Lecture Notes - Copyright c circlecopyrt 2008 by Benjamin E Hermalin All rights reserved Contents List of Tables v List of Figures vii List of

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Unformatted text preview: Copyright c circlecopyrt 2008 by Benjamin E. Hermalin. All rights reserved. Contents List of Tables v List of Figures vii List of Examples ix Preface xi I Review 1 Purpose 3 1 Cost 5 1.1 Opportunity Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.2 Sunk Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.3 Imputed Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2 Pricing 9 2.1 Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.2 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.3 Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.4 Setting Price to Maximize Profit . . . . . . . . . . . . . . . . . . . 13 2.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 II Strategy 21 Overview 23 3 Assessing the Firm’s Situation 27 3.1 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.2 The 5 + 2 Forces Model . . . . . . . . . . . . . . . . . . . . . . . 30 3.3 The AURA Model . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 i ii CONTENTS 4 Game Theory 57 4.1 Introduction to Game Theory . . . . . . . . . . . . . . . . . . . . 57 4.2 The Bertrand Trap . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 4.3 Avoiding the Bertrand Trap . . . . . . . . . . . . . . . . . . . . . 64 4.4 Repeated Interactions . . . . . . . . . . . . . . . . . . . . . . . . . 70 4.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 III International Business 81 Overview 83 5 International Trade 85 5.1 Comparative Advantage . . . . . . . . . . . . . . . . . . . . . . . 85 5.2 Comparative Advantage and the Gains to Trade . . . . . . . . . 87 5.3 Trade as Market Expansion . . . . . . . . . . . . . . . . . . . . . 90 5.4 Criticisms of International Trade . . . . . . . . . . . . . . . . . . 91 5.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 6 Currency Exchange 95 6.1 Foreign Exchange Market . . . . . . . . . . . . . . . . . . . . . . 95 6.2 Quoting Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . 95 6.3 What Determines Exchange Rates? . . . . . . . . . . . . . . . . . 96 6.4 Foreign Exchange Risk . . . . . . . . . . . . . . . . . . . . . . . . 99 6.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 7 Doing Business Abroad 103 7.1 Dealing with Trade Rules . . . . . . . . . . . . . . . . . . . . . . 103 7.2 Different Protections for Property . . . . . . . . . . . . . . . . . . 106 7.3 Different Legal Systems . . . . . . . . . . . . . . . . . . . . . . . 107 7.4 Different Cultures and Cultural Sensitivities . . . . . . . . . . . 109 7.5 Domestic Repercussions . . . . . . . . . . . . . . . . . . . . . . . 111 7.6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Summary ....
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This note was uploaded on 03/22/2009 for the course UGBA 08403 taught by Professor Robinson during the Spring '09 term at University of California, Berkeley.

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Lecture Notes - Copyright c circlecopyrt 2008 by Benjamin E Hermalin All rights reserved Contents List of Tables v List of Figures vii List of

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