Course Syllabus

IMS 5200-CMBA
School of Management
The University of Texas at Dallas

Course Information

Course Number/Section IMS 5200-CMBA

Course Title Global Business
Term and Dates Fall 2007 (Aug 16, 2007– Dec 3, 2007)

Professor’s Contact Information

Professor Habte G. Woldu
Office Phone 972-883-6357
Email Address wolduh@utdallas.edu
Office Location SM 4.805
Office Hours T, R 4:30 – 5:30 pm and T, R 9:00– 9:45 am by
appointment only.

Web site: http://www.utdllas.edu/~wolduh

Course Pre-requisites, Co-requisites, and/or Other Restrictions

The course is designed for graduate students who had already taken international business
or international marketing management courses.

Course Description

The course deals with economic relations in a global economy characterized by

increasing interdependence of nations. Students through the foundations of neoclassic
and contemporary economic theories will learn about absolute and comparative
advantages of nations in international trade. The course also introduces new theories of
international trade that have relevance in the current global economic situation. Students
through various graphs will be able to see the impacts of trade barriers and protectionist
government policies on the economic welfare of nations. Furthermore, students in this
course will learn about the challenges of globalization such as environmental questions,
child labor by multinational firms, the unfair terms of trade and the clash between
multinational firms and developing countries on employment, transfer pricing and
technology sharing. In addition, students through group research and case reports will
present their findings to the class.

Student Learning Objectives/Outcomes

Students upon finishing the course are expected to manage the following core issues:

1. Recognizing the international trade dynamics and its trends and directions in the
global marketplace
 2. Understanding why international trade benefits trade partners.

3. Understanding the impact of trade barriers on the welfare of a nation and how it
affects the world economy

4. Recognizing the significance of regional economic integration in the global economy

5. Understanding why the practice of child labor and transfer pricing strategy by
multinational firms are considered unethical and unlawful business practice.

Required Text:

Carbaugh, Robert, International Economics, 11th Special Edition, South-Western, 2007.

Recommended readings:

Yergin, D. and Stanislaw, J., Commanding Heights: The Battle for the World Economy,
PBS Series, 2002

The Economist, Wall Street-international section and Journal of International Business

Studies

1. Marber, Peter (2004) “Globalization and its contents”, World Policy Journal,
Winter 2004/2005

2 Drucker, Peter (2005) “Trading Places”, The National Interest, Spring 2005

3 Berstein, Aaron (2004) “ Shaking up Trade Theory”, Across the Board,

January/February 2004

4 “Decoupled”, The Economist, February 25, 2006

5 Markusen, James (2002) “ Integrating Multinational Firms into International

Economies” NBER Reporter, Winter 2001/2002

6 Samuelson, Robbert (2005) “Bottom Dollar”, Newsweek, March 21, 2005

7 Bernard, Bruce (2002) “What the New Currency Means to the European
Economy”, Europe, December 2001/January 2002

8 Chandler, Clay, (2005) “The Great –Wal-Mart of China”, Fortune, July, 2005

9 Esfahani, Elizabeth, (2005) “Thinking Locally, succeeding Globally”, Business 2.0,

December, 2005

10 Johnson, Dan (2002) “Progress Against Corruption”, The Futurist, March/April,

2002

11 Cramer, James (2005) “ The China Hedge”, Inc. Magazine, April, 2005
12 Baily, Martin and Farrell, Diana (2005) “Outsourcing Jobs: The Myths and
Realities” , Current, February, 2005

Directions on how to download the above articles:

In order to download the articles, go to the UTD McDermott library webpage. Click on
the e-journals only tab that appears under Resources. The activated page allows you to
look for journals in alphabetical order. Select the relevant journal and drill down further
to find the article.

Academic Calendar / Course Outline

Dates Chapter/Lecture Weekly Discussion on Group Project Assignments

Topics Mini Cases
Week 1 Chapter 1
An overview of the Discuss view points of Group Project distribution
8/16 global economy students on global
economy.

Week 2 Chapter 2 Discussion 1: Group work in class

8/23 Foundation of Marber, Peter (2004) “Understanding the advantage
modern trade theory “Globalization and its of international trade through
and comparative contents”, World Policy cost comparative advantage
advantage Journal, theory”
Winter 2004/2005
Week 3 Chapter 3 Discussion 2:
8/30 Sources Drucker, Peter (2005)
of comparative “Trading Places”, The
advantage National Interest, Spring
2005
Week 4 Discussion 3: Case 1: Do U.S. Companies
9/6 Berstein, Aaron (2004) “ have to outsource products to
Shaking up Trade Theory”, low-wage countries to remain
Across the Board, competitive? New Balance
January/February 2004 keeps Production in the United
States.

Week 5 Chapter 4 Case 2: Determining The

Tariffs and their effect of tariff on the welfare
9/13 effects on the welfare of nations
of nations

Midterm (Ch. 1-4)

Week 6
Note that Chapter
9/20
five is not included
in syllabus
Week 7 Chapter 6 Discussion 4: Esfahani,
Trade regulations and Elizabeth, (2005)
9/27 industrial policies “Thinking Locally,
succeeding Globally”,
Business 2.0, December,
2005
Week 8 Discussion 5: Case 3: WTO Rulings Outrage
Baily, Martin and Farrell, Environmentalists
10/4 Diana (2005) “Outsourcing
Jobs: The Myths and Case 4: Ethics and
Realities” , Current, Corporations: Case 4
February, 2005 Presentation: Nike and Reebok
Respond to Sweatshop Shop
Critics; but wages remain at
poverty Level

Week 9 Chapter 7 Video: Commanding Case 5: Competition in the

10/11 Trade policies in the heights: The emerging World Steel Industry
developing countries markets
Week 10 Chapter 8 Discussion 6: Bernard, Case 6: Fair-trade movement
10/18 Regional trading Bruce (2002) “What the helps poor coffee farmers:
arrangements Vs New Currency Means to Global Awareness
multilateralism the European Economy”,
Europe, December
2001/January 2002

Week 11 Video: .
10/25 European
Enlargement
background
documentary
Week 12 Chapter 9 Case 7:
11/1 International factor Economic performance of EU
movements and members after accession
multinational
enterprise

Week 13 Discussion 7: Case 8: Does Foreign

11/8 Chandler, Clay, (2005) Direct Investment follow export
“The Great –Wal-Mart of
China”, Fortune, July,
Discussion 8:
2005 Baily, Martin and
Farrell, Diana (2005)
“Outsourcing Jobs: The
Myths and Realities” ,
Current, February, 2005
 Week 14 Video: The world is
11/15 flat: Freedman’s Reflection paper on “The
meeting at MIT world is flat”

Week 15 Holiday
11/22 Johnson, Dan (2002)
“Progress Against
Corruption”, The Futurist,
March/April, 2002
Week 16 Final examination
11/29 (Ch. 6-9)

Project report Format: you can earn up to a maximum of 15 % for your paper and
project presentation and 5 % for group peer evaluation.

Each student will be given a grade based on the outcome of group project and his/her
level of participation within a group. The group project report will consist of 5 pages,
double-spaced and typed. The report also should include the bibliography of the sources
used in the report; at least five references excluding your book are required. Even
though, the whole class is expected to read all cases and actively participate in discussion,
the assigned group should play an active role in leading and initiating discussion. As the
end of the group project presentation, the peer evaluation reports will be collected by the
instructor. Peer evaluation is based on individual’s a) intellectual contribution, b) full
participation c) creative and original ideas submitted to the group, d) resourcefulness and
e) level of communication with group members.

Case Profiles

Case 1: Do U.S. Companies have to outsource products to low-wage countries to remain

competitive? New Balance keeps Production in the United States.
When many brand shoe makers began to outsource their operation to countries where
wages per hour are a fraction of what US-based firms pay, New Balance chose not to
outsource its operation to China. Unlike its competitors like Nike and Reebok, the
company decided to increase workers’ efficiency by improving the workers’ skills and
employing superior technology. By implementing such a strategy the company was able
to produce faster and cheaper. As a result, the cost per unit of shoe production was
drastically reduced. The story of New Balance has convinced many international
business strategists that millions of American jobs could have been saved, if every
company followed such business practice. (See pages 56 -57 for detail information).

a) Assess the business strategy followed by New Balance and discuss if this case could
be applicable to many of the products that are being outsourced.
b) What are the pros and cons of such a strategy?
c) How does such strategy impact the U.S. economy and workers?
d) Can New Balance stay competitive in the long-run? .

Case 2: Determine the effect of tariff on the welfare of United States.

Based on hypothetical price, supply and demand schedules, determine the effect of tariff
on a nation’s welfare. In order to reach at a sensible conclusion, you would need to a)
determine the equilibrium point at a closed economic system b) determine the
equilibrium point when the nation freely allows import) determine the equilibrium point
when the nation levies tariffs on imported product. Your presentation should be
accompanied by a table and a graph, where you would determine: consumers and
producers’ surplus, distribution, consumer, producer and revenue effect in closed and
open economy scenarios.

Case 3: WTO Rulings Outrage Environmentalists

While WTO is expected to help the flow of goods and services from country to country
with little trade barriers, environmentalists have been fighting it very forcefully. As long
as the fight between the environmentalist and the business community stays unresolved,
WTO will continue to have supporters and opponents globally. Discuss how this never
ending battle can be stopped. In other words, is there any golden medium that can satisfy
both sides?

Case 4: Nike and Reebok Respond to Sweatshop Critics, but Wages Remain at
Poverty Level

Nike and Reebok have been criticized for the exploitation of children and systematic
violation of workers’ rights that have been certified in law. For example, a 1997 audit
conducted by Ernest and Young found that employees in a large Vietnam factory were
exposed to the fumes of cancer-causing a high incidence of respiratory problems and
were required to work as long as 65 hours a week, while the competitor of Nike, Reebok
applied sex bias, and caused health problems among workers. On the other, while there
is no justification for exploitation and human right violation of people, the socio-
economic situation of many developing countries dictates the terms under which the law
of economics works. There are those who argue that the local people, organizations and
governments should be consulted before such allegations are made. The real question is
how to balance the need for respecting human rights and the need of a country to be
competitive in the global market and to safeguard the basic needs of its citizens. Under
such conflicting objectives what kind of solutions do you suggest in order to find a
resolution to the above conflicting issues?

Case 5: Competition in the World Steel Industry

The relatively low production costs of foreign steelmakers encourage foreign steel
producers to participate in the US market. As a result of increased competition, the
average US cost of steel production came down from $685 in 1982 to $482 per ton in
1999. Global cost comparison still shows that cost of steel production in the US is higher
than its competitors. The American public, interest groups, economists and government
officials are divided on the issue of allowing cheaper steel production into the American
markets
Economists think that the US economic is going to suffer heavily if we deny industries
imported steel production at a competitive price. In fact, the economists argue that, the
US consumers are the ones who suffer from the effect of a protected expensive industry
and as a result, the economy will suffer. On the other hand, labor union and government
officials and special interest group argue that the steel industry is a strategic industry
which we can’t afford to lose it. They argue that, steel is used heavily in the defense
industry and is an intermediary product for many industrial products; therefore, its
absence or dependency on others will make the national economy highly vulnerable to
international shocks

What are the pros and cons of keeping the industry alive by imposing heavy tariffs and
quotas on imported steel products? After presenting the pros and cons of protecting the
industry from competitors, forward your position and justify it by providing current
publications on the issue.

Case 6: Presentation: Fair-trade movement helps poor coffee: global awareness

Farmers’ Fair-Trade Movement is trying to help the small and poor coffee farmers by
bypassing the traditional middlemen who take most of the income and selling it directly
to the big coffee roasters. This movement is getting attention from the world coffee
drinkers, however while the movement is getting a strong support in European countries,
the United States is not keen to bring the issue to its coffee drinkers. What is the
significance of such movement to the global economy? Does it make any difference
whether we drink the coffee directly from its source (the poor small farmers) or from the
middlemen? Read on page 241-242 for detailed information.
Reading assignment: Underreported: Fair Trade Coffee
http://www.wnyc.org/shows/lopate/episodes/11102005
video clip on “ Fair coffee trade”

Case 7: The European Union

The European Union has been determined to increase its member counties. On May 1st,
2004, ten new countries accessed the union, making a total of 25 countries. Eight of the
ten accessing countries belong to the former Soviet Bloc countries, furthermore four
more ex-Soviet Bloc countries were expected to join the 25 countries in January 2007.
Only two of them joined the union, making currently 25 of them. . The West European
citizens have a mixed feeling about the economic integration of two “unequal partners”.
Some critics say that this union is going to erode the high standard of living West
Europeans enjoyed for years, while other indicate that, in order for West Europe to be
competitive with the rest of the world, it needs these emerging countries for market
expansion and long term economic growth.

Based on the following premises, determine whether the European enlargement was
beneficial to the newly accessing countries, the old European countries or both groups.

a) Assess the economic growth of both groups of countries. Hint, compare the GNP
growth of the two groups of countries in pre-enlargement (1999-2003) and post-
enlargement (2004-present) periods.

b) Assess the level of globalization using the formula for economic openness, i.e.
(im+ex)/GNP*100 , for both regions in both periods of time
Case 8: Does Foreign Direct Investment Follow Export?

There are many arguments which attempt to explain why foreign direct investment enters
a specific international market. Some believe that foreign direct investment is taking
place in order to take advantage of availability of low wage workers, while others
indicate that FDI is entering a foreign market in order to get access to key resources.
There is also a group of authors who believe that the success of export in a specific
country leads to a second phase of market entry mode which includes joint venture
interment, wholly owned investment, contract manufacturing and management and
strategic alliances, in short foreign direct investment entry.

Determine if the historical export from US to Mexico, China and Saudi-Arabia (1980-
1990) was followed by a proportionate flow of U.S. capital mentioned countries (2000-
2005). Plot your data on a graph to show the trend. Discuss if there are other variables
that might better explain the motives behind US- FDI in the three mentioned countries. .

Grading System:

Group case report 20%

Class participation and activities 20%
Midterm 30%
Final exam 30%

Class participation: class participation is highly encouraged in both lecture time and case
presentation. The instructor will take attendance from time to time. Those who attend
classes and who actively participate during discussion sessions will be securing
themselves few points that can be critical in the case of borderline situation.

Policy on cheating:

Students are expected to be above reproach in all scholastic activities. Students who
engage in scholastic dishonesty are subject to disciplinary penalties, including the
possibility of failure in the course. "Scholastic dishonesty includes but is not limited to
cheating, plagiarism, collusion, and the submission for credit of any work or materials
that are attributable in whole or in part to another person, taking an examination for
another person, any act designed to give unfair advantage

Syllabus Addendum

Student Conduct & Discipline

The University of Texas System and The University of Texas at Dallas have rules and
regulations for the orderly and efficient conduct of their business. It is the responsibility
of each student and each student organization to be knowledgeable about the rules and
regulations which govern student conduct and activities. General information on student
conduct and discipline is contained in the UTD publication, A to Z Guide, which is
provided to all registered students each academic year.

The University of Texas at Dallas administers student discipline within the procedures of
recognized and established due process. Procedures are defined and described in the
Rules and Regulations, Board of Regents, The University of Texas System, Part 1,
Chapter VI, Section 3, and in Title V, Rules on Student Services and Activities of the
university’s Handbook of Operating Procedures. Copies of these rules and regulations
are available to students in the Office of the Dean of Students, where staff members are
available to assist students in interpreting the rules and regulations (SU 1.602, 972/883-
6391).

A student at the university neither loses the rights nor escapes the responsibilities of
citizenship. He or she is expected to obey federal, state, and local laws as well as the
Regents’ Rules, university regulations, and administrative rules. Students are subject to
discipline for violating the standards of conduct whether such conduct takes place on or
off campus, or whether civil or criminal penalties are also imposed for such conduct.

Academic Integrity

The faculty expects from its students a high level of responsibility and academic honesty.
Because the value of an academic degree depends upon the absolute integrity of the work
done by the student for that degree, it is imperative that a student demonstrate a high
standard of individual honor in his or her scholastic work.

Scholastic dishonesty includes, but is not limited to, statements, acts or omissions related
to applications for enrollment or the award of a degree, and/or the submission as one’s
own work or material that is not one’s own. As a general rule, scholastic dishonesty
involves one of the following acts: cheating, plagiarism, collusion and/or falsifying
academic records. Students suspected of academic dishonesty are subject to disciplinary
proceedings.

Plagiarism, especially from the web, from portions of papers for other classes, and from
any other source is unacceptable and will be dealt with under the university’s policy on
plagiarism (see general catalog for details). This course will use the resources of
turnitin.com, which searches the web for possible plagiarism and is over 90% effective.

Email Use

The University of Texas at Dallas recognizes the value and efficiency of communication
between faculty/staff and students through electronic mail. At the same time, email raises
some issues concerning security and the identity of each individual in an email exchange.
The university encourages all official student email correspondence be sent only to a
student’s U.T. Dallas email address and that faculty and staff consider email from
students official only if it originates from a UTD student account. This allows the
university to maintain a high degree of confidence in the identity of all individual
corresponding and the security of the transmitted information. UTD furnishes each
student with a free email account that is to be used in all communication with university
personnel. The Department of Information Resources at U.T. Dallas provides a method
for students to have their U.T. Dallas mail forwarded to other accounts.

Withdrawal from Class

The administration of this institution has set deadlines for withdrawal of any college-level
courses. These dates and times are published in that semester's course catalog.
Administration procedures must be followed. It is the student's responsibility to handle
withdrawal requirements from any class. In other words, I cannot drop or withdraw any
student. You must do the proper paperwork to ensure that you will not receive a final
grade of "F" in a course if you choose not to attend the class once you are enrolled.

Student Grievance Procedures

Procedures for student grievances are found in Title V, Rules on Student Services and
Activities, of the university’s Handbook of Operating Procedures.

In attempting to resolve any student grievance regarding grades, evaluations, or other

fulfillments of academic responsibility, it is the obligation of the student first to make a
serious effort to resolve the matter with the instructor, supervisor, administrator, or
committee with whom the grievance originates (hereafter called “the respondent”).
Individual faculty members retain primary responsibility for assigning grades and
evaluations. If the matter cannot be resolved at that level, the grievance must be
submitted in writing to the respondent with a copy of the respondent’s School Dean. If
the matter is not resolved by the written response provided by the respondent, the student
may submit a written appeal to the School Dean. If the grievance is not resolved by the
School Dean’s decision, the student may make a written appeal to the Dean of Graduate
or Undergraduate Education, and the deal will appoint and convene an Academic
Appeals Panel. The decision of the Academic Appeals Panel is final. The results of the
academic appeals process will be distributed to all involved parties.

Copies of these rules and regulations are available to students in the Office of the Dean of
Students, where staff members are available to assist students in interpreting the rules and
regulations.

Incomplete Grade Policy

As per university policy, incomplete grades will be granted only for work unavoidably
missed at the semester’s end and only if 70% of the course work has been completed. An
incomplete grade must be resolved within eight (8) weeks from the first day of the
subsequent long semester. If the required work to complete the course and to remove the
incomplete grade is not submitted by the specified deadline, the incomplete grade is
changed automatically to a grade of F.

Disability Services

The goal of Disability Services is to provide students with disabilities educational

opportunities equal to those of their non-disabled peers. Disability Services is located in
room 1.610 in the Student Union. Office hours are Monday and Thursday, 8:30 a.m. to
6:30 p.m.; Tuesday and Wednesday, 8:30 a.m. to 7:30 p.m.; and Friday, 8:30 a.m. to 5:30
p.m.

The contact information for the Office of Disability Services is:

The University of Texas at Dallas, SU 22
PO Box 830688
Richardson, Texas 75083-0688
(972) 883-2098 (voice or TTY)
Essentially, the law requires that colleges and universities make those reasonable
adjustments necessary to eliminate discrimination on the basis of disability. For example,
it may be necessary to remove classroom prohibitions against tape recorders or animals
(in the case of dog guides) for students who are blind. Occasionally an assignment
requirement may be substituted (for example, a research paper versus an oral presentation
for a student who is hearing impaired). Classes enrolled students with mobility
impairments may have to be rescheduled in accessible facilities. The college or
university may need to provide special services such as registration, note-taking, or
mobility assistance.

It is the student’s responsibility to notify his or her professors of the need for such an
accommodation. Disability Services provides students with letters to present to faculty
members to verify that the student has a disability and needs accommodations.
Individuals requiring special accommodation should contact the professor after class or
during office hours.

Religious Holy Days

The University of Texas at Dallas will excuse a student from class or other required
activities for the travel to and observance of a religious holy day for a religion whose
places of worship are exempt from property tax under Section 11.20, Tax Code, Texas
Code Annotated.
The student is encouraged to notify the instructor or activity sponsor as soon as possible
regarding the absence, preferably in advance of the assignment. The student, so excused,
will be allowed to take the exam or complete the assignment within a reasonable time
after the absence: a period equal to the length of the absence, up to a maximum of one
week. A student who notifies the instructor and completes any missed exam or
assignment may not be penalized for the absence. A student who fails to complete the
exam or assignment within the prescribed period may receive a failing grade for that
exam or assignment.
If a student or an instructor disagrees about the nature of the absence [i.e., for the purpose
of observing a religious holy day] or if there is similar disagreement about whether the
student has been given a reasonable time to complete any missed assignments or
examinations, either the student or the instructor may request a ruling from the chief
executive officer of the institution, or his or her designee. The chief executive officer or
designee must take into account the legislative intent of TEC 51.911(b), and the student
and instructor will abide by the decision of the chief executive officer or designee.