CHAPTER 11 INTERNATIONAL STRATEGIC MANAGEMENT International Strategic Management = comprehensive & ongoing management planning process aimed at formulating & implementing strategies that enable a firm to compete effectively internationally FUNDAMENTA
Motivation
We introduced exchange rates in S3 and developed a basic understanding of what determines
them.
We pick this up again. Financial relationships. Supply and demand for goods and services.
Our objective is to link exchange rates to other econom
Midterm Review
MGCR 382
What is the opportunity cost of bicycles in
terms of tables for both China and Sweden?
Without trade, what would be the price of a
bicycle in both countries and why? Explain.
Output per
hour
China
Sweden
Bicycles
8
7
Tables
5
2
Problem Set 4
Exchange Rates Parity Conditions
Key Concepts to Keep in Mind
The Law of one Price (LooP)
Covered Interest Rate Parity (CIP), relation to the Forward
Premium / Discount
Uncovered Interest Rate Parity (UIP), Empirical Validity, the Carry
T
Problem Set 3
Intro Foreign Exchange
Key Concepts to Keep in Mind
Terminology: Exchange Rate, Bid/Ask/Spread
Equilibrium, Demand & Supply Analysis
FX Markets: Facts, features, etc
FX Changes
Spot vs. Forward Rates
Arbitrage: 2 point, 3 point, geogra
Problem Set 5
Trade, Exchange Rates & Int. Monetary
System
Key Concepts to Keep in Mind
Balance of Payments, Definitions, Main Accounts, Debits & Credits,
Classification of transactions and interpretation of surpluses & deficits.
The US Current account
Problem Set 5
Trade, Exchange Rates & Int. Monetary
System
Key Concepts to Keep in Mind
Balance of Payments, Definitions, Main Accounts, Debits & Credits,
Classification of transactions and interpretation of surpluses & deficits.
The US Current account
Problem Set 4
Exchange Rates Parity Conditions
Key Concepts to Keep in Mind
The Law of one Price (LooP)
Covered Interest Rate Parity (CIP), relation to the Forward
Premium / Discount
Uncovered Interest Rate Parity (UIP), Empirical Validity, the Carry
T
Problem Set 3
Intro Foreign Exchange
Key Concepts to Keep in Mind
Terminology: Exchange Rate, Bid/Ask/Spread
Equilibrium, Demand & Supply Analysis
FX Markets: Facts, features, etc
FX Changes
Spot vs. Forward Rates
Arbitrage: 2 point, 3 point, geogra
Problem Set 1
Trade Theory
Key Concepts to Keep in Mind
Definitions of Trade, International Trade, Export and Import
Absolute vs. Comparative Advantage
The concept of opportunity costs
Trade with Money
Strengths & Weaknesses of the concept of compara
10/10/12
Chapter 5
The nature of ethics and social responsibility in international business:
- Existence of business -> create value for owners
o As profit
- Goal of most decisions -> increase income and reduce e
Motives for
Government
Intervention
1. Protecting domestic firms against foreign competition.
2. Help domestic firms entering foreign markets.
For firms ,government intervention can have significant effects!
Regulations, tariffs, quotas, . This is very
09/26/12
Chapter 12
Foreign Market Analysis:
- Go into new markets to expand market share, revenues and profits
o If effective: must understand new markets geographical or product market
o 3 steps:
Assess alterna
10/01/12
Chapter 13
International corporate cooperation:
- Strategic alliances:
o Business arrangement where two or more firms choose to cooperate for mutual benefit
o Ex. Cross-licensing, sharing production facilities,
09/05/12
Chapter 1: An Overview of International Business
International Business is
- Across boarders (export and import)
- Trade (within and outside of a country)
- Selling/buying from another country for lower lab
09/24/12
Chapter 11
The challenges of international strategic management:
- Use strategic management to address challenges
o
- International strategic management: comprehensive and ongoing management planning
process
09/19/12
Chapter 10
The general agreements on tariffs and trade and the WTO:
- International economy collapsed during Great Depression due to prohibitive tariffs, quotas
and protectionist measures on imported goods
09/12/12
Chapter 3: Legal, Technological, Accounting, and Political Environments
The legal environment:
- International business must obey laws from home country and host country
o These laws affect the way internatio
09/10/12
Chapter 2 Global Marketplaces
*political and economic traits of various markets
*uses of national income of countries to make business decisions
The Marketplaces of North America:
- Produces 24% of th
09/17/12
Chapter 4:
Characteristics of culture:
- Business -> conducted within the context of society
- Culture: collection of values, beliefs, behaviors, customs and attitudes that distinguish
societies
o Determines
McGill University
Faculty of Management
International Business (MGCR 382)
Winter 2013
IN-CLASS EXERCISES - 7
Assume that the current exchange rate is $1.63:1; and the one-year interest rate is 12% on the British pounds.
(a) If the one-year interest rate i
McGill University
Faculty of Management
International Business (MGCR 382)
Winter 2013
IN-CLASS EXERCISES - 8
Assume that you can trade at the following prices:
Spot rate, euro () per British pounds sterling ()
1.4876/
One-year forward exchange rate
1.4906
McGill University
Faculty of Management
International Business (MGCR 382)
Winter 2013
IN-CLASS EXERCISES - 5
Suppose the Mexican Peso is currently traded at 7 MP/$. The yen is traded at Yen 90/$.
(a) Determine the MP/Yen cross rate.
(b) Suppose the MP/Yen
