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Chapter 1: GLOBALIZATION
1. What is globalization?
Globalization – the shift toward a more integrated and interdependent world
economy.
The world is moving away from self-contained national economies toward an
interdependent, intergrated global economic system.
Example:
 Vietnam supports globalization)
Since 2007, Vietnam became a member of the WTO (World Trade Organization),
in the following years, continuously signed free trade agreements with major
partners (Korea, India, Chile, Japan, China, Australia, New Zealand, Europe, ...).
o Vietnam actively integrates into and opens its markets to exchange, trade
and do business.
o The Vietnamese government and the Vietnamese community are very
supportive of globalization.
 The United States of America does not support globalization
From 2016, Trump became president, making the decisions: tightening
immigration policy, building a border fence against Mexico; calling for, negotiating
and signing a 2018 North American free trade agreement (US, Canada and Mexico)
with terms that are favorable to the US; launching a trade war with China (imposing
high tariffs on Chinese goods imported into the US); threatened not to join the WTO.
o Isolating the US economy from the world.
o Oppose globalization.
2. What is globalization of markets?
Historically distinct and separate national markets are merging. (slide 9-chap1)
 Falling trade barriers make it easier to sell globally
 Consumers’ tastes and preferences are converging on some global norm
 Firms promote the trend by offering the same basic products worldwide

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3. What is globalization of production?

Firms source goods and services from locations around the globe to capitalize
on national differences in the cost and quality of factors of production like land,
labor, energy, and capital.
→ Có nghĩa là các công ty sẽ có xu hướng tìm kiếm các nguồn hàng hóa và dịch
vụ ở những nơi mà tại đso chi phí về đất đai, lao động rẻ để cải thiện lợi nhuận cho
họ, cũng như ưu tiên những nơi có nền kinh tế chính trị ổn định để thực hiện mục
đích kinh doanh
Companies can:
- Lower their overall cost structure
- Improve the quality or functionality of their product offering
Example:
Why did Samsung set up a billion-dollar factory in China, Vietnam?
 Cheap labor cost
 The political situation is stable and safe
 Land is large, the state of Vietnam can favor
 Preferential corporate income tax for foreign investors, import tax
incentives
 The way Vietnam copes with crises is good
 Anti-corruption -> transparent business environment
4. Global Institutions (Các tổ chức toàn cầu)
Tiến trình toàn cầu hóa diễn ra mạnh mẽ -> lôi kéo những chủ thể tham gia vào quá
trình ấy.
Những chủ thể tham gia vào trong xu hướng: các doanh nghiệp, chính phủ, cá nhân,
hộ gia đình, tổ chức toàn cầu (global institution).
Vai trò của global institutions: giải quyết global issues -> phải có cơ chế toàn cầu
giải quyết các vấn đề đó -> phải có tổ chức đứng ra để xây dựng quy định, quy chế,
giám sát việc vận hành và tuân thủ quy định, quy chế đó.
Global institutions:
- Help manage, regulate, and police the global marketplace;

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- Promote the establishment of multinational treaties to govern the global

business system
WTO - World Trade Organization
Role
- The WTO monitors the international trade, sets agreements, treaties, countries
must comply, ensures that countries conduct free trade (tax and non-tariff
barriers will be removed) and equally, without hindering international trade.
- Maintain a free and fair international trade through agreements and treaties
within the framework of the WTO and through the activities of the WTO in
terms of monitoring and reviewing national trade policies.
- Arbitrator for commercial disputes between member countries.
Mission
To facilitate free and fair trade, (the WTO has set the standards and rules
governing international trade agreements and is considered to be the mediator of
trade disputes, putting countries at rest. enter the negotiating table to resolve
conflicts, narrow disagreements, thereby promoting rules-based standards for the
common good.)
Task/ Assignment: WTO was established with 04 main tasks:
- Promote the implementation of the Agreements and commitments reached
under the WTO framework (and future commitments, if any);
- Create a forum for members to continue to negotiate and sign new agreements
and commitments on liberalization and trade facilitation;

- Settlement of trade disputes arising between WTO members; and

- Periodically review members' trade policies.

Target/ Aim/ Objective/ Goal: WTO has 3 objectives:

- Promote the growth of trade in goods and services in the world to serve the
development, stability, sustainability and environmental protection.
- Promote the development of market institutions, resolve trade disputes and
disputes between member countries within the framework of the multilateral

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trading system; ensure that developing countries and especially the least
developed countries enjoy the real benefits of the growth of international trade,
consistent with their economic development needs and encourage these
countries to increasingly integrate more deeply into the world economy.
- Improve living standards, create jobs and jobs for the people of the member
countries, ensure that the rights and minimum labor standards are respected.
Tổ chức Ngân hàng Thế giới (World Bank)
WB is inclined to economy, business, trade, import-export which means the
physical flow, making physical flows between countries convenient.
Physical flow includes:
- Flow of goods and services
- Flow of capital
- Flow of humans and labors
- Flow of technology
WB helps sustainable development (3Ps):
- Profit - economic growth (GDP);
- People - quality of life, health, social security, infrastructure, health, education,
career;
- Planet - the environment.
To make the globalization process easier, reduce conflicts, reduce
environmental negativity and inequality, the World Bank will stand out to funding
and financing projects for sustainable development. for the integration capacity of
developing countries.
The role of the World Bank:
- Towards sustainable development, strengthening the integration capacity of
countries in a more comprehensive manner, not inclined towards trade like the WTO.
- Although it is the World Bank, it does not perform the function of a normal
commercial bank that is lending, but will support the finances to help developing
countries to integrate better, to take advantage of the process. that globalization
brings, is not left behind.

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Quỹ Tiền tệ quốc tế (IMF) – International Monetary Fund

Task/ Assignment
Ensure the stability of the international monetary system - a system of
international exchange rates and payments that allows countries and their citizens to
transact with each other.
Function
- Monitoring: Monitor the financial and economic situation of the world and
member countries, and advise on economic policies for member countries. In
addition, the IMF will provide advice to member countries and promote policies
designed to promote economic stability, reduce vulnerability to economic and
financial crises, and improve living standards.
- Financial assistance: Provide short and medium term financial assistance to
member countries when they encounter temporary balance of payments difficulties.
Specifically, offering loans with no interest rates with long maturity. This financial
aid mandate is the core responsibility of the IMF.
- Capacity development: Provide technical assistance to member countries to
improve their economic governance.
(More information)
The IMF is an international monetary fund, consulting on policies on
operating the macro-economy of countries, consulting on policies, improving the
capacity to operate the economy, especially developing countries; loan (bailout) to
countries suffering from public debt crisis.
IFM aims at the stability of the macroeconomic environment through
indicators of inflation, exchange rate, interest rates, and public debt; prevent and help
countries improve this index of the economy; release the necessary rescue.
What is driving globalization? There are 2 factors
Declining barriers to the free flow of goods, services, and capital
- Average tariffs are now at just 4%
- More favorable environment for FDI
- Facilitates global production

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Technological change
- Microprocessors and telecommunications
- Internet: information backbone of the global economy
- Transportation technology
5. What does globalization mean for firms?
Lower barriers to trade and investment mean firms can:
- view the world, rather than a single country, as their market
- base production in the optimal location for that activity
Technological change means
- lower transportation costs: help create global markets and allow firms to
disperse production to economical, geographically separate locations
- low-cost information processing and communication: firms can create and
manage globally dispersed production
- low-cost global communications network: help create an electronic global
marketplace
- global communication networks and global media: create a worldwide culture
and a global consumer product market
6. The changing demographics of the global economy
Four trends are important:
The changing world output and world trade picture
Example:
In developed countries, the percentage contribution to the world economy is reduced.
In 1960, the U.S. accounted for almost 40% of world economic activity, but by 2012,
the U.S. accounted for just 23% (a similar trend occurred in other developed
countries).
In contrast, in developing countries, the share of world production tends to increase.

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The share of world output accounted for by developing nations is rising (expected to
account for more than 60% of world economic activity by 2020).
The changing foreign direct investment picture
Example:
- In developed countries, the proportion of FDI is decreasing
In the 1960s, U.S. firms accounted for about two-thirds of worldwide FDI flows.
Today, the United States accounts for less than one-fifth of worldwide FDI flow.
Other developed countries have followed a similar pattern
- In contrast, the share of FDI in developing countries is increasing.
Developing countries, especially China, have also become popular destinations for
FDI.
The changing nature of the multinational enterprise
Multinational enterprise (MNE) - any business that has productive activities in
two or more countries
Since the 1960s
- The number of non-U.S. multinationals has risen
- The number of mini-multinationals has risen
The changing world order
- Many former Communist nations in Europe and Asia are now committed
to democratic politics and free market economies. Creates new
opportunities for international businesses. But, there are signs of growing
unrest and totalitarian tendencies in some countries
- China and Latin America are also moving toward greater free-market
reforms: Between 1983 and 2010, FDI in China increased from less than
$2 billion to $100 billion annually. But, China also has many new strong
companies that could threaten Western firms

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7. Advantages of globalization
- Lower prices for goods and services
- Greater economic growth
- Higher consumer income, and more jobs
8. Disadvantages of globalization
- Job losses
- Environmental degradation
- The cultural imperialism of global media and MNEs
- Global economic crisis

9. Globalization affects jobs and income

Negative side: Falling barriers to trade are destroying manufacturing jobs in
advanced countries.
Positive side: Benefits of globalization outweigh the costs countries will
specialize in what they do most efficiently and trade for other goods—and all
countries will benefit.

10. Globalization affects labor policies and environment

Negative side:
- Firms avoid the cost of adhering to labor and environmental regulations by
moving production to countries where such regulations do not exist, or are not
enforced.
- The shift of industries that require a lot of labor, natural resources, many
industries causing environmental pollution to developing countries; the
foreign capitalists' investments in developing countries became rapidly
deteriorating. Moreover, in the process of globalization, the development of
developed countries not only relies on cheap resources, cheap labor, cheap
markets, cheap goods and services; but also based on ecological environment
poisoning in developing countries.
Positive side: Tougher environmental and labor standards are associated with
economic progress as countries get richer from free trade, they implement
tougher environmental and labor regulations.

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11. Globalization affects national sovereignty

Negative side:
- Global economy shifting economic power away from national governments
toward supranational organizations like the WTO, the EU, and the UN.
- Critics argue that unelected bureaucrats have the power to impose policies on
the democratically elected governments of nation-states.
Positive side:
- Supporters claim that the power of these organizations is limited to what
nation-states agree to grant.
- The power of the organizations lies in their ability to get countries to agree to
follow certain actions.
12. Globalization affects the world’s poor
Negative side:
- Critics believe that if globalization was beneficial there should not be a
divergence between rich and poor nations.
- The world's largest transnational companies are mainly located in developed
countries. These countries also hold most of the most modern technologies,
inventions, etc. In addition, international economic, financial, monetary, and
trade institutions such as the WTO, IMF, WB, etc. are under the control of
developed countries, led by the US. With such great economic powers,
developed countries are dominating the global economy. As for developing
countries, the economy is not strong enough to withstand the spiral of
competition in the world economy. Therefore, developing countries are
getting poorer compared to the rich and fast speed of developed countries.
Positive side: Supporters claim that the best way for the poor nations to
improve their situation is to:
- Reduce barriers to trade and investment
- Implement economic policies based on free market economies
- Receive debt forgiveness for debts incurred under totalitarian regimes

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13. Globalization affects managers

Managing an international business differs from managing a domestic business
because:
- Countries are different
- The range of problems confronted in an international business is wider and
the Problems more complex than those in a domestic business
- Firms have to find ways to work within the limits imposed by government
Intervention in the international trade and investment system
- International transactions involve converting money into different currencies
Chapter 2: National differences in political economy
Môi trường chính trị - Political Systems
Chế độ chuyên chế (Totalitarianism): (s15+16-chap2) Có 4 hình thức:
- Communist totalitarianism (Chuyên chế Cộng sản): ở những quốc gia có ĐCS chiếm
quyền lực
- Theocratic totalitarianism (chuyên chế thần quyền): ở những quốc gia có quyền lực chính
trị bị độc quyền bởi 1 Đảng, nhóm hoặc cá nhân cai trị theo tôn giáo
- Tribal totalitarianism (chuyên chế bộ tộc): đại diện lợi ích của 1 bộ lạc độc quyền quyền
lực
- Right-wing totalitarianism (chuyên chế toàn trị cánh hữu): cho phép tự do kinh tế cá nhân,
nhưng hạn chế tự do chinh trị cá nhân
Chế độ dân chủ (Democracy): slide 14 chap 2
Chế độ chủ nghĩa cá nhân ( Individualism): một cá nhân nên có tự do trong các hoạt
động kinh tế và chính trị của riêng mình slide 13 chap 2
Chế độ chủ nghĩa tập thể (Collectivism): nhấn mạnh tính ưu việt của các mục tiêu tập
thể hơn là mục tiêu cá nhân slide 10 chap 2
Liên kết giữa hệ tư tưởng chính trị và hệ thống kinh tế là gì? (slide 17 chap 2)
- Các quốc gia đề cao các mục tiêu cá nhân có khả năng có nền kinh tế dựa trên thị trường.
- Các quốc gia có các mục tiêu tập thể chiếm ưu thế thường được sở hữu nhà nước

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Môi trường kinh tế - Economic Systems (slide 18-20)

- Nền kinh tế thị trường (Market eco): Tất cả các hđ sx đều thuộc sở hữu tư nhân và được
xác định bởi sự tương tác giữa cung và cầu
- Nền kinh tế chỉ huy (Command eco): chính phủ lên kế hoạch cho hàng hóa và dịch vụ mà
quốc gia đó sx, quyết định số lượng và giá bán
- Nền kinh tế hỗn hợp (Mixed eco): một số lĩnh vực dành cho sở hữu tư nhân và cơ chế thị
trường tự do, số còn lại thuộc quyền sở hữu NN và chính phủ (CP có xu hướng sử hữu
các cty quan trọng với QG)
Môi trường pháp luật – Legal Systems
Có 3 loại hệ thống pháp luật (slide 22 chap 2)
- Thông luật (Common Law): dựa trên truyền thống, tiền lệ và tập quán
+ Hệ thống pháp luật Anh – Mỹ: based on knowledge gathered from court decisions for
specific cases in the past (precedent)
- Dân luật (Civic Law): Vietnam, Germany
- Luật Thần Quyền (Theocratic Law): is a legal system markedly influenced by
religion, moral principles, and moral values seen as a supreme embodiment. The most
important system of Religious Law is based on the laws of Hinduism, Judaism and Islam.
For example: strict Islamic law prohibits giving and receiving interest on loans or
investments. As such, in order to comply with Islamic law, banks cannot lend at interest
as is customary, but must profit by charging administrative fees or a reasonable rate of
profit in the financial projects they finance.

Những quyền pháp lý khác

Property rights (slide 25-chap 2)
Intellectual property (slide 29) - property that is the product of intellectual activity.
It can be protected using
1. Patents – exclusive rights for a defined period to the manufacture, use, or sale of
that invention
2. Copyrights – the exclusive legal rights of authors, composers, playwrights, artists,
and publishers to publish and disperse their work as they see fit
3. Trademarks – design and names by which merchants or manufacturers designate
and differentiate their products

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1. Understand how the political systems of countries differ from each other
Definition:
Political economy of a nation - how the political, economic, and legal systems of a country
are interdependent.
Political system - the system of government in a nation
This systems is assessed according to (đánh giá theo)
- the degree to which the country emphasizes collectivism as opposed (trái ngược) to
individualism
- the degree to which the country is democratic or totalitarian
** Collectivism stresses the primacy of collective goals over individual goals. Today,
collectivism is equated with socialist.
VD: advocate state ownership of the basic means of production, distribution, and
exchange / manage to benefit society as a whole, rather than individual capitalists
** Individualism refers to philosophy that an individual should have freedom in his own
economic and political pursuits. Individual economic and political freedoms are the
ground rules on which a society should be based.
** Democracy is based on the belief that citizens should be directly involved in decision
making - a political system in which government is by the people, exercised either directly
or through elected representatives. Democracy usually associated with individualism.
** Totalitarianism - form of government in which one person or political party exercises
absolute control over all spheres of human life and prohibits opposing political parties.
Today, totalitarianism exists 4 major forms.
NGẮN GỌN: The political systems.
Democracy Related to Individualism.
Totalitarianism (socialism and communism) is Related to Collectivism.
Individualism, which emphasizes the individual's freedom of action, is associated with
democratic countries that emphasize the power of the people. Often democracies also have
market economies.
Countries that have totalitarianism as a political system on the other hand are related to
collectivism, since it concentrates on a central authority entity that chooses what is best for
the people and focuses on collective goals, goals that are "equally important to everyone".
Because they select what to sell and buy, this political system frequently features a
command economy.

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2. Understand how the economic systems of countries differ from each other
Political ideology and economic systems are connected.
There are 3 types of economic systems: Market economy, Command economies, Mixed
economies.
Market economies - all productive activities are privately owned and production is
determined by the interaction of supply and demand
*government encourages free and fair competition between private producers
Command economies - government plans the goods and services that a country produces,
the quantity that is produced, and the prices as which they are sold
* all businesses are state-owned, and governments allocate resources for “the good of
society”
Mixed economies - certain sectors of the economy are left to private ownership and free
market mechanisms while other sectors have significant state ownership and government
planning
* governments tend to own firms that are considered important to national security
NGẮN GỌN: The economic systems.
Market economy (demand and pricing determined by individuals, not government)
Command economy (government determines production and pricing)
Mixed economy (protects private property, but government interference for social aims)
3. Understand how the legal systems of countries differ
Legal system - the rules that regulate behavior along with the processes by which the laws
are enforced and through which redress for grievances is obtained. Legal systems are
important for business because they
- define how business transactions are executed
- identify the rights and obligations of parties involved in business transactionsThere are
3 types of legal systems: Common law, Civil law, Theocratic law.
4. Explain the implications for management practice of national differences in political
economy
What managers must consider when dealing with national variances in political
economy is that, depending on the country's political system, some may be more beneficial
to invest in than others.
Generally, countries with democracy come with an individualistic mentality and a
market economy, which obviously encourages international trade. Totalitarianism and
command economies fight against free trade and can also lack the protection of intellectual
property.

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Finally, the different law systems can have varied consequences on management
practice; Common Law is costly owing to extensive contracts, Civil law is less flexible,
and Theocratic law is dependent on religious views and might be difficult to understand.
Chapter 3: Political economy and Economic development
Gross National Income (GNI): The value of the output of goods and services produced
in a country in a year, including money that leaves and enters the country (slide 1 chap 3)
Human Development Index (HDI) is based on three measures: life expectancy at birth,
educational attainment, and whether average incomes are sufficient to meet the basic needs
of life in a country (slide 6 chap 3)
Q1: How Does Political Economy Influence Economic Progress? (slide 8-12 chap 3)
Innovation and entrepreneurship are the engines oflong- run economic growth
Innovation and entrepreneurship require a market economy
Innovation and entrepreneurship require strong property rights
It seems likely that democratic regimes are more conducive to long-term economic growth
than a dictatorship (Có vẻ như các chế độ dân chủ có lợi hơn cho tăng trưởng kinh tế dài
hạn hơn là một chế độ độc tài)
Q2: What are the implications of a country's political economy on its level of economic
development and its environment for doing business? (slide 23-27)
A country's political economy influences its level of economic development and higher
levels of economic development create a more favorable environment for international
business
A country's level of economic development can affects its attractiveness as a possible
market or production location for firms
1. Gross national income (GNI) is a common measure. To account for cost of
livingdifferences between countries, GNI can be adjusted by purchasing power.
2. Purchasing power parity (PPP) adjustment provides a more direct comparison
ofliving standards in different countries
→ A drawback of both GNI and PPP data is that they provide only a static picture of
development.
NOTE: Expansion of freedom is the primary end and the principal means of development.
(Mở rộng tự do là mục đích chính và là phương tiện chính của sự phát triển.)
Human Development Index based on life expectancy, education attainment, and whether
average incomes are sufficient to meet the basic needs of life in a country

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Q3: What is the relationship between political economy and economic progress?
Economic freedom in a market economy creates greater incentives (động lực) for
innovation and entrepreneurship than in either a planned or mixed economy
- Innovation
new products, new processes, new organizations, new management practices, and new
strategies
- Entrepreneurs first recognize and commercialize innovative new products
and processes
Q4: For a country to sustain long term economic growth?
The business environment needs to be conducive to innovation and entrepreneurial activity
Innovation and entrepreneurship require: strong property rights (quyền sở hữu mạnh)
Democratic regimes (chế độ dân chủ) tend to be more conducive to long-term economic
growth than dictatorships (chế độ độc tài) - even the benevolent kind
Q5: Limiting human freedom also suppresses (ngăn chặn)? human development and
therefore limits progress
Other factors influencing a country's rate of economic development include:
1. Geography: influences economic policy, and thus economic development
2. Education: Investment in education promotes faster economic development transition
economy is one that is changing from central planning to free markets. Countries that
invest in education have higher growthrates because the workforce is more productive
(Các quốc gia đầu tư vào giáo dục có tốc độ tăng trưởng cao hơn vì lực lượng lao động
có năng suất cao hơn)
The shift toward a market-based economic system involves (Sự chuyển dịch sang hệ thống
kinh tế dựa trên thị trường bao gồm):
• Deregulation (Bãi bỏ quy định)
• Privatization (Tư nhân hóa)
• The creation of a legal system to safeguard property rights
Examples of deregulations?
1. Removing price controls
2. Abolishing laws limiting private enterprise (Bãi bỏ luật hạn chế doanh nghiệp tư nhân)
3. Removing restrictions on foreign investment and trade (Xóa bỏ các hạn chế đối với đầu
tư và thương mại nước ngoài) Examples of Privatization?
- Because private investors are motivated by potential profits to increase productivity,
privatization should increase economic efficiency

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- Privatization efforts are more successful when they are accompanied by more
general deregulation and opening of the economy (Các nỗ lực tư nhân hóa thành công
hơn khi chúng đi kèm với việc bãi bỏ quy định chung và mở cửa nền kinh tế)
Q6: Market economies require? A well-functioning legal system. Examples of well-
functioning legal systems?
It should protect property rights and the machinery to enforce that system
Many countries have made significant strides toward creating a strong legal system, but
more work is necessary
The costs of doing business in foreign markets:
1. Political Costs (include the cost of paying bribes or lobbying for favorable or fair
treatment)
2. Economic Costs
3. Legal Costs
Q7: What Are The Implications Of Political Economy Differences For Managers?
(Hàm ý của sự khác biệt về kinh tế chính trị đối với các nhà quản lý là gì?)
The risks of doing business in a country are a function of
• Political risk - the likelihood that political forces will cause drastic changes in a
country's business environment that adversely affects the profit and other goals of
a business enterprise
• Economic risk - the likelihood that economic mismanagement will cause drastic
changes in a country's business environment that adversely affects the profit and
other goals of a business enterprise.
Ex: the currency is devalued (đồng tiền bị mất giá)
• Legal risk - the likelihood that a trading partner will opportunistically break a
contract or expropriate property rights (khả năng một đối tác thương mại có cơ
hội phá vỡ hợp đồng hoặc chiếm đoạt quyền sở hữu trí tuệ)
•
CHAPTER 4: DIFFERENCES IN CULTURE

4.1. How Do Cultural Differences Affect International Business?

Understanding and adapting to the local cultural is important international companies
• cross-cultural literacy - an understanding of how cultural differences across and
within nations can affect the way in which business is practiced. Cross-cultural
literacy is important for business success

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• A relationship may exist between culture and the costs of doing business in a country
or region
• MNEs can be agents of cultural change – McDonald’s

4.2. What is culture?

• Culture - a system of values and norms that are shared among a group of people and
that when taken together constitute a design for living (slide 3)
oValues are abstract ideas about what a group believes to be good, right, and
desirable. Values provide the context within which a society’s norms are established
and justified and form the bedrock of a culture
oNorms are the social rules and guidelines that prescribe appropriate behavior in
particular situations. Norms include folkways - the routine conventions of everyday
life; and mores- norms that are seen as central to the functioning of a society and to
its social life
• Society - a group of people who share a common set of values and norms
How Are Culture, Society, And The Nation-State Related? (slide 5)
 The relationship between a society and a nation state is not strictly one-to-one
 Nation-states are political creations, can contain one or more cultures
 A culture can embrace several nations
What Determines Culture? (slide 6)
The values and norms of a culture evolve (develop/change) over time.
Determinants: (slide 7)
• religion
• political and economic philosophies (chính trị và triết học về kinh tế)
• education (giáo dục)
• language (ngôn ngữ)
• social structure (cấu trúc xã hội)

4.3. What Is A Social Structure?

(slide 8 chap 3)
How Are Individuals and Groups Different? (slide 9-11)
In many Asian societies, the group is the primary unit of social organization
 discourages job switching between firms
 encourages lifetime employment systems

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 leads to cooperation in solving business problems But, might also suppress

individual creativity and initiative
What Is Social Stratification? (slide 12-14)
All societies are stratified on a hierarchical basis into social categories, or social strata
(tầng lớp xã hội), individuals are born into a particular stratum.
Must consider:
 Mobility between strata
 The significance placed on social strata in business contexts
1. Social mobility (điểm chuyển giao cấp bậc) - the extent to which individuals can move
out of the strata into which they are born.
Caste system (hệ thống đẳng cấp) - closed system of stratification in which social
position is determined by the family into which a person is born.
 change is usually not possible during an individual's lifetime
Class system - form of open social stratification
→ Position a person has by birth can be changed through achievement or luck. If no, the
position will remain.
2. The significance attached to social strata in business contacts (slide 14)
class consciousness - a condition where people tend to perceive themselves in terms of
their class background, and this shapes their relationships with others
 an antagonistic relationship between management and labor raises the cost of
production in countries with significant class differences.
4.4. How Do Religious And Ethical Systems Differ? (slide 15)
1. Religion - a system of shared beliefs and rituals that are concerned with the realm of
the sacred. Four dominate society:
 Christianity (Cơ Đốc giáo) (slide 18)
 Islam (đạo Hồi) (slide 19-20)
 Hinduism (Ấn Độ giáo) (slide 21)
 Buddhism (đạo Phật) (slide22)
Confucianism (Nho giáo) is also important in influencing behavior and culture in many
parts of Asia (slide 23)

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2. Ethical systems - a set of moral principles, or values, that are used to guide and shape
behavior.
Religion and ethics are often closely intertwined
Example: Christian or Islamic ethics

4.5.What Is The Role Of Language In Culture? (slide 24-26)

What is language - the spoken and unspoken (nonverbal communication such as facial
expressions, personal space, and hand gestures) means of communication
Countries with more than one language often have more than one culture: Canada,
Belgium, Spain
Language is one of the defining characteristics of culture
 Chinese is the mother tongue of the largest number of people
 English is the most widely spoken language in the world
 English is also becoming the language of international business
 but, knowledge of the local language is still beneficial, and in some cases,
critical for business success
 failing to understand the nonverbal cues of another culture can lead to
communication failure
Đúc kết phần 4.4, 4.5: Language and religion are significant aspects of culture;
businesses that wish to succeed in the worldwide market must comprehend and learn
completely, thoroughly, and properly about these two in the country or region that they are
targeting.
Ex: Pork sausage producers, for example, will be unable to trade in Muslim
communities.

4.6. What Is The Role Of Education In Culture

(slide 26)
4.7. How Does Culture Impact The Workplace?
(slide 27-30)
About Hofstede (slide 31)
4.8. Does Culture Change? (slide 32-34)

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CHAPTER 5: INTERNATIONAL TRADE THEORY

1. Free Trade (Thương mại tự do)
- Free trade - a situation where a government does not attempt to influence through quotas
or duties what its citizens can buy from another country or what they can produce and sell
to another country
Example: The E.U. will gradually eliminate 99.2 percent of tariff lines, accounting for
99.7 percent of Vietnam’s exports, over the next seven years. As for the remaining 0.3
percent, it will give Vietnam tariff quotas with import duties of zero percent.
-Trade theory shows why it is beneficial for a country to engage in international trade even
for products it is able to produce for itself
2. Some theories about role of government in trade (slide 9)
Gồm 3 nhóm: + Leontief paradox
-The mercantilist philosophy makes a crude case for government involvement in promoting
exports and limiting imports
-Smith, Ricardo, and Heckscher-Ohlin promote unrestricted free trade
-New trade theory and Porter’s theory of national competitive advantage justify limited and
selective government intervention to support the development of certain export-oriented
industries.
2.1 Mercantilism: chủ nghĩa trọng thương
-Mercantilism (mid-16th century) suggests that it is in a country’s best interest to maintain
a trade surplus—to export more than it imports
-Advocates government intervention to achieve a surplus in the balance of trade
-Mercantilism views trade as a zero-sum game—one in which a gain by one country results
in a loss by another
*Example: In 1651, the British government, led by Oliver Cromwell, introduced a
legislation that made it illegal for any foreign ship to carry goods from or to any of its
colonies. All trade was to be conducted by a British ship, with a British owner, master, and
majority crew.
2.2 Smith, Ricardo, and Heckscher-Ohlin
2.2.1 Smith’s Theory of Absolute Advantage
-Adam Smith (1776) argued that a country has an absolute advantage in the production of
a product when it is more efficient than any other country in producing it

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-Countries should specialize in the production of goods for which they have an absolute
advantage and then trade these goods for goods produced by other
-Example: slide p11-p17/Chapter5
2.2.2 David Ricardo’s Theory of Comparative Advantage (slide 18)
-The theory of comparative advantage (1817)—countries should specialize in the
production of those goods they produce most efficiently and buy goods that they produce
less efficiently from other countries (Even if this means buying goods from other countries
that they could produce more efficiently at home)
-Example: slide p19-p23/Chapter5
2.2.3 Heckscher Ohlin Theory
-Eli Heckscher (1919) and Bertil Ohlin (1933) - comparative advantage arises from
differences in national factor endowments is the extent to which a country is endowed with
resources like land, labor, and capital, the more abundant a factor, the lower its costs
-Heckscher and Ohlin predict that countries will
+export goods that make intensive use of locally abundant factors
+import goods that make intensive use of factors that are locally scarce
-Example, Viet Nam has mostly plain and midland terrain, which is favorable for wet rice
cultivation, so fertile alluvial soil is Viet Nam’s national factor endowments.
2.2.4 The product life-cycle theory
-Products mature both the location of sales and the optimal production location will change
affecting the flow and direction of the trade (proposed by Ray Vernon in the mid1960s)
(Tự đọc thêm trong slide p30-p34/Chap5)
2.3 New trade theory and Porter’s theory (slide 38)
2.3.1 New Trade Theory
-New trade theory (emerged in the 1980s) suggests that the ability of firms to gain
economies of scale (unit cost reductions associated with a large scale of output) can have
important implications for international trade
-Example, New York City is the apparel capital of the United States, because of the volume
of fabric available here, and the potential for customers. So they always produce garments
in large quantities, so the cost per unit of output is lower than in other countries
=>Through New Trade Theory, it impacts on economies of scale:
+Trade can increase the variety of goods available to consumers and decrease the average
cost of those goods

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+ Without trade, nations might not be able to produce those products where economies of
scale are important
+ With trade, markets are large enough to support the production necessary to achieve
economies of scale
+ Trade is mutually beneficial because it allows for the specialization of production, the
realization of scale economies, and the production of a greater variety of products at lower
prices
2.3.2 Porter’s theory
-Michael Porter (1990) identified four attributes that promote or impede the creation of
competitive advantages:
1.Factor endowments - a nation’s position in factors of production necessary to
compete in a given industry
-can lead to competitive advantage
-can be either basic (natural resources, climate, location) or advanced (skilled labor,
infrastructure, technological know-how
2.Demand conditions - the nature of home demand for the industry’s product or
service
-influences the development of capabilities
-sophisticated and demanding customers pressure firms to be competitive
3. Relating and supporting industries - the presence or absence of supplier industries
and related industries that are internationally competitive
-can spill over and contribute to other industries
-successful industries tend to be grouped in clusters in countries
4. Firm strategy, structure, and rivalry - the conditions governing how companies are
created, organized, and managed, and the nature of the domestic rivalry
-different management ideologies affect the development of national competitive
advantage
-vigorous domestic rivalry creates pressures to innovate, improve quality, reduce costs, and
invest in upgrading advanced features
=> Tự đọc thêm: Balance of Payment P50-p54/Chap5.

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Chapter 6: The Political Economy On International Trade

1. Free trade (slide 6)
Free trade occurs when governments do not attempt to restrict what citizens
can buy from another country or what they can sell to another country
Many nations are nominally committed to free trade, but intervene to protect
the interests of politically important groups
2. Instruments of trade policy (slide 7)
- Tariffs
- Subsidies
- Import quotas (Hạn ngạch nhập khẩu)
- Voluntary Export Restraints (Hạn chế xuất khẩu tự nguyện)
- Local Content Requirements (Hàm lượng nội địa/Tỉ lệ nội địa hóa)
- Administrative Policies (Các biện pháp hành chính giấy tờ)
- Antidumping Policies (Chống bán phá giá)
Tariffs (Thuế quan)
Đánh tại biên giới của quốc gia # thuế đánh trong nội địa.
Tariffs include: Export and Import tariffs.
Export tariffs
Most countries encourage exports, so export taxes are less applicable, only for food
items, natural resources (ore, oil, ...) because these products affect food security,
sustainable development, natural resources, environmental protection.
Import tariffs - taxes levied on imports that effectively raise the cost of imported
products relative to domestic products. (slide 7)
Therefore, import taxes protect domestic industry from foreign competition.
There are 2 kinds of Import tariffs:
 Specific tariffs: levied as a fixed charge for each unit of a good
imported. (Usually applied to luxury goods)

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For example Wine (tax on the unit "bottle," regardless of the type of wine,
regardless of the contract price for the bottle of wine, etc.);
Car (For example, 1 car has a specific tax of $ 5000, regardless of the worth of the
car or the brand)
 Ad valorem tariffs: levied as a proportion of the value of the imported goods
Example: If the CIF price of a car to Cat Lai port is $100,000 and the ad valorem
tariff is 70%, the payable import tax is $700,000.
Ad valorem tariffs thường gặp hơn Specific tariffs. (are more common than)
Đa phần thuế quan là thuế nhập khẩu

Import Tariffs impacts (slide 8)

- Increase government revenues
- Force consumers to pay more for certain imports
- Are pro-producer and anti-consumer
- Reduce the overall efficiency of the world economy
Efficiency means that when businesses produce better quality, and serve the
market better, they must sell more goods -> resources must be distributed to
those businesses. Then it will bring efficiency to the economy.
But due to the import tax, the goods of these enterprises when entering
foreign markets are subject to high taxes -> they can not sell goods quickly.
As for domestic enterprises, although their production is ineffective, thanks
to the protective impact of import duties, they can sell their goods, expand
their markets, and distribute resources to them.
Inefficient economy.

Subsidies (Trợ cấp): Government payments to domestic producers.

What are subsidies? (slide 9)
Government payments to domestic producers in the direction of export incentives
(in either financial or non-financial form). Non-financial: policies, programs to
support exports,...

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Forms of subsidies
 Lending to domestic enterprises with preferential interest rates, long periods,
or easy conditions for investment in research and development.
 Support through the Agriculture and Fisheries Extension programs, and
projects to support export capacity.
For example, in agriculture, the state supports businesses, and farmers deploy
production according to GlobalGAP, and VietGAP standards to meet demanding
markets such as Japan, Australia, EU,... to have better export capacity.
Effects of subsidies: Help domestic enterprises improve production capacity and
product quality to compete better with foreign goods. Subsidies help domestic
producers
- Compete against low-cost foreign imports
- Gain export markets
However, domestic consumers will suffer. When subsidizing, the State must use the
budget (the budget is from taxes of businesses and individuals) -> reduces the State
budget.
Consumers typically absorb the costs of subsidies.
Import Quotas (Hạn ngạch nhập khẩu)
What is import quotas? (slide 10)
Import quotas - restrict the quantity of some good that may be imported into a
country.
Tariff rate quotas - A hybrid of a quota and a tariff where a lower tariff is applied
to imports within the quota than to those over the quota.
VD: Import sugar. The quota is set at 10,000 tons. The tax from the first ton to the
10,000th is 10%, while beyond the quota, the tax is 50% from the 10,000th to the
15,000th ton, and 90% from the 15,001st to the 20,000th ton -> the tax in the quota
will be substantially lower than the tax outside the quota. Import restrictions are
intended. (import restriction)

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Voluntary Export Restraints (slide 11)

Voluntary Export Restraints - quotas on trade imposed by the exporting country,
typically at the request of the importing country’s government.
VD: Japan is well-known for making automobiles, and the export of Japanese
automobiles to the United States is significant, threatening the US auto sector. The
US utilized political pressure to compel Japan to agree to voluntary export
limitations.
Local Content Requirements (Hàm lượng nội địa/Tỉ lệ nội địa hóa)
Local Content Requirements – Demand that some specific fraction of a good be
produced domestically
VD: Swiss enterprises want to invest in factories in the Vietnamese market
(investment in machinery, production processes, etc.), and the Vietnamese
government agrees to allow them to deploy the project in Vietnam, provided that
For the products they make, they must ensure that 70% are using domestic sources
(from domestic enterprises in Vietnam). If the annual inspection finds that the
Swiss enterprise does not meet that rate, the Government will withdraw the license.
Tác động:
- Benefit domestic producers
- Reduce imported goods
Thay vì doanh nghiệp Thụy Sĩ đó phải nhập khẩu nguyên vật liệu từ nước
ngoài, thì họ phải cân nhắc sử dụng nguồn cung ứng của Việt Nam để đảm
bảo hàm lượng nội địa theo quy định của Chính phủ -> Nhập khẩu giảm
Administrative Policies (Các biện pháp hành chính giấy tờ)
Administrative Policies – Bureaucratic rules designed to make it difficult for
imports to enter a country.
Antidumping Policies (Chống bán phá giá) (slide 13)
Antidumping Policies – punish foreign firms that engage in dumping and protect
domestic producers from unfair foreign competition.
Dumping - selling goods in a foreign market below their costs of production, or
selling goods in a foreign market below their fair market value.

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 Enables firms to unload excess production in foreign markets.

 May be predatory behavior - producers use profits from their home markets
to subsidize prices in a foreign market to drive competitors out of that market,
and then later raise prices.
3. The case for government interventions (slide 14)
There are two main arguments for government intervention in the market:
 Political arguments: Concerned with protecting the interests of certain
groups within a nation (normally producers), often at the expense of other
groups (normally consumers).
Ví dụ:
The steel industry is a major industry in the US, affecting national security and
defense, having a political role. The steel industry is very supportive of the US steel
industry protection policy. But the building industries, assembling and
manufacturing cars do not support protectionist policies because these industries
have steel inputs.
If the US government protects the steel industry, it makes domestic steel monopoly
and high prices -> input costs of the construction industry, automobile production
are high. If the US government does not protect the steel industry, these industries
can completely import steel from China and Taiwan, with equal quality and cheap
prices.
Government intervention in international trade is to protect the interests of
certain industries because of political factors.
 Economic arguments: Concerned with boosting the overall wealth of a
nation – benefits both producers and consumers.
The domestic manufacturing industry creates jobs for the country. The government
protects imports to protect domestic jobs and secure the state budget. If the
government does not protect it:
Business goes bankrupt -> State loses corporate income tax, employees are fired ->
has no income, affecting their life.

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Các lý do mà chính phủ các nước đưa ra để biện hộ cho việc họ can thiệp vào
thương mại quốc tế (slide 15-19)
3.1.Protecting jobs (Bảo hộ việc làm) - The most common political reason for
trade restrictions.
Results from political pressures by unions or industries that are "threatened"
by more efficient foreign producers, and have more political clout than consumers.
3.2. Protecting industries deemed important for national security
Industries are often protected because they are deemed important for national
security..
For example: aerospac, semiconductors, steel industry,…
3.3. Retaliation for unfair foreign competition (Trả đũa thương mại)
When governments take, or threaten to take, specific actions, other countries may
remove trade barriers.
- If threatened governments do not back down, tensions can escalate and new
trade barriers may be enacted
- Risky strategy
3.4. Protecting consumers from “dangerous” products - This reason is often
applied to plant and animal quarantine barriers. However, countries are currently
abusing this issue to limit imports.
For example, 1 imported mango has a pesticide residual limit of 0.01mg per
fruit. However, countries take advantage of this issue to reduce it, for example,
to 0.005mg / left. Imported items will face difficulties as a result of this.
3.5. Furthering the goals of foreign policy
Preferential trade terms can be granted to countries where a government wants to
build strong relations with partners.
Trade policy can also be used to punish rogue states
For example: the US administration, dealing with illegal immigration on the
Mexican border, threatens to impose a 5% import tax on Mexican goods entering the
US if Mexico cannot help the US stop the influx of illegal immigrants.

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3.6. Protecting the human rights of individuals in exporting countries

Several new generations of free trade agreements often include child labor terms.
Member countries find that a certain member country where the export of that
country, in the production process using child labor, has the right to prohibit import
of that product.
3.7. Protecting the environment (Bảo vệ môi trường)
International trade is associated with a decline in environmental quality.
Concern over global warming
- Enforcement of environmental regulations
For example: when cars are imported into Vietnam, and if Vietnam wants to restrict
imports, it is possible to set a requirement that such imported cars must have a license
for the amount of CO2 emitted into the environment is not over the limitation. We
will justify this permit requirement to protect the environment.
(còn từ slide20 trở đi)
CHAPTER 7: FOREIGN DIRECT INVESTMENT (FDI)
1. About FDI
- FDI (Foreign direct investment) occurs when a firm invests directly in new
facilities to produce and/or market in a foreign country.
The firm becomes a multinational enterprise (the company has production activities
from two or more countries)
Example: Investing directly in factories, machines, … (new facilities) to produce and
market in a foreign country.
- FDI can be in the form of greenfield investments and acquisitions or mergers
(M&A)
+ Greenfield investments – the establishment of a wholly new operation in a foreign
country.
• New investment
• Investors bring technology and capital to invest abroad and form facilities, and
factories abroad, or it can be called investment in the form of projects.

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• Manufacturing industry because it must follow the standards of the investor in the
facilities.
Example: SAMSUNG
+ Acquisitions or mergers (M&A) with existing firms in the foreign country.
• Acquired, mergers
• Using money, and capital to buy back a company in another country.
• Changing the management board, and working process to help the company do
more stably.
• Often in the areas of retail, FMCG, entertainment, fashion, etc.
• Make use of local brands, prime locations.
Example: CJ acquired Cau Tre
- The flow of FDI – the amount of FDI undertaken over a given time period.
+ Outflows of FDI are the flows of FDI out of a country.
+ Inflows of FDI are the flows of FDI into a country.
Example: With SAMSUNG, South Korean (FDI Outflow) – Vietnam (FDI Inflow)
- The stock of FDI – the total accumulated value of foreign – owned assets at a given
time.
(Measure at a time and include the previous accumulation)
2.The growth of FDI is a result of: (slides 11-12)
+ A fear of protectionism
 Want to circumvent trade barriers
+ Political and economic changes
 Deregulation, privatization, fewer restrictions on FDI
+ New bilateral investment treaties
 Designed to facilitate investment
+ The globalization of the world economy
 Many companies now view the world as their market
 Need to be closer to their customers

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3.Why Do Firms Choose Acquisition Versus Greenfield Investments? (slide 17)

- Firms prefer to acquire existing assets because
- Mergers and acquisitions are quicker to execute than greenfield investments
- It is easier and perhaps less risky for a firm to acquire desired assets than build them
from the ground up
- Firms believe that they can increase the efficiency of an acquired unit by transferring
capital, technology, or management skills
4. How Does FDI Benefit the Host Country?
There are four main benefits of inward FDI for a host country
- Resource transfer effects - FDI brings capital, technology, and management
resources
- Employment effects - FDI can bring jobs
- Balance of payments effects - FDI can help a country to achieve a current account
surplus
- Effects on competition and economic growth - greenfield investments increase the
level of competition in a market, driving down prices and improving the welfare of
consumers: can lead to increased productivity growth, product and process innovation, and
greater economic growth
Inward FDI has three main costs:
- Adverse effects of FDI on competition within the host nation
Ví dụ: Pepsi, Coca nắm giữ phần lớn thị trường, chỉ có Tân Hiệp Phát còn cạnh tranh.
+ Subsidiaries of foreign MNEs may have greater economic power than indigenous
competitors because they may be part of a larger international organization
- Adverse effects on the balance of payments
+ When a foreign subsidiary imports a substantial number of its inputs from abroad,
+ There is a debit on the current account of the host country’s balance of payments
- Perceived loss of national sovereignty and autonomy
+ Decisions that affect the host country will be made by a foreign parent that has no real
commitment to the host country,
+ And over which the host country’s government has no real control

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- Ảnh hưởng đến môi trường. Ví dụ: Fomosa

- Vấn đề đối xử lao động: Chủ DN nước ngoài nợ lương người lao động
- Tình trạng chuyển giá: (liên tục mở rộng thị trường nhưng luôn báo lỗ để né thuế)
+ Cơ quan thuế truy thu của CocaCola, Heniken
5. How Does FDI Benefit the Home Country?
The benefits of FDI for the home country include
- The effect on the capital account of the home country’s balance of payments from
the inward flow of foreign earnings
Khi SamSung đầu tư vào VN, có lời → chuyển lợi nhuận về nước → cải thiện cán cân
thanh toán của home country; chi nhánh ở nước ngoài cần nhập khẩu nguyên vật liệu đầu
vào từ nước home country → home country tăng xuất khẩu
- The employment effects that arise from outward FDI through export demand
- The gains from learning valuable skills from foreign markets that can subsequently
be transferred back to the home country
The home-country’s balance of payments can suffer
- From the initial capital outflow required to finance the FDI
- If the purpose of the FDI is to serve the home market from a low cost labor location
- If the FDI is a substitute for direct exports
+ Employment may also be negatively affected if the FDI is a substitute for domestic
production
+ But, international trade theory suggests that home-country concerns about the negative
economic effects of offshore production (FDI undertaken to serve the home market) may
not be valid may stimulate economic growth and employment in the home country by
freeing resources to specialize in activities where the home country has a comparative
advantage
- Lao động tại home country có thể mất việc làm
- Làm giảm xuất khẩu sản phẩm cuối cùng
6.How does government influence FDI? (slide 36)
- Governments can encourage outward FDI
+ Government-backed insurance programs to cover major types of foreign investment
risk

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- Governments can restrict outward FDI

+ Limit capital outflows, manipulate tax rules, or outright prohibit FDI
- Governments can encourage inward FDI
+ Offer incentives to foreign firms to invest in their countries
→ gain from the resource-transfer and employment effects of FDI, and capture FDI away
from other potential host countries
- Governments can restrict inward FDI
+ Use ownership restraints and performance requirements
- Chính phủ HQ: (Home country)
+ Khuyến khích: cho SS vay vốn ưu đãi, cung cấp các gói bảo hiểm giúp bảo vệ SS
trước rủi ro đầu tư nước ngoài
+ Hạn chế: đánh thuế cao vào lợi nhuận chuyển về của SS từ nước ngoài
- Chính phủ VN: (Host country)
+ Khuyến khích: giảm thuế, ưu đãi thuế, tạo thuận lợi mặt bằng đẹp ở các khu công
nghiệp đẹp, thời gian thuê đất, giá thuê đất
+ Hạn chế: giới hạn sự hiện diện của họ (không cho thâu tóm), hạn chế sở hữu của nước
ngoài (cho liên doanh, không cho phép 100% vốn nước ngoài)

CHAPTER 8: REGIONAL ECONOMIC INTEGRATION

1. Regional economic integration
Regional economic integration - agreements between countries in a geographic region to
reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of
production between each other.
2. The Levels Of Regional Economic Integration
First level: free trade area eliminates all barriers to the trade of goods and services among
member countries. Ex:
• European Free Trade Association (EFTA) - Norway, Iceland, Liechtenstein, and
Switzerland
• North American Free Trade Agreement (NAFTA) - U.S., Canada, and Mexico

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• Hiệp định thương mại tự do VN-HQ

Second level: A customs union (liên minh hải quan) eliminates trade barriers between
member countries and adopts a common external trade policy. VD:
• Andean Community (Bolivia, Colombia, Ecuador, and Peru): xuất khẩu thịt bò vào
4 nước này thì có mức thuế như nhau
Third level: A common market has no barriers to trade between member countries, a
common external trade policy, and the free movement of the factors of production. Vd:
• Có bằng đại học ở VN nhưng có thể đem bằng cấp đó đi làm ở các công ty trong
các nước ASEAN
Fourth level: An economic union (liên minh kinh tế) has the free flow of products and
factors of production between members, a common external trade policy, a common
currency, a harmonized tax rate, and a common monetary and fiscal policy. Vd: European
Union (EU)
Fifth level: A political union (liên minh chính trị) involves a central political apparatus
that coordinates the economic, social, and foreign policy of member states. Chưa có nước
hay liên minh nào đạt đến cấp độ 5
3. Why Should Countries Integrate Their Economies
Lợi ích:
-Regional economic integration is an attempt to exploit the gains from free trade and
investment
- Linking countries together, making them more dependent on each other
• creates incentives for political cooperation and reduces the likelihood of violent
conflict
• gives countries greater political clout when dealing with other nations
Hạn chế:
• while a nation as a whole may benefit from a regional free trade agreement, certain
groups may lose
• it implies a loss of national sovereignty
-Regional economic integration is only beneficial if the amount of trade it creates
exceeds the amount it diverts
• trade creation occurs when low cost producers within the free trade area replace
high cost domestic producers

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• trade diversion occurs when higher cost suppliers within the free trade area replace
lower cost external suppliers
Vd: Nước Anh rút khỏi EU vì bất đồng sâu sắc
4. Economic Integration Mean For Managers
Lợi ích:
• Opens new markets (mở ra thị trường mới cho doanh nghiệp)
• Allows firms to realize cost economies by centralizing production in those locations
where the mix of factor costs and skills is optimal
Vd: HQ đặt các máy móc thiết bị sản xuất ở VN
Bất lợi:
• Business environment becomes competitive
• There is a risk of being shut out of the single market by the creation of a “trade
fortress”
Vd: doanh nghiệp nội địa VN vào thị trường TQ khi nền kinh tế TQ bị vấn đề -> cửa
khẩu bị tắt nghẽn dẫn đến các mặt hàng cần được giải cứu

Chapter 9: Entry Strategy and Strategic Alliances

( Những yếu tố doanh nghiệp cần phải cân nhắc khi muốn mở dộng doanh nghiệp
sang nước ngoài).
Các hình thức khi thâm nhập sang môi trường nước ngoài:
- Exporting (xuất khẩu): a common first step for many manufacturing firms.
Why choose exporting?
Attractive
- It avoids the cost of establishing local manufacturing operations
- It helps the firm achieve experience curve and location economies.

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Unattractive
- There may be lower-cost manufacturing locations.
- High transport costs and tariffs can make it
-nAgents in a foreign country may not act in exporter’s best interest.
Licensing: a licensor grants the rights to intangible property to the licensee for a
specified time period (Nhượng quyền thương mại dược phẩm, bằng sáng chế,…)
Vd: Starbuck và Việt Nam. Starbuck là licensor kí hợp đồng với licensing là Việt
Nam, sẽ nhường mọi quyền sử dụng hình ảnh của Starbuck ở Việt Nam với điều
kiện là đảm bảo chất lượng hình ảnh và Việt Nam phải đóng một khoản phí nhượng
quyền hằng năm.
Why choose Licensing?
Attractive
- The firm avoids development costs and risks associated with opening a foreign
market.
- The firm avoids barriers to investment.
-The firm can capitalize on market opportunities without developing those
applications itself.
Unatractive
The firm doesn’t have the tight control required for realizing experience curve and
location economies.
The firm's ability to coordinate strategic moves across countries is limited
Proprietary assets could be lost
→ To reduce this risk, use cross-licensing agreements
Franchising: a specialized form of licensing in which the franchisor not only sells
intangible property to the franchisee (nhượng quyền thương mại dịch vụ, chuỗi
cửa hàng,…)
Why choose franchising?
Attractive

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- The firm avoids development costs and risks associated with opening a foreign
market.
- Firms can quickly build a global presences
Unattractive
- It inhibits the firm's ability to take profits out of one country to support competitive
attacks in another
- The geographic distance of the firm from its franchisees can make it difficult to
detect poor quality.
Joint Ventures: a firm that is jointly owned by two or more otherwise independent
firms (Liên doanh)
Why choose Joint Ventures?
Attractive:
- Firms benefit from a local partner’s knowledge of local market, culture, language,
political systems and business systems.
- The costs and risks of opening a foregin market are shared
- The satisfy political considerations for market entry.
Unattractive:
The firms risks giving control of its technology to its partner.
The firm may not have the tight control to realize experience curve or location
economies.
Shared ownership can lead to conflicts and battles for control if goals and objectives
differ or change over time.
Wholly owned Subsisdiary: the firm owns 100 percent of the stock (đầu tư mới)
Why choose wholly owned Subsisdiary?
Attractive:
They reduce the risk of losing control over core competencies.
They give a firm the tight control in different countries necessary for global strategic
coordination.

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They may be required in order to realize location and experience curve economies.
Unattractive:
The firm bears the full cost and risk of setting up overseas operations.
Turnkey projects ( Hợp đồng chìa khóa trao tay): the contractor handles every
detail of the project for a foreign client, including the training of operating
personnel.
Attractive
They are a way of earning economic returns from the know-how required to
assemble and run a technologically complex process.
They can be less risky than conventional FDI
Unattractive
The firm has no long-term interest in the foreign country.
The firm may create a competitor
If the firm's process technology is a source of competitive advantage, then selling
this technology through a turnkey project is also selling competitive advantage to
potential and/or actual competitors.
What Influences the Choice of Entry Mode?
Transport costs Economic Risks
Trade barriers Costs
Political Risks Firm Strategy
Which Foreign Markets Should firms Enter?
The choice of foreign markets will depend on their long-run profit potential
Favorable markets
Are politically stable Have relatively low inflation rates
Have free market systems Have low private sector debt
Markets are also more attractive when the product in question is not widely available
and satisfies an unmet need

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Less desirable markets ( thị trường không mong muốn)

Are politically unstable
Have mixed or command economies
Have excessive levels of borrowing.
When should a Firm Enter a Foreign Market?
Once attractive markets are identified, the firm must consider the timing of entry
1. Entry is early when the firm enters a foreign market before other foreignfirms
2. Entry is late when the firm enters the market after firms have
alreadyestablished themselves in the market
Why Enter a Foreign Market Early?
First-mover advantages include
The ability to preempt rivals by establishing a strong brand name.
The ability to build up sales volume and ride down the experience curve ahead of
rivals and gain a cost advantage over later entrants
The ability to create switching costs that tie customers into products or services
making it difficult for later entrants to win business
First-mover disadvantages include
Pioneering costs - arise when the foreign business system is so different from that in
the home market that the firm must devote considerable time.
Effort and expense to learning the rules of the game.
The costs of business failure if the firm, due to its ignorance of the foreign
environment, makes some major mistakes
The costs of promoting and establishing a product offering, including the cost of
educating customers
How Do Core Competencies Influence Entry Mode?
- When competitive advantage is based on proprietary technological know-how
- Avoid licensing and joint ventures unless the technological advantage is only
transitory, or can be established as the dominant design.
- When competitive advantage is based on management know-how

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- The risk of losing control over the management skills is not high, and the benefits
from getting greater use of brand names is significant.
Which Is Better – Greenfield or Acquisition?
A greenfield strategy - build a subsidiary from the ground up
A greenfield venture may be better when the firm needs to transfer organizationally
embedded competencies, skills, routines, and culture
An acquisition strategy – acquire an existing company ( mua lại)
Acquisition may be better when there are well-established competitors or global
competitors interested in expandingThe volume of cross-border acquisitions has
been rising for the last two decades
Why choose Acquisition?
Acquisitions are attractive because
They are quick to execute
They enable firms to preempt their competitors.
They may be less risky than greenfield ventures
Acquisitions can fail when
The acquiring firm overpays for the acquired firm.
The cultures of the acquiring and acquired firm clash
Anticipated synergies are slow and difficult to achieve.
There is inadequate pre-acquisition screening.
To avoid these problems, firms should
Carefully screen the firm to be acquired
Move rapidly to implement an integration plan
Why choose greenfield?
The main advantage of a greenfield venture is that it gives the firm a greater ability
to build the kind of subsidiary company that it wants But, greenfield ventures are
slower to establish
Greenfield ventures are also risky