brief CONTENTS Introduction and Overview The Global Trade and Investment Environment The Global Monetary System

Transcription

1 brief CONTENTS part one part two part three part four part five Introduction and Overview Chapter 1 Globalization 2 Country Differences Chapter 2 National Differences in Political Economy 40 Chapter 3 Differences in Culture 86 Chapter 4 Ethics in International Business 122 Cases: Google in China 154 Mired in Corruption Kellogg, Brown & Root in Nigeria 155 The Global Trade and Investment Environment Chapter 5 International Trade Theory 158 Chapter 6 The Political Economy of International Trade 196 Chapter 7 Foreign Direct Investment 230 Chapter 8 Regional Economic Integration 264 Cases NAFTA and the U.S. Textile Industry 298 Martin's Textiles 299 Agricultural Subsidies and Development 300 Boeing versus Airbus 302 Starbucks Foreign Direct Investment 308 The Global Monetary System Chapter 9 The Foreign Exchange Market 310 Chapter 10 The International Monetary System 340 Chapter 11 The Global Capital Market 374 Case Argentina's Monetary Crisis 399 The Strategy and Structure of International Business Chapter 12 The Strategy of International Business 400 Chapter 13 The Organization of International Business 430 Chapter 14 Entry Strategy and Strategic Alliances 468 Cases The Global Automobile Industry in

2 vitt 'ie: ~c IKEA: Furniture Retailer to the World 512 Downey's Soup 518 part six International Business Operations Chapter 15 Exporting, Importing, and Countertrade 520 Chapter 16 Global Production, Outsourcing, and Logistics 542 Chapter 17 Global Marketing and R&D 568 Chapter 18 Global Human Resource Management 602 Chapter 19 Accounting in the International Business 630 Chapter 20 Financial Management in the International Business 652 Cases Li & Fung 676 Castrol Oil in Vietnam 677 China Mobile 678 Glossary 680 Photo Credits 692 Index 694 1

3 CONTENTS part one Introduction and Overview CHAPTER 1 Globalization 2 The Globalization of Health Care 2 Introduction 4 What Is Globalization? 6 The Globalization of Markets 6 The Globalization of Production 7 Vizio and the Market for Flat Panel TVs 8 The Emergence of Global Institutions 9 Drivers of Globalization 11 Declining Trade and Investment Barriers 11 The Role of Technological Change J 4 Microprocessors and Telecommunications 14 The Changing Demographics of the Global Economy 16 The Changing World Output and World Trade Picture 16 India's Software Sector 18 The Changing Foreign Direct Jni'estment Picture J 8 The Changing Nature of the Multinational Enterprise 20 China's Hisense An Emerging Multinational 22 The Changing World Order 22 The Global Economy of the 21st Century 24 The Globalization Debate 24 Antiglobafeation Protests 25 Globalization, jobs, and Income 26 Protesting Globalization in France 27 Globalization, Labor Policies, and the Environment 29 Globalisation and National Sovereignty 3 J Globalization and the World's Poor 31 Managing in the Global Marketplace 33 Chapter Summary 34 Questions 35 ResearchTask 36 Globalization at General Electric 36 part two Country Differences CHAPTER 2 National Differences in Political Economy 40 Egypt, the Troubled Giant Introduction Political Systems 42 Collectivism and Individualism 45 Democracy and Totalitarianism 45 Chavez's Venezuela 46 Economic Systems 48 Market Economy 48 Command Economy 48 Mixed Economy 49 Legal Systems 49 Different Legal Systems 50 Differences in Contract Law 51 Property Rights and Corruption 5 J Corruption in Nigeria 54 The Protection of Intellectual Property 55 Product Safety and Liability 56 Starbucks Wins Key Trademark Case in China The Determinants of Economic Development 57 Differences in Economic Development 57 Broader Conceptions of Development: Amartya Sen 61 Political Economy and Economic Progress 6i Emerging Property Rights in China 66 Geography, Education, and Economic Development 67 States in Transition 68 The Spread of Democracy 68 The New World Order and Global Terrorism 70 The Spread of Market-Based Systems The Nature of EconomicTransformation 73 Deregulation 73 Privatization 73 Legal Systems

4 Implications of Changing Political Economy 75 Implications for Managers 76 Chapter Summary 80 Questions 80 ResearchTask 81 India's Transformation 81 CHAPTER 3 Differences in Culture 86 McDonald's in India 86 Introduction 88 What Is Culture? 89 Values and Norms 89 Culture, Society, and the Nation-State 90 The Determinants of Culture 91 Social Structure 92 Individuals and Groups 92 Social Stratification 94 Breaking India's Caste System 95 Religious and Ethical Systems 97 Christianity 97 Islam 99 Islamic Capitalism in Turkey 102 Hinduism 103 Buddhism 104 Confucianism 104 DMG-Shanghai 106 Language 107 Spoken Language 107 Unspoken Language 108 Education 108 Culture and the Workplace 109 Cultural Change 111 Implications for Managers 113 Chapter Summary 116 Questions 117 ResearchTask 117 Wal-Mart's Foreign Expansion 118 CHAPTER 4 Ethics in International Business 122 Siemens Bribery Scandal 122 Introduction 124 Ethical Issues in International Business 124 Employment Practices 124 Human Rights 125 Making Apple's ipod 126 Environmental Pollution 128 Corruption 128 Unocal in Myanmar 129 Moral Obligations 131 Ethical Dilemmas 131 The Roots of Unethical Behavior 132 Personal Ethics 132 Decision-Making Processes 133 Organization Culture 133 Unrealistic Performance Expectations 134 Pfizer's Drug-Testing Strategy in Nigeria 135 Leadership 135 Philosophical Approaches to Ethics 136 Straw Men 136 Utilitarian and Kantian Ethics 138 Rights Theories 139 Justice Theories 141 Implications for Managers 142 Chapter Summary 146 Questions 147 ResearchTask 148

5 Wal-Mart's Chinese Suppliers 148 Part Two Cases Google in China 154 Mired in Corruption Kellogg, Brown & Root in Nigeria 155 part three The Global Trade and Investment Environment CHAPTER 5 International Trade Theory 158 Bangladesh's Textile Trade 158 Introduction 160 An Overview of Trade Theory 160 The Benefits of Trade 161 The Pattern of International Trade 161 Trade Theory and Government Policy 162 Mercantilism 162 Absolute Advantage 163 Is China a Neo-Mercantilist Nation? 164 Comparative Advantage 166 The Gains from Trade 167 Qualifications and Assumptions 168 Extensions of the Ricardian Model 169 Moving U.S. White-Collar Jobs Offshore Heckscher-Ohlin Theory 174 The Leontief Paradox 174 The Product Life-Cycle Theory 175 Evaluating the Product Life-Cycle Theory New Trade Theory 178 Increasing Product Variety and Reducing Costs 178 Economies of Scale, First-Mover Advantages, and the Pattern of Trade 179 Implications of New Trade Theory 179 National Competitive Advantage: Porter's Diamond Factor Endowments 182 Demand Conditions 182 Related and Supporting Industries Finn Strategy, Structure, and Rivalry 183 Evaluating Porter's Theory 183 The Rise of Finland's Nokia 184 Implications for Managers 185 Chapter Summary 187 Questions 188 ResearchTask 189 The Ecuadoran Rose Industry 189 Appendix International Trade and the Balance of Payments 190 CHAPTER 6 The Political Economy of International Trade 196 The Global Financial Crisis and Protectionism 196 Introduction 198 Instruments of Trade Policy 198 Tariffs 199 Subsidies 200 Subsidized Wheat Production in Japan 201 Import Quotas and Voluntary Export Restraints 201 Local Content Requirements 203 Administrative Policies 203 U.S. Magnesium Seeks Protection 204 The Case for Government Intervention 205 Political Arguments for Intervention 205 Economic Arguments fan Intervention 208 Trade in Hormone-Treated Beef 209 The Revised Case for Free Trade 211 Retaliation and Trade War 211 Domestic Policies 211 Development of the World Trading System 212 From Smith to the Great Depression : GATT, Trade Liberalization, and Economic Growth : Protectionist Trends 213 The Uruguay Round and the World Trade Organization 214

6 xu WTO: Experience to Date 215 The Future of the WTO: Unresolved Issues and the Doha Round 218 Estimating the Gains from Trade for America 222 Implications for Managers 224 Chapter Summary 225 Questions 226 Research Task 227 Why Did Global Food Prices Rise? 227 Home-Country Costs 253 International Trade Theory and FDI 253 Government Policy Instruments and FDI 254 Home-Country Policies 254 Host-Country Policies 255 International Institutions and the Liberalization of FDI 256 Implications for Managers 257 Chapter Summary 259 Questions 260 ResearchTask 260 Lakshmi Mitt a I and the Growth of Mittal Steel 261 CHAPTER 7 Foreign Direct Investment 230 Spain's Telefonica Introduction Foreign Direct Investment in the World Economy 232 Trends in FDI 232 The Direction of FDI 234 Foreign Direct Investment in China 236 The Source of FDI 237 The Form of FDI: Acquisitions versus Greenfield Investments 237 The Shift to Services 238 Theories of Foreign Direct Investment 239 Why Foreign Direct Investment Foreign Direct Investment by Cemex 240 The Pattern of Foreign Direct Investment 242 The Eclectic Paradigm 244 Political Ideology and Foreign Direct Investment 245 The Radical View 245 The Free Market View 246 Pragmatic Nationalism 247 Shifting Ideology 247 DP World and the United States 248 Benefits and Costs of FDI 249 Host-Country Benefits 249 Host-Country Costs 251 Home-Country Benefits 253 CHAPTER 8 Regional Economic Integration 264 NAFTA and Mexican Trucking 264 Introduction 266 Levels of Economic Integration 267 The Case for Regional Integration 268 The Economic Case for Integration 269 The Political Case for Integration 269 Impediments to Integration 270 The Case against Regional Integration 270 Regional Economic Integration in Europe 271 Evolution of the European Union 271 Political Structure of the European Union 271 The European Commission and Media Industry Mergers 274 The Single European Act 274 Creating a Single European Market in Financial Services 276 The Establishment of the Euro 277 Enlargement of the European Union 279 Regional Economic Integration in the Americas 280 The North American Free Trade Agreement 280 The Andean Community 283 MERCOSUR 284 Central American Common Market, CAFTA, and CARICOM 285 Free Trade Area of the Americas 285

7 xni Regional Economic Integration Elsewhere 286 Association of Southeast Asian Nations 286 Asia-Pacific Economic Cooperation 286 Regional Trade Blocs in Africa 288 Implications for Managers 289 Chapter Summary 291 Questions 292 ResearchTask 292 The Euro Energy Market 293 Part Three Cases NAFTA and the U.S. Textile Industry 298 Martin's Textiles 299 Agricultural Subsidies and Development 300 Boeing versus Airbus 302 Starbucks Foreign Direct Investment 308 part four The Global Monetary System CHAPTER 9 The Foreign Exchange Market 310 CaterpillarTractor 310 Introduction 312 The Function of the Foreign Exchange Market 313 Currency Conversion 313 Insuring against Foreign Exchange Risk 315 Volkswagen's Hedging Strategy 317 The Nature of the Foreign Exchange Market 318 Economic Theories of Exchange Rate Determination 319 Prices and Exchange Rates 319 Anatomy of a Currency Crisis 326 Summary 328 Exchange Rate Forecasting 328 The Efficient Market School 328 The Inefficient Market School 328 Approaches to Forecasting 329 Currency Convertibility 330 Implications for Managers 331 Dealing with the Rising Euro 333 Chapter Summary 335 Questions 336 Research Task 336 Hyundai and Kia 337 CHAPTER 10 The International Monetary System Economic Turmoil in Latvia 340 Introduction 342 The Gold Standard 343 Mechanics of the Gold Standard 343 Strength of the Gold Standard 344 The Period between the Wars, The Bretton Woods System 345 The Role of the IMF 345 The Role of the World Bank 347 The Collapse of the Fixed Exchange Rate System 347 The Floating Exchange Rate Regime 348 The Jamaica Agreement 348 Exchange Rates since Fixed versus Floating Exchange Rates 351 The U.S. Dollar, Oil Prices, and Recycling Petrodollars 352 The Cose for Floating Exchange Rates 352 The Case for Fixed Exchange Rates 353 Who Is Right? 354 Exchange Rate Regimes in Practice 355 Pegged Exchange Rates 355 Currency Boards IMF Crisis Management 357 Financial Crises in the Post-Bretton Woods Era 357 Mexican Currency Crisis of The Asian Crisis 359 Evaluating the IMF's Policy Prescriptions 363 Turkey and the IMF 364

8 XIV Implications for Managers 366 Airbus and the Euro 368 Chapter Summary 369 Questions 370 ResearchTask 370 China's Managed Float 371 CHAPTER 11 The Global Capital Market 374 Global Capital Markets in Crisis 374 Introduction 376 Benefits of the Global Capital Market 376 Functions of a Generic Capital Market 376 Attractions of the Global Capital Market 377 Deutsche Telekom Taps the Global Capital Market 379 Growth of the Global Capital Market 382 Global Capital Market Risks 384 Did the Global Capital Markets Fail Mexico? 385 The Eurocurrency Market 386 Genesis and Growth of the Market 386 Attractions of the Eurocurrency Market 386 Drawbacks of the Eurocurrency Market 388 The Global Bond Market 388 Attractions of the Eurobond Market 389 The Global Equity Market 389 Foreign Exchange Risk and the Cost of Capital 390 The Search for Capital in the Czech Republic 391 Implications for Managers 392 Chapter Summary 393 Questions 394 Research Task 394 Industrial and Commercial Bank of China 395 Part Four Case Argentina's Monetary Crisis 399 part five The Strategy and Structure of International Business CHAPTER 12 The Strategy of International Business 400 The Evolving Strategy of IBM 400 Introduction 402 Strategy and the Firm 402 Value Creation 403 Strategic Positioning 404 Operations: The Firm as a Value Chain 405 Global Expansion, Profitability, and Profit Growth 408 Expanding the Market: Leveraging Products and Competencies 408 Location Economies 409 Experience Effects 411 Leveraging Subsidiary Skills 414 Summary 414 Cost Pressures and Pressures for Local Responsiveness 415 Pressures for Cost Reductions 415 Pressures for Local Responsiveness 416 Local Responsiveness at MTV Networks 417 Choosing a Strategy 419 G loi>ai S tandardization S trategy 419 Vodaphone in Japan 420 Localization Strategy 420 Transnational Strategy 421 International Strategy 422 Evolution of Strategy at Procter & Gamble 423 The Evolution of Strategy 423 Chapter Summary 424

9 XV Questions 425 Research Task 425 Coca Cola 426 Appendix Profitability, Growth, and Valuation 428 Questions 464 Research Task 464 A Decade of Organizational Change at Unilever 465 CHAPTER 13 The Organization of International Business Nestle 430 Introduction 432 Organizational Architecture 433 Organizational Structure 434 Vertical Differentiation: Centralization and Decentralization 434 The International Division at Wal-Mart 436 Horizontal Differentiation: The Design of Structure The Rise and Fall of Dow Chemical's Matrix Structure 442 Integrating Mechanisms 444 Control Systems and Incentives 448 Types of Control Systems 448 Incentive Systems 449 Control Systems, Incentives, and Strategy in the International Business 451 Processes 452 Organizational Culture 454 Creating and Maintaining Organizational Culture 454 Organizational Culture and Performance in the International Business 455 Culture and Incentives at Lincoln Electric 456 Synthesis: Strategy and Architecture 458 Localization Strategy 458 International Strategy 459 Global Standardization Strategy 459 Transnational Strategy 459 Environment, Strategy, Architecture, and Performance 460 Organizational Change 460 Organizational Inertia 461 Implementing Organizational Change 462 CHAPTER 14 Entry Strategy and Strategic Alliances General Electrics Joint Ventures 468 Introduction 470 Basic Entry Decisions 470 Which Foreign Markets! 470 Timing of Entry 4 71 Tesco's International Growth Strategy 472 Scale of Entry and Strategic Com?m'tments 472 Summary 474 Entry Modes 475 Exporting 475 The Jollibee Phenomenon A Philippine Multinational 476 Turnkey Projects 477 Licensing 478 Franchising 480 Joint Ventures 481 Wholly Owned Subsidiaries 482 Selecting an Entry Mode 483 Core Competencies and Entry Mixle 484 Pressures for Cost Reductions and Entry Mode 484 Greenfield Ventures or Acquisition? 485 Pros and Cons of Acquisitions 485 Pros and Cons of Greenfield Ventures 487 Greenfield err Acquisition! 488 Strategic Alliances 488 The t Advantages /\avantages of Strategic strategic AUia /MUances 489 The Disadvantages of Strategic Alliances 489 Cisco and Fujitsu 490 Making Alliances Work 490 Chapter Summary 493 Questions 494 Chapter Summary 463 Research Task

10 XVI JCB in India 495 Part Five Cases The Global Automobile Industry in IKEA: Furniture Retailer to the World 512 Downey's Soup 518 Chapter Summary 538 Questions 539 ResearchTask 539 Exporting and Growth for Small Businesses 539 part six International Business Operations CHAPTER 15 Exporting, Importing, and Countertrade 520 MD International 520 Introduction 522 The Promise and Pitfalls of Exporting Improving Export Performance 523 An International Comparison FCX Systems 524 Information Sources 525 Utilising Export Management Companies 525 Exporting with a Little Government Help 526 Export Strategy 527 Export and Import Financing 527 Export Strategy at 3M 528 Lack of Trust 528 Red Spot Paint & Varnish 529 Letter of Credit 530 Draft 531 Bill of Lading 532 A Typical International Trade Transaction 532 Export Assistance 534 Export-Import Bank 534 Export Credit Insurance 535 Countertrade 535 The Incidence of Countertrade 535 Types of Countertrade 536 The Pros and Cons of Countertrade 537 CHAPTER 16 Global Production, Outsourcing, and Logistics 542 The Rise of the Indian Automobile Industry 542 Introduction 544 Strategy, Production, and Logistics 544 Where to Produce 547 Country Factors 547 Philips in China 548 Technological Factors 548 Product Factors 552 Locating Production Facilities 552 The Strategic Role of Foreign Factories 554 Hewlett-Packard in Singapore 555 Outsourcing Production: Make-or-Buy Decisions 556 The Advantages of Make 557 The Advantages of Buy 558 Trade-offs 560 Strategic Alliances with Suppliers 560 Managing a Global Supply Chain 561 The Role of Just-in-Time Inventory 561 The Role of Information Technology and the Internet 562 Chapter Summary 562 Questions 563 Research Task 564 Building the Boeing

11 xvn CHAPTER 17 Global Marketing and R&D 568 Microsoft in India 568 Introduction 570 The Globalization of Markets and Brands 570 Market Segmentation 571 Product Attributes 572 Marketing to Black Brazil 573 Cultural Differences 573 Economic Development 574 Product and Technical Standards 575 Distribution Strategy 575 Differences between Countries 576 Choosing a Distribution Strategy 578 Communication Strategy Barriers to International Communication Overcoming Cultural Barriers to Selling Tampons 581 Push versus Pull Strategies 582 Unilever Selling to India's Poor 583 Global Advertising 584 Pricing Strategy 585 Price Discrimination 585 Strategic Pricing 587 Regulatory Influences on Prices 588 Configuring the Marketing Mix 589 Levi Strauss Goes Local 590 New-Product Development 590 The Location of R&D 591 Integrating RdfD, Marketing, and Production 592 Cross-Functional Teams 593 Building Global R&D Capabilities 594 Chapter Summary 595 Questions 596 Research Task 597 Dove Building a Global Brand 597 CHAPTER 18 Global Human Resource Management 602 AstraZeneca 602 Introduction 604 The Strategic Role of International HRM 604 Staffing Policy 606 Types of Staffing Policy 606 Expatriate Managers 609 Managing Expatriates at Royal Dutch/Shell 612 The Global Mind-Set 613 Training and Management Development 613 Training for Expatriate Managers 614 Repatriation of Expatriates 615 Management Development and Strategy Monsanto's Repatriation Program 616 Performance Appraisal 617 Performance Appraisal Problems 617 Guidelines for Performance Appraisal 617 Compensation 618 National Differences in Compensation 618 Expatriate Pay 619 Global Compensation Practices at McDonald's 620 International Labor Relations 622 The Concerns of Organized Labor 622 The Strategy of Organized Labor 622 Approaches to Labor Relations 623 Chapter Summary 624 Questions 625 ResearchTask 625 Lenovo 626 CHAPTER 19 Accounting in the International Business 630 Chinese Accounting Introduction

12 XVU1 Country Differences in Accounting Standards 632 Relationship between Business and Providers of Capital 633 Political and Economic Ties with Other Countries 635 Inflation Accounting 635 Level of Development 635 Culture 636 National and International Standards Lack of Comparability 636 International Standards The Consequences of Different Accounting Standards 638 Multinational Consolidation and Currency Translation 639 Novartis Joins the International Accounting Club 640 Consolidated Financial Statements 640 Currency Translation 642 Current U.S. Practice 643 Accounting Aspects of Control Systems 644 Exchange Rate Changes and Control Systems 644 Transfer Pricing and Control Systems 646 Separation of Subsidiary and Manager Performance 646 Chapter Summary 647 Questions ResearchTask Adopting International Accounting Standards 649 CHAPTER 20 Financial Management in the International Business 652 Global Treasury Management at Procter & Gamble 652 Introduction 654 Investment Decisions 655 Capital Budgeting 655 Project and Parent Cash Flows 656 Adjusting for Political and Economic Risk 656 Black Sea Energy Ltd. 657 Risk and Capital Budgeting 658 Financing Decisions 658 Source of Financing 659 Financial Structure 659 Global Money Management: The Efficiency Objective 660 Minimising Cash Balances 660 Reducing Transaction Costs 660 Global Money Management: The Tax Objective 661 Moving Money across Borders: Attaining Efficiencies and Reducing Taxes 662 Dividend Remittances 662 Royalty Payments and Fees 662 Transfer Prices 663 Fronting Loans 664 Techniques for Global Money Management 666 Centralized Depositories 666 Multilateral Netting 667 Chapter Summary 669 Questions 670 Research Task 670 Brazil's Gol 670 Part Six Cases Li & Fung 676 Castrol Oil in Vietnam 677 China Mobile 678 Glossary 680 Photo Credits 692 Index 694

13 IIS -C MAPS GN! per Capita, GN! Purchasing Power Parity per Capita, Growth Rate in GDP per Capita, The Human Development Index, Political Freedom, Distribution of Economic Freedom in World Religions 98 Member States of the European Union in Economic integration in the Americas 281 ASEAN countries 287 APEC Members 288