brief PREFACE xiii ONE Introduction and Overview 2 Chapter One Globalization 3 TWO Country Differences 36 Two National Differences in Political Economy 37 Three Political Economy and Economic Development 59 Four Differences in Culture 89 Chapter Five Ethics in International Business PART THREE The Global Trade and Investment Environment 150 ChapterSix International Trade Theory 151 Chapter Seven The Political Economy of International Trade Eight Foreign Direct Investment 219 Chapter Nine Regional Economic Integration 249 FOUR Global Money System 280 Ten The Foreign Exchange Market 281 Chapter Eleven The International Monetary System 307 PART The Strategy of International Business 332 Chapter Twelve The Strategy International Business 333 Entering Foreign Markets 367 PART International Business Functions 390 Chapter Fourteen Exporting, Importing, and Countertrade 391 Chapter Fifteen Global Production, Outsourcing, and Logistics Chapter Sixteen Global Marketing and R&D 437 Chapter Seventeen Global Human Resource Management 467 GLOSSARY 491 ENDNOTES 499 CREDITS 521 522 ACRONYMS COUNTRIES AND THEIR CAPITALS WORLD MAP Hill, Charles W. L. Global business today 2014 digitalisiert durch: IDS Basel Bern
PREFACE xiii PARTTWO 36 PART ONE Introduction and Overview 2 Chapter Two National Differences in Political Economy 37 Opening Case: Ghana: An African Dynamo 37 Chapter One Globalization 3 Introduction 38 Opening Case: Makes the Apple 3 Political Systems 39 Introduction 4 39 What Globalization? 6 42 The Markets 6 Economic Systems 44 The Production 7 Market Economy 44 The of Global 9 Economy 45 Globalization 45 Declining Trade and Investment Barriers Legal Systems 46 Change 14 Different Legal Systems 46 The Changing Global Differences in 47 Economy Property Rights and Corruption 48 The Changing World Output and World Trade The Intellectual Property 51 16, Product Safety and Product Liability 53 The Changing Foreign Direct Investment Picture 18 Managerial Implications 54 The ofthe Multinational Key Terms 55 Enterprise 19 Chapter Summary 55 The Changing World Order 22 Thinking and Discussion Questions 55 The Global Twenty-First Task 56 Century 23 The Polish Surprise 56 The Globalization Debate 24.,,,. Three Political Economy and Economic Protests 24 Development 59 Globalization, Jobs, and 26 Opening Case: Revolution in Egypt 59 Globalization, Labor Policies, the Environment 28 Differences in Economic Development 61 Globalization and National Sovereignty 29 Broader Conceptions of Development: Amartya Sen 63 Globalization and the World's Poor 30 Political Economy and Economic Progress 66 Managing in the Global Marketplace 31 Innovation and Entrepreneurship Are the Engines 66 Chapter Summary 33 Innovation and Entrepreneurship a Critical Thinking and Discussion Questions 34 Market Economy 68 Research Task 34 Innovation and Entrepreneurship Require Strong Closing Case: Legal Outsourcing 35 Property Rights 68
Political System 69 Five Ethics in International Economic Progress Begets 70 Business Education, and Economic Development 70 Opening Case: Exporting Used Batteries States in Transition 71 Mexico 123 71 Introduction 124 New World Order and 74 Ethical Issues in International Business 125 The Market-Based Systems 75 Employment Practices 125 Economic Transformation 77 Human Rights 125 Derequlation 77 Environmental Pollution 127 77 128 Legal Systems 79 Moral Obligations 130 Economy 79 Ethical Dilemmas 131 Implications for Managers: benefits, costs and risks of doing Behavior business 80 Personal Ethics 132 Terms 84 Decision-Making Processes 133 Chapter Summary 84 Organization Culture 134 Critical Thinking and Discussion Questions 85 Unrealistic Performance Expectations 134 Research Task 85 Leadership 134 Closing Case: Japan's Economic Malaise 85 Societal Culture 134 Philosophical Approaches to Ethics Four Differences in Culture 89 Did Germany? 89,,.,......,. ' and Kantian Ethics 137 Introduction 90 What Culture? 91 Values and 91 Culture, Society, and the Nation-State 93 The Culture 93 Social Structure 94 and Groups 94 Social Stratification 96 Rights Theories Justice Theories 140 Focus on Managerial Implications 141 Key Terms 146 Chapter Summary 146 Critical Thinking and Discussion Questions 147 Research Task 147 Closing Case: Working Conditions in a Religious and Ethical Systems 99 101 Islam 102 105 PART THREE The Global Trade and Investment 106 Environment 150 106 ChapterSix International Trade Theory 151 Language 108 Drug Spoken Language 108 Industry 151 Unspoken Language 109 Introduction 152 Education 110 An Trade Theory 153 Culture Workplace 111 The Benefits of Trade 153 Cultural Change The International Trade 154 Focus on Managerial Implications Trade Theory and Government Policy Terms 118 155 Chapter Summary Absolute Advantage 156 Critical Thinking and Discussion Questions Comparative Advantage Research Task from Trade 160 Closing Case: Culture and Business in Saudi and Assumptions 161 Arabia Model 162 vii
Theory GATT, Trade Liberalization, and The Leontief Paradox 167 203 The Theory 168 1980-1993: Trends 204 Evaluating the Product Life-Cycle The Uruguay Round and the World Trade Theory 170 Organization 205 New Trade Theory to Date 206 Product Variety and Reducing The Future ofthe WTO: Unresolved Issues and the Costs 171 Doha Round 207 Economies Scale, Advantages, Focus on Managerial Implications and the Pattern of Trade 171 Terms 214 New Trade Theory 172 Chapter Summary 214 National Competitive Advantage: Porter's Critical Thinking and Discussion Questions Diamond Research Task 215 Factor 174 Closing Case: Tire Imports 175 from China 215 Related and Supporting Industries Firm Strategy, Structure, and Chapter Eight Foreign Direct Evaluating Porter's Theory Investment Opening Case: Foreign Retailers in India 219 Focus on Managerial Implications Key Terms 180 Chapter Summary 180 Critical Thinking and Discussion Questions 181 Research Task 181 Closing Trade 182 Appendix A International Trade and the Balance Payments 183 Introduction 220 Foreign Direct Investment in the World Economy 221 Trends 221 222 223 The Form of FDI: versus Greenfield Investments 224 of Foreign Direct Investment 225 Seven The Political Economy of Why Foreign Direct Investment? 225 International Trade 189 The Pattern Foreign Direct Opening Case: China Limits Exports of Rare Investment 227 Earth Minerals 189 The 228 Introduction Political Ideology and Foreign Direct Instruments of Trade Policy 191 Investment 230 191 The Radical View 230 192 Free Market View 231 Import Quotas and Voluntary Export 232 Restraints 193 Ideology 232 Local Content Requirements 195 Benefits and Costs of FDI 233 Administration Policies 195 Host-Country Benefits 234 Policies 196 Host-Country Costs 236 The for Government Intervention 197 Benefits 237 Political Arguments for Intervention 197 Home-Country Costs 238 Economic Arguments for Intervention International Trade Theory and FDI 238 The Revised Case for Trade 201 Government Policy Instruments and Trade War 202 and FDI 239 202 Home-Country Policies 239 Development of the World Trading Host-Country Policies 240 System 202 International and the Liberalization From Smith to the Great Depression 203 viii
Focus on Managerial Implications 241 Insuring against Foreign Exchange Risk 285 Terms 244 The Nature Foreign Exchange Market 287 Chapter Summary 244 Economic Theories Rate Critical Thinking and Discussion Questions 244 Determination 288 Research Task 245 Prices and Exchange Rates 289 Closing Case: Japan 245 Interest Rates and Exchange Rates 294 Investor Psychology and Bandwagon Chapter Nine Regional Economic Effects 295 Integration 249 Opening Case: I Want My 249 Introduction 250 Summary Exchange Rate Theories 296 Exchange Rate Forecasting 296 The Efficient Market School 297 Integration 251,.,,,,, The Market School 297 The Case for Regional Integration 253 The Economic Case for Integration 253 The Political Case for Integration 254 to Integration 254 The Case Against Regional Integration 255 Regional Economic Integration in Europe 256 Evolution ofthe European Union 256 Political Structure ofthe European Union 256 The Single European Act 259 The Establishment ofthe Euro 260... Chapter Eleven The International Monetary the European Union 264 307 Regional Economic Integration in the Opening Case: in Malawi 307 265 The North American Free Trade Agreement 265 Community 268 Mercosur 269 Central American Common Market, CAFTA, 270 Free Trade Area ofthe Americas 270 Regional Economic Integration Elsewhere 271 Association Nations 271 Economic Cooperation 272 Approaches to Forecasting 297 Convertibility 298 Focus on Managerial Implications 300 303 Chapter Summary 303 Critical Thinking and Discussion Questions 304 Research Task 305 Closing Case: Billabong 305 Introduction 308 The Gold Standard 310 Mechanics ofthe 310 Strength ofthe Gold Standard The Period between the Wars, 1918-1939 310 The Bretton Woods System Role ofthe IMF 312 The Role ofthe World Bank The Collapse Regional in Africa 272 System Focus on Managerial Implications 274 Fixed Exchange Rate Terms 276 The Agreement 315 Chapter Summary 276 Exchange Rates 1973 Critical Thinking and Discussion Questions 277 Task 277 for Floating Exchange Rates 319 Closing Case: NAFTAand 277 The Case for Fixed Exchange Rates 319 320 PART FOUR Global Money System 280 Exchange Rate Regimes in Practice 320 Chapter Ten The Foreign Exchange Pegged Exchange Rates 321 Market 281 Currency Boards 321 Opening Yen 281 Crisis IMF 322 uction 282 Financial Crises in the Post-Bretton The Functions Foreign Exchange Market 283 Woods Era 323 Conversion 283 Evaluating the Policy Prescriptions 324 ix
on Managerial Implications 327 Basic Entry Decisions 369 Key Terms 329 Which Foreign Markets? 369 Chapter Summary 329 of Entry 370 Critical Thinking and Discussion of Entry and 371 Questions 330 Market Entry Summary 372 Research Task 331 Modes 374 Closing Case: Turmoil in Exporting 374 Latvia 331 PART The Strategy of International Business 332 Turnkey Projects 375 Licensing 375 Franchising 377 Ventures 378 Subsidiaries 379 Chapter Twelve The Strategy of International Selecting an Entry Mode 380 Business 333 Gore and Entry Mode 380 Opening Case: Ford's Global Strategy 333 Pressures for Cost Reductions and Entry Mode 382 Introduction 334 Greenfield Venture or Acquisition? 382 Strategy and the Firm 335 Pros and Cons Acquisition 382 Creation 335 Pros and Cons Greenfield Ventures 384 Strategie Positioning 337 Greenfield Venture or Acquisition? 385 Operations: The Firm as a Value Chain 338 Key Terms 386 Global Expansion, and Profit Growth 343 Chapter Summary 386 Expanding the Market: Leveraging Products and Critical Thinking and Discussion Competencies 343 Questions 387 Location Economies 344 Research Task 387 Effects 346 Closing Case: General Motors in China 387 Leveraging Skills 348 Profitability and Profit Growth Summary 348 Cost Pressures and Pressures for Local Responsiveness 349 Pressures for Cost Reductions 350 Pressures for Local Responsiveness 350 PART International Business Functions 390 Choosing a Strategy 353 Chapter Fourteen Exporting, and Global Standardization Strategy 354 Countertrade 391 Strategy 354 Opening Case: SteelMaster Buildings 391 Transnational Strategy 355 Introduction 392 International Strategy 356 Exporting 393 The Evolution Strategy 357 Export Performance 394 Strategie Alliances 358 An 395 The Strategie Alliances 358 Information Sources 395 The Disadvantages Strategie Alliances 359 Management Companies 396 Making Alliances Work 359 Export Strategy 397 Terms 362 Export and Import Financing 399 Chapter Summary 363 Trust 399 Critical Questions 363 Credit 400 Research Task 364 Closing Case: Avon Products 364 402 A Typical International Trade Transaction 402 Thirteen Entering Foreign Markets 367 Assistance 403 Opening JCB in India 367 Export-Import Bank 403 Introduction 368 Export Credit Insurance 404
Countertrade 404 Product Attributes 441 The Incidence 404 Cultural Differences 441 Countertrade 405 Economic Development 442 The Pros and Cons 406 Product and Technical Standards 443 Terms 407 Distribution Strategy 443 Chapter Summary 407 Differences between Countries 444 Critical Thinking and Discussion Questions 408 Choosing a Distribution Strategy 446 Research Task 408 Strategy 447 Closing Case: Vellus Products 409 Barriers to International Communication 447 Push Versus Pull Strategies 449 Chapter Fifteen Global Production, Outsourcing, 451 Introduction 412 and Logistics Pricing Strategy 453 Case: Making the Amazon Discrimination 453 Strategy, Production, and Logistics Where to Produce 415 Country Factors Technological Factors Product Factors 420 Locating Production Facilities 420 The Costs Locations 421 The Strategie Role Production Site 422 Foreign Foreign The Buy 427 Trade-offs 428 Pricing 455 Regulatory Influences on Prices 456 Configuring the Marketing Mix 457 New-Product Development 458 The ofr&d 459 Integrating R&D, Marketing, and Production 460 Teams Outsourcing Production: Make-or-Buy Questions 464 Building Global R&D Capabilities Critical Thinking and Discussion Decisions 424 Research Task 464 The Advantages 425 Pizza 465 Strategie Alliances with 428 Chapter Seventeen Managing a Global Supply Chain 429 Introduction 468 The Role of Inventory 430 Information Technology and 469 the Internet 430 Staffing Policy 471 Types Staffing Policy 471 Chapter Summary 431 Expatriate Managers 474 Critical Thinking and Discussion Questions 432 The Global Mind-Set 478 Global Human Resource Management 467 Research Task 433 Training and Management Development 478 Closing Case: The Rise Indian Automobile for Expatriate Managers 479 Industry 433 of Expatriates 480 Sixteen Global Marketing Management Development and and R&D 437 Opening Case: Burberry's Global Brand Performance Appraisal 482 Strategy 437 Performance Appraisal Problems 482 Introduction 438 Guidelines for Performance Appraisal 482 The Globalization of Markets and 483 Brands 439 National Differences in Compensation 483 Market Segmentation 440 Expatriate Pay 484 xi
International Labor Relations 486 PHOTO CREDITS 521 The Labor 486 The Strategy Labor 487 522 Approaches to Labor Relations 488 Key Terms 488 Chapter Summary 488 Critical Thinking and Discussion Questions 489 Research Task 490 Closing Case: AstraZeneca 490 GLOSSARY 491 ENDNOTES 499 ACRONYMS COUNTRIES AND THEIR WORLD MAP xii