International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
Module A: International Institutions from a Business
Perspective
Use this Instructor Guide to incorporate the unique content of this product and facilitate your
Face-to-Face, Online, and Hybrid classes. This guide has been designed to be interactive and links
have been created within each title in the Table of Contents to guide you to each section. You
can also link back to the main page by clicking at the button at the bottom of each page.
Here is the Table of Contents highlighting what you’ll be able to find to support you in teaching
this module:
YOUR CONTENT
Summary
Learning Objectives
Key Terms & Key Terms with Definitions
Content Outline
CONNECT TOOLS FOR CLASS PREPAR ATION
SmartBook
What is SmartBook?
How Does SmartBook Help You/Students?
How to assign SmartBook to ensure students come to class prepared?
ENGAG EMENT & APPLICAT ION (FACE TO F ACE & ONLINE & HYBRID)
BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS
IB IN PRACTICE
GLOBAL DEBATE
Video Suggestions
Team Exercises
Supplemental Lecture
Tools & Tricks
Controversial Issues
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
Teaching Suggestions
CONNECT TOOLS FOR ASSESSEM ENT OF LEARNING
Interactive Applications
Assigning Interactives
Time-Saving Hints:
Connect Content Matrix
YOUR CONTENT
SUMMARY
As the world becomes more closely connected, it becomes less governable at the national level.
This chapter introduces ways of thinking about institutions (institutional theory) and then briefly
describes many of the international organizations that may be useful to businesses or whose
influence businesses feel.
LEARNING OBJECTIVES
LO A-1 Explain the importance of major international institutions to business decision
Bank.
LO A-5 Discuss the resources of the Organisation for Economic Co-operation and
Development and the World Trade Organization.
LO A-6 Identify the types of trading blocs by their level of economic integration, with
examples.
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
capital within the union
Common Market of the South
(Mercosur or Mercosul)
(p. 432)
Presently a South American customs union of Argentina,
Paraguay, Brazil, Uruguay, and Venezuela, with associate
members Chile, Bolivia, Colombia, Ecuador, and Peru
Council of the European Union
(p. 438)
The EU’s primary policy-setting institution
customs union (p. 432)
Collaboration that adds common external tariffs to an FTA
Doha Development Agenda
(p. 429)
WTO extended conference on trade, also known as the Doha
Round
Economic and Monetary
Union (EMU) (p. 437)
EU group that established use of the euro in the 18-country
euro zone
Economic and Social Council
(ECOSOC) (p. 422)
UN body concerned with economic and social issues such as
trade, development, education, and human rights
economic integration (p. 433)
Integration on economic and political levels
European Commission(p. 438)
Body responsible for the EU’s day–to-day operations
European Parliament (p. 438)
EU legislative body whose members are popularly elected
from member-nations
European Union (p. 436)
A body of 28 European countries committed to economic and
political integration
formal institutions (p. 418)
Institutions that influence behavior through laws and
regulations
free trade area (FTA)(p. 432)
Area in which tariffs among members have been eliminated,
but members keep their external tariffs
General Assembly (p. 422)
Deliberative body of the UN made up of all member-nations,
each with one vote regardless of size, wealth, or power
informal institutions (p. 418)
Institutions that influence behavior through norms, values,
customs, and ideologies
International Court of Justice
(ICJ) (p. 422)
UN body that makes legal decisions involving disputes
between national governments
International Monetary Fund
(IMF) (p. 424)
Institution that fosters global monetary cooperation, financial
stability, international trade, high employment and
sustainable economic growth, and reduction of poverty
new institutional theory
(p. 418)
Understanding of institutions as social constructs, a collection
of norms that structure the relations of individuals to one
another
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
North American Free Trade
Agreement (NAFTA) (p. 434)
Agreement creating a free trade area among Canada, Mexico,
and the United States
Organisation for Economic Co–
operation and Development
(OECD) (p. 427)
Group of developed countries dedicated to promoting their
own and other nations’ economic expansion
par value (p. 424)
Stated value
Secretariat (p. 423)
The staff of the UN, headed by the secretary-general
Security Council(p. 422)
Main peacekeeping body of the UN, composed of 15 members
including 5 permanent members
Special Drawing Rights (SDRs)
(p. 424)
An international reserve asset established by the IMF
Trade-related intellectual
property rights (TRIPS) (p. 431)
The WTO agreement that protects copyrights, trademarks,
trade secrets, and other intellectual property matters
United Nations (UN) (p. 421)
193-member organization of countries dedicated to the
promotion of peace and stability of the world
World Bank (p. 424)
Institution that lends money for development projects focused
on reducing poverty
World Trade Organization
(WTO)(p. 428)
An international organization that establishes and helps
implement rules of trade between nations
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
5
Instructor’s Manual – Module A | Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
CONTENT OUTLINE
The following section provides the flow of information using the LEARNING OBJECTIVES as a
guide, KEY TERMS learners will need to take away from the course and a notation of when to use
POWERPOINT SLIDES with LECTURE NOTES to drive home teaching points.
LO A-1
Explain the importance of major international institutions
to business decision makers.
• Role in problem–solving
• Role in support for infrastructure necessary for
trade
Key Terms:
Lecture Outline and Notes:
Institutions provide a way to resolve conflict before it reaches open hostility—
Example of China and the U.S. and the role institutions play in helping them work together
constructively, despite different values and approaches.
II. Institutions provide support for infrastructure necessary for trade
Fig. A.2)
A. They limit behavior.
B. They provide managers with rules of the game.
There are formal and informal institutions. (See Fig. A.1)
A. Formal institutions operate with rules and regulations. Compliance to avoid undesirable
consequences.
B. Informal institutions operate through shared norms and values (social behavior,
means of conceptual frameworks or schema.
a. often neither explicit or tangible
b. many cultural practices are the result of cognitive institutions, and they
are a significant issue for international managers (Guanxi, what supplier
relationships should be, as understood in Japan and the U.S.)
BACK TO
MAIN PAGE
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
LO A-2
Describe institutions, drawing on new institutional theory.
• Institutions are a collection of norms that “regulate the
relations of individuals to each other.”
• Types: Formal and informal
o Formal: operate through laws and regulations
o Informal: operate through norms and values
o normative—establish standards and
propagate principles
o cognitive—collections of shared ideas
that define reality by means of
conceptual frameworks or schema
Key Terms:
• new institutional
theory
• formal institutions
• informal institutions
LO A-3
Describe the United Nations as an institution and its relevance
to international managers.
• UN support of business
o agreements on standards
o groundwork for investment, social problem
solutions, downsides of globalization
o conferences that support global trade needs
shipping, and sales, Postal Union, pharmaceutical
standards, weather collaboration
• UN as an institution: informal, normative—5 organs
o General Assembly—main deliberative body, 1
Key Terms:
• United Nations (UN)
• General Assembly
• Security Council
• Economic and Social
Council
• International Court of
Justice (ICJ)
• Secretariat
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
7
Instructor’s Manual – Module A | Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
A. Many agreements on standards
B. Groundwork for investment, solutions to social problems, issues related to downsides of
globalization
C. Conferences dedicated to specific trade needs—shipping methods and agreements, use
of canals, sales terms, agreements such as the Postal Union, telephone agreements,
pharmaceutical methods and standards, conference on weather data sharing
II. UN as an institution: informal, normative. 5 organs:
A. General Assembly—main deliberative body. Each member has 1 vote
B. Security Council—responsible for peace and security. 5 permanent members (Fr, Ch, Ru,
US, UK) and 10 elected by General Assembly
C. Economic and Social Council (ECOSOC)—covers issues such as trade, development, many
social issues
D. International Court of Justice (ICJ), aka World Court. Hears disputes between nations
and offers advisory opinions
E. Secretariat—UN’s staff. Presently Ban Ki Moon is in his second term as Secretary
General. Staff is about 44,000, worldwide.
LO A-4
Describe the purposes of the two monetary institutions, the
IMF and the World Bank.
• Established at Bretton Woods, 1944
• International Monetary Fund—collaboration of
nations for monetary cooperation
o Special Drawing Rights
o Exchange rate mechanism until 1971
o Many criticisms
o Current IMF issues
• World Bank—economic development –operates as a
nonprofit cooperative, 5 institutions, 2 major (IBRD
and IDA) and 3 smaller
Key Terms:
• Bretton Woods
• International Monetary
Fund (IMF)
• World Bank
• Special Drawing Rights
(SDRs)
• par value
I. IMF and World Bank established at Bretton Woods in 1944
II. International monetary Fund (IMF)—collaboration of nations for monetary cooperation—
common interests transcend conflicting individual interests. Quota contributions are based on
nation’s size in world economy.
A. Special Drawing Rights (SDRs)—reserve asset established by IMF
1. Value linked to basket of currencies, not a claim on IMF but on members’ currencies
2. Quotas are contributions of members and they form the pool for IMF lending
B. Exchange rate mechanism set fixed rates with par value based on gold and U.S. dollar;
followed until 1971
C. There are many criticisms of the IMF
1. Forcing free-market policies on poor countries
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
8
Instructor’s Manual – Module A | Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
2. Increasing poverty and political chaos (Bolivia, Indonesia, Thailand)
D. Current IMF issues
1. Aid coupled with mandatory advice to reduce budget deficits and inflation lead to
increased poverty
2. IMF largely controlled by developed Western countries; BRIC economies have 10.3 % of
IMF vote and produce 24.5 % of word GDP.
3. IMF has strengthens economies of dictatorial regimes that become markets for
multinationals. The test is economic, not political.
4. IMF is making attempts to address these issues.
III. World Bank: nonprofit cooperative to fund development. 2 major and 3 minor institutions
A. International Bank for Reconstruction and Development (IBRD or World Bank) with focus on
middle income nations
B. International Development Association (IDA) with focus on poorest nations via interest-free
loans and grants
LO A-5
Discuss the resources of the Organisation for Economic Co-
operation and Development (OECD) and the World Trade
Organization (WTO).
• Organisation for Economic Co-operation and
Development (OECD) –research resource
• World Trade Organization (WTO)
o Principles
o Doha Development Agenda
o Trade-related intellectual property rights
o WTO going forward
Key Terms:
• Organisation for
Economic Co-operation
and Development
(OECD)
• World Trade
Organization (WTO)
• Doha Development
Agenda
• trade-related
intellectual property
rights (TRIPS)
I. Organisation for Economic Co-operation and Development (OECD)
A. Supports economic growth for member and non-member countries
B. Provides research on economic and business topics
II. World Trade Organization (WTO)
A. Purpose is to establish and implement rules of trade
B. Five principles
1. Trade without discrimination
2. Freer trade
3. Predictability through binding and transparency
BACK TO
MAIN PAGE
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
2. Most concerns market access for developing nations, esp. for their textiles,
clothing, agriculture and fish
D. Trade-related intellectual property rights
1. Acceptance of duty to enforce property rights on 20-year patents and 50-year
copyrights
2. Many issues remain, esp in music, software, and pharmaceuticals
E. WTO going forward
A. Many issues need to be addressed; rising tide must lift all boats
B. China and India offer a sense of WTO’s possibilities, since absolute poverty has
declined as a result of trade
C. Due to slow progress of WTO agreements, regional trade agreements have been
increasing
LO A-6
Identify the types of trading blocs by their level of
economic integration, with examples.
• Free trade area (FTA) and customs union
• Common market
• Economic integration
• Examples
o NAFTA
o African trade groups
o Latin American trade groups
o Asian trade groups
Key Terms:
• free trade
• customs union
• Common Market of
the South (MERCOSUR
or MERCOSUL)
• common market
• economic integration
• North American Free
Trade Agreement
(NAFTA)
• European Union (EU)
• Economic and
Monetary Union
• Council of the
• European Commission
I. Free trade area and customs union
A. Free trade area—members trade with each other without tariffs or quotas, each has its own
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module A
10
Instructor’s Manual – Module A | Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
external tariffs. Restrictions often remain on services, labor, and capital.
B. Customs union—adds shared external tariffs to a free trade area
C. Common market—customs union lifts restrictions on the movement of labor and capital
D. Economic integration—adds political and further economic integration
E. Examples of stages of economic integration
1. NAFTA—largest free trade zone—Mexico, U.S., Canada
2. African trade groups—growth hampered because African nations tend to have their
primary trading relationships with former colonial powers.
3. Latin American trade groups: Mercosur/Mercosul, DR-CAFTA, CAN
4. Asian trade groups: ASEAN, ASEAN + 3
5. EU: 3 areas of integration— foreign policy, economics and domestic affairs
BACK TO
MAIN PAGE