International business: a course on the essentials

Cover
Half Title
Title Page
Copyright Page
Table of Contents
Preface
Prologue: Ode to the Yes Era
Maps
1. An Introduction to International Business and Multinational Corporations
	Current Scope and Historical Antecedents
		What Is International Business?
		Brief History of International Business
		The Multinational Corporation
		Definition of a Multinational Corporation
		Multinational Corporations Come of Age
		A Look at Present-Day Multinationals
		Operating Advantages and Disadvantages of Multinationals
	Recent Trends in World Trade
		Expanding Volume
		Increased Competition
		Increasing Complexity
		Trade in Services
	The Field of International Business Studies
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: Germany’s Mittelstand and Competitive Advantage
	Case Study 1.1: Transworld Minerals Inc.
2. The Nature of International Business
	Domestic Versus International Business
	Methods of Going International
		Exporting
		Licensing
		Franchising
		Management Contracts
		Contract Manufacturing
		Direct Investment
		Strategic Alliances
		Wholly Owned Subsidiaries
		Globalized Operations
		Portfolio Investments
	Recent Trade Patterns and Changes in Global Trade
		Product Groups
		Patterns of Direct Investment
	Government Involvement in Trade Restrictions and Incentives
		Protectionism
		Tariffs
		World Trade Organization
	Regional Trade Groups
		Cartels
	Nontariff Barriers to Merchandise Trade
		Quotas
		Nontariff Price Barriers
		Government Restriction of Exports
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: Is Securitization the Enemy?
	Case Study 2.1: Electronics International Ltd.
3. Theories of Trade and Economic Development
	Introduction to International Trade Theories
		Mercantilism
		Classical Theory
		Comparative Advantage
		Weaknesses of Early Theories
	More Recent Theories
		Factor Endowment Theory
		The Leontief Paradox
		Criticisms
	Modern Theories
		International Product Life Cycle Theory
		Other Modern Investment Theories
	Theories of Economic Development
		Rostow’s Stages of Economic Growth
		The Big Push: Balanced Versus Unbalanced Growth
		Hirschman’s Strategy of Unbalance
		Galbraith’s Equilibrium of Poverty
		Sen’s Development as Freedom
	The Global Continuum: Where Nations Fall Today
		The Political Continuum
		The Economic Continuum
		Integrating Both Continua
	Patterns of World Development
		Background: The Role of GNI
		The Developed Countries
		Upper-Middle-Income Countries
		Low-Income and Lower-Middle-Income Countries
		The Subterranean Economies
		Parallel Tracks: The Continued Diversity of the World Economy
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: The Fortune at the Bottom of the Pyramid
	Case Study 3.1: Euromanagé Inc.
4. International Monetary System and the Balance of Payments
	International Monetary Terminology
		Hard Currencies
		Soft Currencies
		Convertibility
		Exchange Rate
		Appreciation
		Depreciation
	A Brief History of the International Monetary System
		The Gold Standard (1880–1914)
		The Gold Specie Standard
		The Gold Bullion Standard
		The Interwar Years (1918–1939)
		The Bretton Woods System (1944–1973)
	The International Monetary Fund
		Aims
		Membership
		Structure
	Forms of IMF Assistance
		Extended Fund Facility
		Structural Adjustment Facilities
	IMF Conditionality
	Special Drawing Rights
		Using Special Drawing Rights
		Valuation of SDRs
	Difficulties in the Bretton Woods System
	The Floating-Rate Era: 1973 to the Present
		Pure Floating Rates
		Managed, or Dirty, Floating Rates
		Pegging
		Crawling Pegs
		Basket of Currencies
		Fixed Rates
	European Monetary System
	Difficulties in the Floating-Rate Era
		Fluctuations in the US Dollar: The Plaza and Louvre Accords
		European Monetary Union
		Maastricht Treaty
		Denmark’s Challenge to Monetary Union
		Asian Financial Crisis
		EU Sovereign Debt Crisis
	Issues for Reform
		International Exchange-Rate Stability
		Target Zones
		International Liquidity
		A More Equitable International Monetary System
	Summary
	Discussion Questions
	Bibliography
	Appendix 4.1: Balance of Payments
		Preliminary Definitions
		Problems in Balance of Payments
	Appendix 4.1 Discussion Questions
	Appendix 4.1 Bibliography
	Case Study 4.1: Global Bank Corporation
	Case Study 4.2: Scrinton Technologies
5. Foreign Exchange Markets
	Background
	The Structure of the Foreign Exchange Markets
	Market Participants
		Individuals
		Institutions
		Banks
		Central Banks and Other Official Participants
		Speculators and Arbitragers
		Foreign Exchange Brokers
	Location of Foreign Exchange Markets
		Japan
		Singapore and Hong Kong
		Bahrain
		European Markets
		US Markets
	Market Volumes
	Uses of the Foreign Exchange Market
	Types of Foreign Exchange Markets
		The Spot Market
		The Forward Market
	Foreign Exchange Rates
		Bid and Offer Rates
		Cross Rates
		Premiums and Discounts
		Devaluation and Revaluation of Exchange Rates
	Triangular Arbitrage
	Covered Interest Arbitrage
	Currency Futures Markets
		Differences Between Futures and Forward Markets
	Foreign Currency Options
		Option Terminology
	Forecasting Foreign Exchange Rates
		Problems in Forecasting Foreign Exchange Rates
		Fundamental Forecasting
		Technical Forecasting
		Assessing Market Sentiments
		Forecasting Strategy
	Types of Exposure in Foreign Exchange Markets
		Transaction Exposure
		Economic Exposure
		Translation Exposure
	Consolidation Problems
		Consolidation Rules in the United States
		Inflation
	Tax Exposure
		Tax Havens
		Transfer Pricing
		Transfer Pricing and Costing
	Summary
	Discussion Questions
	Bibliography
	Case Study 5.1: Skytrack Instrumentation
	Case Study 5.2: Chemtech Inc.
6. Supranational Organizations and International Institutions
	Background
	General Agreement on Tariffs and Trade
		World Trade Organization
		Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
		Doha Agenda
	United Nations Conference on Trade and Development
	Regional Trade Groupings
	Forms of Regional Integration
		Free Trade Area
		Customs Union
		Common Market
		Economic Union
		Political Union
	Association of South East Asian Nations
	Asia-Pacific Economic Cooperation Forum
	Financial Organizations
		The World Bank
		Inter-American Development Bank
		Asian Development Bank
		African Development Bank
		European Investment Bank
	European Bank for Reconstruction and Development
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: Whither the WTO?
	Case Study 6.1: Structural Adjustments in Masawa
7. Analyzing National Economies
	The Purpose and Methodology of Country Analysis
	Preliminary Economic Indicators
		Size of the Economy
		Income Levels
		Income Distribution
		Personal Consumption
		Growth and Stability Patterns
		Population
		Sector Analysis
		Inflationary Trends
		External Financial Position: Extent of Debt
		Exchange-Rate Levels and Policies
		Banking and Financial Markets
		Comparison of Similar Economies
		Tax Systems
		Fiscal and Monetary Policy Situations
		Economic Planning: Ideology and Practices
		Competition
	Market Demand Forecasting
		Purposes
		Data Collection and Sources
		Primary Research
	Areas of Research
		Trade Activities
		Input-Output Tables
		Historical Trends
		Country Comparisons: Analysis by Analogy
		Regression Analysis
		Income Elasticity
	Methods of Estimating Market Size and Share
		Market Buildup
		Chain Ratio
		Analogy with Known Data
	Designing Initial Market Strategy
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: World Oil Demand and the Edgeworth Box
	Case Study 7.1: The Republic of Mazuwa
8. International Law and Global Orientations
	Public and Private Law
	Different Legal Systems
	International Treaties Framework
	Legal Concepts Relating to International Business
		Sovereignty
		Sovereign Immunity
		Act of State
		Extraterritoriality
	Areas of Concern to Multinational Corporations
		US Trade Laws
		Countervailing Duties
		Antidumping Laws
		Antitrust Laws
		Foreign Corrupt Practices
		Tax Treaties
	Intellectual and Industrial Property Rights
		Trademarks and Trade Name
		Patent Laws and Accords
		Copyrights
	Operational Concerns of Multinational Corporations
		Which Nationality?
		Local Laws and Orientations
	Resolving Business Conflicts
		Contracts
		Resolving Disputes
		Local Courts, Local Remedies
		The Principle of Comity
		Litigation
		International Arbitration
		International Centre for Settlement of Investment Disputes
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: The Unified European Patent
	Case Study 8.1: CompuSoft Systems Inc.
9. Sociocultural Factors
	Sociocultural Factors and International Business
	Society, Culture, and Sociocultural Forces
	Elements of Culture
		Attitudes and Beliefs
		Attitudes About Time
		Attitudes About Work and Leisure
		Attitudes About Achievement
		Attitudes About Change
		Attitudes About Jobs
		Does Religion Affect Commerce?
		Aesthetics
		Material Culture
		Literacy Rate
		Education Mix
		Brain Drain
		Communication and Language
		Groups: Families and Friends
		Gift-Giving and Bribery
	Other Theories of Culture
		Cultural Cluster Approach
		Hall’s Low-Context, High-Context Approach
		Hofstede’s Five Dimensions of Culture
	Corporate Diversity Initiatives
	Management of Cultural Change
	Summary
	Discussion Questions
	Bibliography
	Case Study 9.1: Delis Foods Corporation
	Case Study 9.2: Air America
10. Foreign Investment: Researching Risk
	Why Invest Abroad?
		Bigger Markets
		Host-Nation Demands
		Economies of Scale
		Competitive Motives
		Technology and Quality Control
		Raw Materials
		Forward Integration
		Technology Acquisition
	Assessing Political Risk
		Inherent Causes of Political Risk
		Circumstantial Causes of Political Risk
	Types of Host-Nation Control
		Limits on Repatriation of Profits
		Curbing Transfer Pricing
		Price Controls
		Ownership Restrictions
		Joint Ventures
		Personnel Restrictions
		Import Content
		Discrimination in Government Business
		Labor Controls
	Assessing the Risk
		Assessing Country Risk
		Assessing Investment Risk
	Managing Risk
		Rejecting Investment
		Long-Term Agreements
		Lobbying
		Legal Action
		Home-Country Pressure
		Joint Ventures and Increased Shareholding
		Promoting the Host Country’s Goals
		Risk Insurance
		Contingency Planning
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: Market Competition and the HHI
	Case Study 10.1: Amalgamated Polymers Inc.
11. Ethical Concerns: Multinationals and Sustainability
	Emerging Environmental Concerns
	Social Responsibility of Business
	Major Environmental Issues
		Greenhouse Gases
		Depletion of the Ozone Layer
		Deforestation
		Fishing Stocks
		Hazardous Waste
		Pollution
		Kyoto Protocol
	MNC Responses
		Establishing In-House Environmental Ethics
		Relocation of Production
		Modification of Technology
		Use of Raw Materials
		Use of Energy
		Environmental Restoration
		Pollution Disclosure
		In-House Environmental Training
	MNC Opportunities
		New Consumer Products
		New Technologies
		New Industrial Products
		Substitute Products
		New Energy Sources
		Environmental Consulting
	The Environment at Center Stage
	Summary
	Discussion Questions
	Bibliography
	Case Study 11.1: Milford Processes Inc.
	Case Study 11.2: Alapco Chemicals Ltd.
12. The Pathway Forward and Future Concerns
	Letters of Credit in International Trade
		Banker Acceptance Process
		Letters of Credit Process
		Letters of Credit Varieties
		The Pathway Forward
	Why Study the Future?
	Future Trends Affecting International Business
		European Union Integration
		The Rise of BRICs and MINTs
		The Importance of Sovereign Wealth Funds
		Protectionism and Trade Agreements
		Depreciation of the US Dollar
		Energy Policy
		Global Resource Depletion
		Environmental Degradation
		International Terrorism
		The Doha Agenda
		Migration
		Technology Explosion: The Information Era
		The Internet
	Impact of Trends on MNCs
		The Megacorporation
		Geocentric Staffing
		Multicultural Management
		Managerial Technocrats
		Overseas Manufacturing Facilities
		Financial Integration
		Rising Labor Unrest
	The Permanence of Change
	Summary
	Discussion Questions
	Bibliography
	Globalization at the Crossroads: Sushi and the Veblen Effect
	Case Study 12.1: Remagen Brothers Ltd.
Glossary
Index
About the Authors