensure availability & quality Method of delivery to ensure availability & quality Marketing Mix with Internet Product: Product: Mass production to mass customizationMass production to mass customization Truncated product cycleTruncated product cycle Valu

130、e migration (new contents, new products: attention)Value migration (new contents, new products: attention) Economy of scopeEconomy of scopePrice:Price: Reverse auction: find producer with given priceReverse auction: find producer with given pricePromotion:Promotion: Broadcasting to customer searchin

131、g & focast (focused-cast) Broadcasting to customer searching & focast (focused-cast) Place:Place: Informediary & Informatization (smart goods)Informediary & Informatization (smart goods) Distributor becomes supplier: (pay per view)Distributor becomes supplier: (pay per view)What is ProductExceptiona

132、l UtilityPurchasePurchaseDeliveryDeliveryUseUseSupplementSupplementMaintenanceMaintenanceDisposalDisposalCustomer Customer ProductivityProductivityFast food Fast food coffeecoffeeDellDellNormal Normal ComputerComputerSimplicitySimplicityConvenienceConvenienceRisk ReductionRisk ReductionFun & ImageFu

133、n & ImageStarbucksStarbucksEnvironment Environment FriendnessFriendnessPhilips Philips BulbBulbValue RepositionedValue food chainExperience Information serviceDifferentiationCommodityExperience of communityExperience of communityExperience of entertainmentExperience of entertainmentExperience of thr

134、ill (win)Experience of thrill (win)Product ExtensionBrand DecisionBrand Decision Price CorridorPrice of goods with similar FormFunctionObjectiveAverage competitionLow competitionHigh competitionNew Pricing ModelReverse pricing (price to cost) (Swatch)Leasing (video)Time share (jet), slice share (mut

135、ual fund)Equity share (% of sales)Price DecisionDiscriminative PricingDiscriminative PricingAggressive PricingAggressive PricingTransfer pricingTransfer pricing Discriminative Pricing Aggressive Pricing Predatory pricing: aggressive pricing with Predatory pricing: aggressive pricing with cross subsi

136、dizing cross subsidizing Multipoint pricing: aggressive pricing in Multipoint pricing: aggressive pricing in different points different points Fuji vs. Kodak Fuji vs. Kodak Experience Curve Pricing: aggressive pricing Experience Curve Pricing: aggressive pricing to reach the economy of scaleto reach

137、 the economy of scalePromotion MixPullPushAdvertising StrategyChecklist for Sales Force ManagementStructured selling effortsStructured selling effortsOrganization, Size, Territory deploymentOrganization, Size, Territory deploymentRight staffRight staffAge, tenure, education, Inter-person skills, Age

138、, tenure, education, Inter-person skills, Technical capabilities, Selling techniqueTechnical capabilities, Selling techniqueStrong guidanceStrong guidanceWritten guidance, Key task definitionsWritten guidance, Key task definitionsCall frequency, time allocationCall frequency, time allocationPeople t

139、o be seen, market, account focusPeople to be seen, market, account focusAdequate supportAdequate supportTraining, Technical backup, In-house sales Training, Technical backup, In-house sales staff, Product & application literaturestaff, Product & application literatureProper motivationProper motivati

140、onTotal compensation, Split between salary & Total compensation, Split between salary & commission, incentives design, fringe benefitcommission, incentives design, fringe benefitChannels for Foreign MarketsDistribution StrategyDistribution StrategyGrey MarketingDealer selectionDealer Contract Trade Marketing