Pedagogy Newsletter

    – A Periodic Publication for Teaching Resources – 

The following Current Concepts in IB issues are intended to provide international business educators with cutting-edge, pedagogical tools for important contemporary and evolving IB topics.  They are intended for classroom use as a supplemental resource for your teaching. Each issue contains a brief summary of the topic, PPTs, exercises, links to videos and topic discussion items.

Teaching International Trade Theory

Discussing international trade theory doesn’t need to be boring.  Scholars around the world have created many sensible -and sometimes competing- theories that do a great job explaining the complex world around us.

International trade theories relate to arguments about why nations trade and the benefits from cross-border movement of goods and services; International business theories examine why and how firms internationalize their activities.

Both can stimulate plenty of interesting discussion in the classroom, especially when related to current events, like Brexit, NAFTA, the trade in services, etc.

Below are links to some of the latest theories, thinking and teaching materials on this important topic.

As always, we welcome your feedback and suggestions on this month’s newsletter.

Sincerely,
Tamer Cavusgil, Gary Knight & John Riesenberger    

* With thanks to Assistant Professor Ilke Kardes of Valdosta State University for her valuable contributions to this issue.

Impeded by protectionism and an economic slowdown, the IMF predicts global trade will grow by just 1.1% in 2019, down from 3.6% in 2018, and the lowest level in more than a decade.

Much discussion today emphasizes protectionism and anti-trade sentiments.  This video offers five common arguments against international trade and provides arguments for trade restrictions

On the flip side, this video provides a counterview and a positive spin on international trade (from a US perspective), expressed using eight charts.

Exercise 1
Review the alternate trade theories in this presentation with your class. Divide your class into groups of four or five students per team and give each group 10 minutes to discuss one or two of the theories; invite a student representative from each group to explain the theory's main points, including real world examples and/or opinions in favor & against.

Exercise 2 
Have your students review and discuss Brazil's competitiveness in this Exercise on the World Economic Forum’s Global Competitiveness Report.


A good summary of why firms and nations internationalize and how they sustain their competitive advantage is summarized in Exhibit 5.1 of CKR 5Click on the appropriate link to access these other useful tools:

 

  1. Explanations of Absolute and Comparative Advantage: https://bit.ly/2q11MYz  (12 min)
  2. How Not to Be Ignorant About the World.  Hans Rosling: https://bit.ly/2BWTu6E (TED; 19 min)
  3. Absolute vs. Comparative Advantage Principles: https://bit.ly/2Nqc2Bt  (6 min)
  4. Related and supporting industries in Porter’s Model:  https://bit.ly/32Xmsze  (3 min)
  5. National competitiveness: https://bit.ly/34kQhtT  (WEF; 3 min)
  6. Global Competitiveness Index – Singapore: https://www.facebook.com/watch/?v=542919249797733  (WEF 1.5 min)

The updated and revised e-textbook 'International Business: The New Realities, 5th Edition, by Cavusgil, Knight & Riesenberger,' (2020) is now available!  Rent a digital copy for as little as $59.99

or

CONTACT US FOR MORE INFORMATION
Tamer Cavusgil - stcavusgil@gsu.edu 
Gary Knight - gknight@willamette.edu
John Riesenberger – jriesen97@aol.com

Clean Energy & International Business

As world leaders gather in New York this week for the Climate Action Summit, we take a closer look at energy; reliable, affordable, and clean energy.

Much of our economic and social future depends on access to this kind of energy.  Of the 17 UN Sustainable Development Goals, one of them directly refers to affordable and clean energy, and many others are contingent upon it.

Electricity provides the power vital to daily life and to international trade & commerce. It powers all manner of devices, appliances, and equipment that make life and commerce more productive and enjoyable.

Below are links to the latest trends, teaching materials and resources for this important topic.

As always, we welcome your feedback and suggestions on this month’s newsletter.

Sincerely,
Tamer Cavusgil, Gary Knight & John Riesenberger     

As of 2019, for the first time, more than 90% of the world's population can access electricity.  Rural areas of Sub-Saharan Africa and South Asia are among the only areas still lacking access.

Electricity demand is growing rapidly in developing economies and emerging markets, where electrical power drives economic development. Access to electricity facilitates innovation, rising productivity, and improved living standards. People need electricity for lighting, heating, refrigeration, telecommunications, transportation, machinery and appliances.

Rising electricity usage poses enormous opportunities for business.  But the shortage of renewable energy sources means that a lot of electricity production still harms the environment and accelerates climate change.

In this newsletter, we feature three exercises on sustainability and energy

Exercise 1 addresses the opportunities and challenges of rising electricity consumption around the world:
Electricity – Opportunities and Consequences 

Exercise 2 is a shorter examination on:
The Growing Access to Electricity

Exercise 3 discusses the rise of sustainable practices in corporations, with a focus on Unilever:
Sustainability and Unilever 


Discussion on sustainability and energy can be aligned with many topics in the classroom. In addition to Chapter 4 in our textbook, which provides the background discussion, you can raise the issue almost any time.Click on the appropriate link to access these useful tools:

 

  1. Human Population Through Time - American Museum of Natural History, 6 minutes; suggests how recent rapid population growth is creating various global challenges
  2. Martin Stuchtey - How Things Look Today - Ellen MacArthur Foundation, 3 minutes; discusses the often harmful effects of the world’s recent, rapid economic growth
  3. Outlook for Energy to 2040 - BP, 8 minutes; describes the current state and future of energy resources worldwide, and the implications for humanity
  4. Designing cleaner stoves for the developing world - PBS, 8 minutes; describes how current household cooking methods in developing economies are highly polluting and how technology can help
  5. Two TED Talks with contrasting views:

The updated and revised e-textbook 'International Business: The New Realities, 5th Edition, by Cavusgil, Knight & Riesenberger,' (2020) is now available!  Rent a digital copy for as little as $59.99

or

CONTACT US FOR MORE INFORMATION
Tamer Cavusgil - stcavusgil@gsu.edu 
Gary Knight - gknight@willamette.edu
John Riesenberger – jriesen97@aol.com

The Changing Environment of Globalization

The landscape of globalization shifted in 2019. According to Fortune magazine’s Global 500, China is now home to the largest proportion of leading multinational firms in many industries. The new reality is that emerging markets have produced many world leading companies.

At the same time, new technologies in automation, robotics, AI, and 3D printing are boosting the productivity of local manufacturing. Lower production costs means that firms in advanced economies are doing more manufacturing in their home markets. Just as manufacturing is becoming more local, the volume of FDI and merchandise trade has slowed.

Symptomatic of the shift in globalization are growing nationalism, Brexit, and the trade war between China and the United States.

Below are links to the latest teaching materials on these important trends.

As always, we welcome your feedback and suggestions on this month’s newsletter.

Sincerely,
Tamer Cavusgil, Gary Knight & John Riesenberger     

As of 2019, China now has the largest number of companies in Fortune’s Global 500 in many industries.  China’s rise, and its huge trade deficit with the United States, coincide with the country’s trade war with the US.

Rising nationalism and protectionism are occurring in a period when China is extending its global influence. China’s GDP is on track to surpass the US. Other emerging markets are also on the rise, even as the economic influence of Europe (weakened by Brexit) and the US slowly declines.

With all these changing dynamics, globalization is undergoing a fundamental shift, with profound reprecussions 

Brexit supporters and many populists believe globalization harms opportunity for citizens at home due to unfettered global competition, job loss, and liberal immigration. They argue for increasing national autonomy, protecting the home economy, and reducing reliance on the World Trade Organization, the EU, and other supranational institutions.

Others argue that free trade raises living standards and increases the variety of goods and services, at lower prices. Workforce shortages in some industries and aging populations can be offset by mindful immigration policies.  Similarly, not all countries feel aggrieved - Brazil, China, and other emerging markets are prospering as a result of globalization.

Have your students peruse the research on these trends, then ask the class to debate the pro’s and con’s of globalization, in the exercise globalization debate (click link)

An additional exercise that can be done individually can be found here.


Teaching on the changing landscape of globalization aligns with discussion on the contemporary environment of international business, and coincides with Chapters 1, 2, 5, and elsewhere in our textbook. Globalization is the subject of Chapter 2. The book provides background that can be enhanced using the material below.Click on the appropriate link to access these useful articles and tools:

Practitioner oriented explanations on current globalization trends:

  1. The Problem with Globalization (4 minutes)
  2. Brexit explained: What happens when the UK leaves the EU? (11 minutes)
  3. Protectionism easily explained (4 minutes)
  4. Globalization Isn’t Finished, It’s Evolving (2.5 minutes)
  5. Preparing for Shifts in the Global Economy (2 minutes)

The updated and revised e-textbook 'International Business: The New Realities, 5th Edition, by Cavusgil, Knight & Riesenberger,' (2020) is now available!  Rent a digital copy for as little as $59.99

The Rise in the Global Trade of Services

Of all the long-term trends in international business, perhaps none is more striking than the continued rise in the global trade of services.  In 2018, the value of world exports of services rose to $5.8 trillion, up from about $3 trillion in 2007. Meanwhile, growth in international trade of goods has slowed during this phase.

Just as new technologies support international services trade, they also increase the productivity of local manufacturing.  Cross-border data flows, new technologies including digital platforms, the Internet of Things, automation, and artificial intelligence (AI) are all reshaping global value chains. These technologies might further decrease the role of goods in trade while boosting trade in services.

Yet, for all its promises, services are also susceptible to new trade barriers, as increased regulations in the EU recently reminded us.

In this edition we take an in-depth look at the rise of trade in services.   As always, we look forward to your feedback and please let us know if you have ideas for future editions.

Sincerely,
Tamer Cavusgil, Gary Knight & John Riesenberger     
* With thanks to Assistant Professor Ilke Kardes of Valdosta State University for her valuable contributions to this issue.

Americans spend twice as much on services as they do on goods and fully 80% of the U.S. workforce is employed in service industries.

What about the rest of the world?   In recent years, emerging markets have also witnessed a tipping point. In countries like China and India, services now account for more than 50% of GDP.

This trend is likely to continue as their economies grow.  In advanced economies, services generally account for more than 70% of GDP.

References: India China World 

Like trade in goods, trade in services is also subject to trade barriers. These can range from outright restrictions against foreign firms participating in domestic service industries to more subtle 'non tariff' regulations designed to favor local service firms.

Read the online article about digital trade barriers to internet services and discuss the following questions:

  • Are we likely to see an increase in trade barriers on services?
  • Could you foresee instances where this is justified?
  • What are some of the methods/strategies you could use to insulate your company from the affects of trade barriers?

Trade in services is always topical and can be discussed at any time. The CKR textbook chapters 1 - Introduction and 2 - Globalization provide excellent background to this topic.  Additional material is covered throughout the book, but especially in chapters 7 - Government Intervention and 9 - International Monetary and Financial Environment.Access the following tools:

  1. Introduction to World Trade (World Bank - 3.5 minutes)
  2. How globalization is changing with technology (BCG - 2.5 minutes)
  3. The Next Phase of Globalization (Fortune/McKinsey - 34 minutes)
  4. Services Trade in the Global Economy (OECD - 2.5 minutes)
The new e-textbook 'International Business: The New Realities, 5th Edition, by Cavusgil, Knight & Riesenberger,' is now available for just $59.99 for 180 days through this LINK

China - The World's Biggest Retail Market

Home to 1.4 billion people, China is rapidly transitioning from a manufacturing to a service-based economy.  Already a huge market for food, electronics, luxury goods, and many other products, China will soon also become the world’s largest retail market.  

Yet, even as the country enters a new era of technology, prosperity, and global commerce, tremendous challenges remain.  Consumer tastes, technology platforms, and the regulatory environment are evolving rapidly.  Infrastructure remains patchy, while shifting government intervention can make for uncertain business conditions.

It's also a market that is simply too big to ignore for firms like Amazon, Costco, IKEA and Walmart, despite the mixed results of foreign multinationals in recent years.   

Powered by a rising middle class of 300m people making at least $15,000 a year, in this edition we take an in-depth look at the fascinating Chinese retail market. 

As always, we welcome your feedback and suggestions.  

Sincerely,

Tamer Cavusgil, Gary Knight & John Riesenberger   

In 2019, China will become the world’s largest market for retailers.  Retail sales in China are projected to grow 7.5 percent to $5.6 trillion in 2019. In comparison, retail sales in the United States are forecast to increase 3.3 percent to $5.5 trillion. Growth is slowing in both countries, but China will outpace the U.S. for some years to come.

Current articles that address the retailing boom and other key trends in the new China:
China to Top U.S. as World’s No. 1 Retail Market in 2019

Commercial Excellence in China: Lessons from the Top CPG Companies

Consumption in China: Ten Trends for the Next 10 Years

China’s Economy Became No. 2 by Defying No. 1

Exercise 1. Read the articles in adjacent column “China to Top U.S. as World’s No. 1 Retail Market in 2019” and “Commercial Excellence in China: Lessons from the Top CPG Companies,” and then complete the exercise here, IKEA: Furniture Retailing in China (LINK), and discuss in class.

Exercise 2. Read the adjacent article “China’s Economy Became No. 2 by Defying No. 1,” and discuss the questions:

  • What factors have allowed China to become an economic and business superpower?
  • What are the implications of this shift for US companies and their international business activities?

China is topical and can be discussed at any time. Retailing in China is especially relevant to CKR Chapters 8 (Emerging Markets), 11 (Strategy), 14 (FDI), and 16 (Marketing).
Access the following tools:

  1. Introduction to China in 10 Minutes (10 minutes)    
  2. China May Replace US as World’s Largest Retailer (RT America, 6 minutes) 
  3. We Visited Alibaba's New Retail Store, Sweeping through China (CNBC, 5 minutes)
  4. What is the Belt and Road initiative? (CNBC International, 6 minutes) 

Digital rental copies of International Business: The New Realities, 5th Edition, by Cavusgil, Knight & Riesenberger, are now available for $59.99 through this LINK

Hard-bound paper textbooks are also available for rental for less than $100. Request an educator's review copy at the above link or contact your Pearson representative!
Ask your Pearson representative about their revolutionary new pricing options that, for the first time, make our text financially affordable for all students! 

The Fourth Industrial Revolution and IB 

IB is being transformed by the rise of the new digital technologies, known as The Fourth Industrial Revolution. Students and educators alike need a deeper understanding of this new reality – how it will transform globalization and how IB is conducted worldwide.

The new technology that defines this phase is blurring the lines between the digital and physical worlds.  Breakthroughs in quantum computing, the Internet of Things, artificial intelligence, robotics, autonomous vehicles, 3D printing, nanotechnology, and biotechnology are boosting the efficiency of global production and international trade.

Thanks to such trends, national borders and traditional country-based business models are losing much of their relevance; The Fourth Industrial Revolution is transforming IB and value chains in organizational activities worldwide. 

The links below highlight the latest trends, teaching materials and resources on this exciting topic.

As always, we welcome your feedback and suggestions.  

Sincerely,
Tamer Cavusgil, Gary Knight & John Riesenberger   

 

As of late 2018, more than half the world’s population is now online.  That’s an amazing 3.9 billion people!

According to the International Telecommunications Union, steady growth in advanced economies increased Internet penetration from about 50% in 2005 to 81% in 2018. In developing economies, this growth jumped from 8% to 45% in the same timeframe!

This development symbolizes of the Fourth Industrial Revolution - Here's some pointed reading on the subject:
Everything you need to know about the Fourth Industrial Revolution, and
The Fourth Industrial Revolution Will Bring a Massive Productivity Boom.

While the 4th Industrial Revolution holds great promise for advancing global productivity and innovation, it will also bring about profound social and environmental change.
Have your students read one or both of these articles for more on this perspective:  We can decide to live within the limits of our planet and Can we build a shared future?
Ask the class to discuss the pros and cons of the 4th Industrial Revolution. Key issues include:

  • The implications for energy use, resource sharing, and sustainability worldwide;
  • Potential threats from the Internet of Things and Big Data to global cybersecurity;
  • Implications of AI and automating technologies for jobs and global job mobility;
  • The effect of key technologies on IB, including internationalization of small and medium enterprises (SMEs).

The 4th Industrial Revolution is a broad topic that crosses numerous areas of IB. Class discussion aligns with various topics – you can raise the issue any time.Click the links below to access these useful articles and tools:

  1. What is the Fourth Industrial Revolution? (CNBC, 4 minutes)
  2. What is the Fourth Industrial Revolution? (World Economic Forum, 11 minutes)
  3. The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy  (Business Insider, 9 minutes)
  4. AI & The Future of Work  (TEDx Talks, 18 minutes)

Digital copies of International Business: The New Realities, 5th Edition, by Cavusgil, Knight & Riesenberger, are now available for $59.99 through this LINK

Hard copy will be available later this month for less than $100. Request an educator's review copy at the above link or contact your Pearson representative!
Ask your Pearson representative about their revolutionary new pricing options that, for the first time, make our text financially affordable for all students! 

The Rise of the Middle Class in Emerging Markets

Welcome to the first edition of our monthly newsletter “Current Concepts in IB©.”

We received excellent feedback for the topics you’d like to see discussed, so we’re starting with one of the most popular topics – ‘The Rise of the Middle Class in Emerging Markets’. 

This is not a new phenomenon.  Undoubtedly, the rise of emerging markets has helped fuel the fast pace of globalization over the past three decades.

‘The Rise of the Middle Class in Emerging Markets’ is important in global commerce and it is an exciting topic that is not covered by most existing IB textbooks.  We hope it will be a welcome addition to your syllabus.

Below are links to the latest trends, teaching materials and resources for this important topic.

We welcome your feedback and look forward to hearing suggestions on how we can further improve this newsletter.  

Sincerely,
Tamer Cavusgil, Gary Knight & John Riesenberger       

In September 2018 something momentous happened that few  people noticed. For the first time in history, more than half the world’s population can now be considered middle class. That’s an astounding 3.8 billion people!

These new entrants, with disposable household income of at least $11/day, are mostly in emerging markets. 

We cannot understate the importance of this trend to business. Click here  for a current article on the trend.

It is ironic that, while the emerging markets have been building a robust middle class over the past several decades, the middle class in the U.S. has been diminishing.

Have your students peruse the research on this trend in the U.S. by the Brookings Institute .

Then ask the class to debate the underlying causes of these contradictory trends – rise of middle class (MC) in emerging markets (EMs), and the decline of MC in advanced economies.


Discussion on the EM Middle Class can be aligned with other topics in the classroom. In addition to the coverage in Chapter 8 in our textbook, which provides the background discussion, you can bring it up at any time.Click on the appropriate link to access these useful tools:

  • PPT Presentation on The Rise of the Middle Class in Emerging Markets
  • Facts about The Rise of the Middle Class in Emerging Markets
  • For a more scholarly treatment, see Tamer’s 2018 article in the Journal of International Marketing, here.
  • Global Market Opportunity Assessment (GMOA). Use the Market Potential Index at globalEDGE https://globaledge.msu.edu/mpi and see Chapter 12 in our textbook.
  • Ethics, Social Responsibility, and Sustainability: please see Chapter 4 in our textbook.

  1. Rise of Emerging Markets Middle Class (CNBC)
  2. Consumer Survey Emerging Markets (Credit Suisse) 
  3. Avoiding Tensions Between Emerging & Developed Markets (G20)
  4. Rise of Middle Class Spending in China (CNBC)

International Business, 5th Edition, by Cavusgil, Knight & Riesenberger, available February 2019. Contact your Pearson representative for a free Instructor’s review copy today!   Ask your Pearson representative about their revolutionary new pricing options that, for the first time, make our text financially affordable to all students!

 

Current Concepts in IB © is produced solely by the authors.  All original materials subject to copyright.