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High School Articulation Meeting�October 2023��robert.jackson@austincc.edu�512-223-7360�

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IBUS-1305 International Business

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Discussion Outline

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  • Course Overview

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  • Appendix
    • Global Trade Trends

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IBUS-1305 International Business & Trade�Course Objectives

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  • Examine sociocultural, demographic, economic, technological, political, & legal factors in trade
  • Discuss patterns of world trade
  • Examine the internationalization of the firm
  • Review multinational operating procedures
  • Discuss why countries differ
  • Analyze the economics and politics of international trade and investment
  • Explain the global monetary system
  • Examine international business strategies
  • Assess the roles of functional organizations

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IBUS-1305 International Business & Trade�Course Textbook

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  • Global Business Today 12th Edition by Hill (9th, 10th, or 11th editions are also acceptable)

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  • ISBN 9781264067503 or ISBN 9781264209637

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  • No online modules are required

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IBUS-1305 International Business & Trade�Course Structure

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Module 1 – Chapters 1, 2, 4, 5

    • Globalization
    • Political, Economic, and Legal Differences
    • Culture
    • Ethics
    • Chapter quizzes and exam

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Module 2 – Chapters 6, 7, 8, 9

    • Trade Theory
    • Trade Policies
    • Foreign Direct Investment
    • Regional Integration
    • Chapter quizzes and exam

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Module 3 – Chapters 11, 12, 13

    • International Monetary System
    • Business Strategy
    • Foreign Market Entry
    • Chapter quizzes and exam

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Module 4 – Chapters 14, 15, 16

    • Export, Import, Countertrade
    • Global Supply Chains and Outsourcing
    • Global Marketing & R&D
    • Chapter quizzes and exam

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Research Paper

This course is taught at ACC online (ONL) and in virtual (DLS) and on campus (LEC) classrooms.

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The final exam for high school students has not changed.

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Appendix

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  • Global trade is dynamic

  • The following slides provide recent global trade trends and are provided as a courtesy.

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Global Trade, Supply Chains, & Inflation

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  • Global Trade Trends

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  • Supply Chain Challenges

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  • Inflation

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What is free trade?

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When a government does not attempt to influence through quotas or tariffs

  • what citizens can buy from another country or
  • what they can produce and sell to another country

Strong opinions on both sides

Is free

trade good?

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Myths & Realities of Free Trade *

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Myths:

  1. More exports are better.
  2. Protectionism saves jobs.
  3. Protectionism benefits citizens.
  4. Trade deficits are bad.
  5. Trade agreements reduce sovereignty

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Realities:

  1. More trade is better.
  2. Innovation creates jobs.
  3. Protectionism benefits inefficient firms and special interests.
  4. The trade deficit is not debt. It becomes foreign investment.
  5. Trade agreements increase freedom.

* “The Benefits of Free Trade: Addressing Key Myths”, Boudreaux & Ghei, Trade & Immigration Policy Brief, May 23, 2018

https://www.mercatus.org/publications/trade-and-immigration/benefits-free-trade-addressing-key-myths#:~:text=2.,wages%20and%20improving%20living%20standards.

Is free trade good?

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Global Trade Trends*

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  1. Slowbalization not deglobalization

* Source: “De-globalization? Global Value Chains in the Post-COVID-19 Age” presented by Pol Antràs – Robert G. Ory Professor of Economics, Harvard Business School at the Dallas Federal Reserve Bank “Supply Chains in a Changing Global Landscape” conference on October 20, 2022

Global trade growth has been flat for the past 15 years.

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Global Trade Trends*

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  1. Slowbalization was inevitable

* Source: “De-globalization? Global Value Chains in the Post-COVID-19 Age” presented by Pol Antràs – Robert G. Ory Professor of Economics, Harvard Business School at the Dallas Federal Reserve “Supply Chains in a Changing Global Landscape” conference on October 20, 2022

1986 to 2006

Growth Drivers

  • technology
  • trade policies
  • capitalistic politics

Global trade growth rates from 1986 to 2006 were not sustainable.

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Global Trade Trends*

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  1. Automation such as robots & 3D printing is not yet deglobalizing
  2. Sunk costs (e.g. foreign direct investment) make global value chains sticky
  3. Policies are trending toward deglobalization
    • regionalization has stalled
    • WTO is weak
    • US/China trade war
  4. Geopolitical factors are troubling
    • inequalities blamed on globalization
    • demand for protectionism is increasing
    • Taiwan…will China remain pragmatic?

* Source: “De-globalization? Global Value Chains in the Post-COVID-19 Age” presented by Pol Antràs – Robert G. Ory Professor of Economics, Harvard Business School at the Dallas Federal Reserve “Supply Chains in a Changing Global Landscape” conference on October 20, 2022

Slowbalization will continue.

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COVID and the Supply Chain in the U.S. *

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  • Deepest economic contraction since WW2 in March-April 2020
  • Fastest economic recovery ~one year later in May 2021
  • COVID response:
    • $4.0 trillion in funds spent by US government (one year of tax revenues)
    • 0% interest rates
    • vaccines reopened the economy quickly
    • consumers spent more on goods

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  • Consequences of COVID response:
    • supply chain challenges
    • inflation
    • risk of recession

https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/how-us-consumers-are-feeling-shopping-and-spending-and-what-it-means-for-companies

* Source: Chart Book: Tracking the Recovery from the Pandemic Recession, Center on Budget and Policy Priorities, Updated October 27, 2022

https://www.cbpp.org/research/economy/tracking-the-recovery-from-the-pandemic-recession

Demand for goods increased. Supply chains failed.

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Supply Chain Challenges*

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* Source: “Just-in-time for a new era – can supply chains become more resilient and still stay lean?” presented by Leon Van Der Merwe, Vice-President Supply Chain & Production Control, Toyota Motor Europe at the Automotive Logistics & Supply Chain Europe 2022 On Demand conference on May 12, 2022

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Demand may slow down, but supply chain challenges will continue.

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Supply Chain Challenges*

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* Source: “Just-in-time for a new era – can supply chains become more resilient and still stay lean?” presented by Leon Van Der Merwe, Vice-President Supply Chain & Production Control, Toyota Motor Europe at the Automotive Logistics & Supply Chain Europe 2022 On Demand conference on May 12, 2022

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Parts to build one day of vehicles at one Toyota

plant would fill a soccer field up to a height of 5 feet.

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What is Toyota Europe Doing*

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  • run the business using a supply chain control tower
    • bad news first
    • control what you can control
    • build vehicles that have parts
  • make decisions that are consistent with strategic plans
    • remain lean
    • don’t sacrifice quality
    • build an agile and resilient team

* Source: “Just-in-time for a new era – can supply chains become more resilient and still stay lean?” presented by Leon Van Der Merwe, Vice-President Supply Chain & Production Control, Toyota Motor Europe at the Automotive Logistics & Supply Chain Europe 2022 On Demand conference on May 12, 2022

Businesses are becoming more resilient AND remaining committed to successful business strategies .

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COVID and Inflation *

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  • $4 trillion caused a faster recovery
  • 0% interest rates stimulated spending
  • Consumers continue spending and supply chains continue struggling …supply and demand imbalanced
  • Big Oil (and others) making record profits

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* Source: Chart Book: Tracking the Recovery from the Pandemic Recession, Center on Budget and Policy Priorities, Updated October 27, 2022

https://www.cbpp.org/research/economy/tracking-the-recovery-from-the-pandemic-recession

Current inflation in part caused by COVID response.

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Role of the Federal Reserve *

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  • Federal Reserve
    • central bank of the U.S.
    • independent government agency
    • chairman
      • appointed by the President
      • confirmed by the Senate
      • 4-year term, can be reappointed to a second 4-year term

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  • Role
    • maintain stable prices
    • ensure maximum employment

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  • Tools
    • raising or lowering interest rates charged to banks
    • buying or selling government issued bonds they own in the open market

* Source: Chart Book: Tracking the Recovery from the Pandemic Recession, Center on Budget and Policy Priorities, Updated October 27, 2022

https://www.cbpp.org/research/economy/tracking-the-recovery-from-the-pandemic-recession

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Federal Reserve Actions *

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  • has raised the federal funds rate
    • to reduce investment
    • to slow economic growth
    • to reduce inflation

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  • has stopped buying bonds
    • to slow the economy
    • to reduce inflation

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* Source: Chart Book: Tracking the Recovery from the Pandemic Recession, Center on Budget and Policy Priorities, Updated October 27, 2022

https://www.cbpp.org/research/economy/tracking-the-recovery-from-the-pandemic-recession

Trying to reduce inflation without causing a recession.

2022

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Global Trade Trends Summary

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  • free trade is good
  • slowbalization will continue
  • the biggest threat to globalization is geopolitical
  • demand may slow down but supply chain challenges will continue
  • businesses are becoming resilient AND remaining committed to successful business strategies
  • current inflation in part caused by the COVID response
  • the Federal Reserve is attempting to slow inflation without causing a recession