International Business: Environments and Operations

Cover
Brief Contents
Contents
Preface
About the Authors
Part 1: Background for International Business
	Chapter 1: Globalization and International Business
		Case: The Globalized Business of Sports
		Introduction
			How Does International Business Fit In?
		The Forces Driving Globalization
			Factors in Increased Globalization
		The Costs of Globalization
			Threats to National Sovereignty
			Environmental Stress
			Growing Income Inequality and Personal Stress
			Point-Counterpoint: Is Offshoring Good Strategy?
		Why Companies Engage in International Business
			Expanding Sales
			Acquiring Resources
			Reducing Risk
		Modes of Operations in International Business
			Merchandise Exports and Imports
			Service Exports and Imports
			Investments
			Types of International Organizations
		Why International Business Differs from Domestic Business
			Physical and Social Factors
		Fast Moving Consumer Goods: Fmcg in India
		Market Break-up of Indian FMCG Industry
		Trends in FMCG Revenues Over the Years in India
			The Competitive Environment
			Looking to the Future: Three Ways of Looking at Globalization
			Case: Carnival Cruise Lines
		Summary
		Key Terms
		Endnotes
		An Atlas
		Map Index
Part 2: Comparative Environmental Frameworks
	Chapter 2: The Cultural Environments Facing Business
		Case: Saudi Arabia’s Dynamic Culture
		Introduction
			The People Factor
		Cultural Awareness
			A Little Learning Goes a Long Way
		The Idea of a “Nation”: Delineating Cultures
			The Nation as a Point of Reference
		How Cultures Form and Change
			Sources of Change
		Language as Both a Diffuser and Stabilizer of Culture
			Why English Travels So Well
		Religion as a Cultural Stabilizer
		Behavioral Practices Affecting Business
			Issues in Social Stratification
			Does Geography Matter? Birds of a Feather Flock Together
			Work Motivation
			Relationship Preferences
			Risk-Taking Behavior
			Information and Task Processing
		Communications
			Spoken and Written Language
			Silent Language
		Dealing with Cultural Differences
			Host Society Acceptance
			Degree of Cultural Differences
			Ability to Adjust: Culture Shock
			Company and Management Orientations
			Strategies for Instituting Change
			Point-Counterpoint: Does International Business Lead to Cultural Imperialism?
			Looking to the FutureWhat Will Happen to National Cultures?
			Case: Tesco PLC: Leveraging Global Knowledge
			Summary
			Key Terms
			Endnotes
	Chapter 3: The Political and Legal Environments Facing Business
		Case: China-Complicated Risks, Big Opportunities
		Introduction
		The Political Environment
		Individualism Versus Collectivism
			Individualism
			Collectivism
		Political Ideology
			Spectrum Analysis
			Democracy
			Totalitarianism
		The Standard of Freedom
		Trends in Political Ideologies
			Engines of Democracy
			Democracy: Recession and Retreat
			Authoritarianism’s Surge
			Looking to the Future: Political Ideology and MNEs’ Actions
		Political Risk
			Classifying Political Risk
			Classes and Characteristics of Political Risks
			Point-Counterpoint: Proactive Political Risk Management: The Best Approach
		The Legal Environment
			Types of Legal Systems
			Trends in Legal Systems
			Implications for Managers
			The Confound of Democracy’s Retreat
			Which Rule When?
		Legal Issues in International Business
			Operational Concerns
			A Key Relationship: Wealth and Regulation
		Strategic Concerns
			Country Characteristics
			Product Safety and Liability
			Legal Jurisdiction
			Intellectual Property
		The Basis of Political and Legal Differences
			Historical Legacies
			Economic Circumstances
			Cultural Orientation
			The Potential for Cross-National Convergence
			Case: It’s a Knockoff World
		Summary
		Key Terms
		Endnotes
	Chapter 4: The Economic Environments Facing Businesses
		Case: The Comeback Accelerates
		Introduction
			New Markets, New Perspectives
		International Economic Analysis
			Does Geography Matter? Consequence of Change in Arctic Sea Ice
		Economic Freedom
			Economic Freedom Today
			The Value of Economic Freedom
			Trends in Economic Freedom
		Types of Economic Systems
			Market Economy
			Command Economy
			Mixed Economy
			Looking to the Future: State Capitalism: Detour or Destination?
		Assessing Economic Development, Performance, and Potential
			Measures of Economic Performance
			Adjusting Analytics
			Performance and Potential: Alternative Interpretations
			Point-Counterpoint: Growth: Positive and Productive
		Introduction
		Economic Analysis
			Inflation
			Unemployment
			Debt
			Income Distribution
			Poverty
			The Balance of Payments
			Elaborating Economic Analysis with Global Indices
			Case: The BRICs: Vanguard of the Revolution
		Summary
		Key Terms
		Endnotes
Part 3: Theories and Institutions: Trade and Investment
	Chapter 5: International Trade and Factor-Mobility Theory
		Case: Costa Rica’s Trade Evolution
		Introduction
		Laissez-Faire Versus Interventionist Approaches to Exports and Imports
		Theories of Trade Patterns
			Trade Theories and Business
			Factor-Mobility Theory
		Interventionist Theories
			Mercantilism
			Neomercantilism
		Free-Trade Theories
			Theory of Absolute Advantage
			Theory of Comparative Advantage
			Theories of Specialization: Some Assumptions and Limitations
		Trade Pattern Theories
			How Much Does a Country Trade?
			What Types of Products Does a Country Trade?
			With Whom Do Countries Trade?
			Does Geography Matter? Variety Is the Spice of Life
		The Statics and Dynamics of Trade
			Product Life Cycle (PLC) Theory
			The Diamond of National Competitive Advantage
		Factor-Mobility Theory
			Point-Counterpoint: Should Nations Use Strategic Trade Policies?
			Why Production Factors Move
			Effects of Factor Movements
			The Relationship Between Trade and Factor Mobility
			Looking to the Future: In What Direction Will Trade Winds Blow?
			Case: Ecuador: A Rosy Export Future?
		Summary
		Key Terms
		Endnotes
	Chapter 6: Governmental Influence on Trade
		Case: The U.S.-Vietnamese Catfish Dispute
		Introduction
		Conflicting Results of Trade Policies
			The Role of Stakeholders
		Economic Rationales for Governmental Intervention
			Fighting Unemployment
			Protecting “Infant Industries”
		Impact of Government Policies on the Automobile and Banking Industries in India
			Developing an Industrial Base
			Economic Relationships with Other Countries
		Noneconomic Rationales for Government Intervention
			Maintaining Essential Industries
			Promoting Acceptable Practices Abroad
			Point-Counterpoint: Should Governments Impose Trade Sanctions?
			Maintaining or Extending Spheres of Influence
			Preserving National Culture
		Instruments of Trade Control
			Tariffs
			Nontariff Barriers: Direct Price Influences
			Nontariff Barriers: Quantity Controls
		Dealing with Governmental Trade Influences
			Tactics for Dealing with Import Competition
			Convincing Decision Makers
			Involving the Industry and Stakeholders
			Preparing for Changes in the Competitive Environment
			Looking to the Future: Dynamics and Complexity
			Case: U.S.–Cuban Trade: When Does a Cold War Strategy Become a Cold War Relic?
		Summary
		Key Terms
		Endnotes
	Chapter 7: Cross-National Cooperation and Agreements
		Case: Toyota’s European Drive
		Introduction
		The World Trade Organization—Global Integration
			GATT: Predecessor to the WTO
			What Does the WTO Do?
		The Rise of Bilateral Agreements
		Regional Economic Integration
			Geography Matters
			The Effects of Integration
		Major Regional Trading Groups
			The European Union
			The North American Free Trade Agreement (NAFTA)
			Regional Economic Integration in the Americas
			Point-Counterpoint: Is CAFTA-DR a Good Idea?
			Regional Economic Integration in Asia
			Regional Economic Integration in Africa
			Other Forms of International Cooperation
		Commodity Agreements
			Commodities and the World Economy
			Consumers and Producers
			The Organization of the Petroleum Exporting Countries (OPEC)
			Looking to the Future: Will the WTO Overcome Bilateral and Regional Integration Efforts?
			Case: Walmart Goes South
		Summary
		Key Terms
		Endnotes
Part 4: World Financial Environment
	Chapter 8: Global Foreign-Exchange Markets
		Case: Going Down to the Wire in the Money-Transfer Market
		Introduction
		What Is Foreign Exchange?
		Players on the Foreign-Exchange Market
		How to Trade Foreign Exchange
		Some Aspects of the Foreign-Exchange Market
			Global OTC Foreign Exchange Instruments
			Size, Composition, and Location of the Foreign-Exchange Market
			Does Geography Matter? Foreign-Exchange Trades and Time Zones
		Major Foreign-Exchange Markets
			The Spot Market
			The Forward Market
			Options
			Futures
		The Foreign-Exchange Trading Process
			Banks and Exchanges
			Top Exchanges for Trading Foreign Exchange
		How Companies Use Foreign Exchange
			Business Purposes (I): Cash Flow Aspects of Imports and Exports
			Business Purposes (II): Other Financial Flows
			Point-Counterpoint: Is it OK to Speculate on Currency?
			Looking to the Future: Where Are Foreign-Exchange Markets Headed?
			Case: Do Yuan to Buy Some Renminbi?
		Summary
		Key Terms
		Endnotes
	Chapter  9: The Determination of Exchange Rates
		Case: El Salvador Adopts the U.S. Dollar
		Introduction
		The International Monetary Fund
			Origin and Objectives
			The IMF Today
			The Global Financial Crisis and the IMF
			Evolution to Floating Exchange Rates
		Exchange-Rate Arrangements
			Three Choices: Hard Peg, Soft Peg, or Floating Arrangement
			Hard Peg
			Soft Peg
			Floating Arrangement
			The Euro
			Pluses and Minuses of the Conversion to the Euro
			Point-Counterpoint: Should Africa Develop a Common Currency?
		Determining Exchange Rates
			Nonintervention: Currency in a Floating-Rate World
			Intervention: Currency in a Fixed-Rate or Managed Floating-Rate World
			Case: The U.S. Dollar and the Japanese Yen
			Black Markets
			Foreign-Exchange Convertibility and Controls
			Exchange Rates and Purchasing Power Parity
			Exchange Rates and Interest Rates
			Other Factors in Exchange-Rate Determination
		Forecasting Exchange-Rate Movements
			Fundamental and Technical Forecasting
			Fundamental Factors to Monitor
		Business Implications of Exchange-Rate Changes
			Marketing Decisions
			Production Decisions
			Financial Decisions
			Looking to the Future: Changes in the Relative Strength of Global Currencies
			Case: Welcome to the World of Sony-Unless the Falling Yen Rises
		Summary
		Key Terms
		Endnotes
	Chapter  10: Global Capital Markets
		Case: GPS: In the Market for an Effective Hedging Strategy?
		Introduction
		The Finance Function
			The Role of the CFO
		Capital Structure
			Leveraging Debt Financing
			Factors Affecting the Choice of Capital Structure
			Debt Markets as a Means of Expansion
		Global Capital Markets
			Eurocurrencies and the Eurocurrency Market
			International Bonds
			Equity Securities
			The Size of Global Stock Markets
		Taxation of Foreign-Source Income
			International Tax Practices
			Taxing Branches and Subsidiaries
			Transfer Prices
			Double Taxation and Tax Credit
			Dodging Taxes
		Offshore Financing and Offshore Financial Centers
			What Is an OFC?
			Point-Counterpoint: Should Offshore Financial Centers and Aggressive Tax Practices Be Eliminated?
			Looking to the Future: The Growth of Capital Markets and the Drive by Governmentsto Capture More Tax Revenues by MNEs
			Case: Does the Devil Really Wear Prada?
		Summary
		Key Terms
		Endnotes
Part 5: Global Strategy, Structure, and Implementation
	Chapter 11: Globalization and Society
		Case: Ecomagination and the Global Greening of GE
		Introduction
			Stakeholder Trade-Offs
		The Foundations of Ethical Behavior
			Why Do Companies Care About Ethical Behavior?
		The Cultural Foundations of Ethical Behavior
			Relativism Versus Normativism
		The Legal Foundations of Ethical Behavior
			Legal Justification: Pro and Con
			Extraterritoriality
			Ethics and Corporate Bribery
		Corruption and Bribery
			The Consequences of Corruption
			What’s Being Done About Corruption?
			Point-Counterpoint: Are Top Managers Responsible When Corruption Is Afoot?
		Ethics and the Environment
			What Is “Sustainability”?
			Global Warming and the Kyoto Protocol
			Does Geography Matter? How to See the Trees in the Rain Forest
		Ethical Dilemmas and the Pharmaceutical Industry
			Tiered Pricing and Other Price-Related Issues
			Taking TRIPS for What It’s Worth
			R&D and the Bottom Line
		Ethical Dilemmas of Labor Conditions
			The Problem of Child Labor
			What MNEs Can and Can’t Do
		Corporate Codes of Ethics: How Should a Company Behave?
			Motivations for Corporate Responsibility
			Developing a Code of Conduct
			Looking to the Future: Dealing with Ethical Dilemmas in the Global Economy
			Case: Anglo-American PLC in South Africa: What Do You Do When Costs Reach Epidemic Proportions?
		Summary
		Key Terms
		Endnotes
	Chapter 12: The Strategy of International Business
		Case: Zara’s Strategy for Value Creation in the Global Apparel Industry
		Introduction
		Industry Structure
			Industry Change
		Perspectives on Strategy
		Approaches to Value Creation
			Cost Leadership
			Differentiation
		The Firm as Value Chain
		Managing the Value Chain
			Configuration
			Does Geography Matter? Clusters and Configuring Value Chains
			Logistics
			Coordination
			Looking to the Future: The Rise of Robots
		Change and the Value Chain
			A Case in Point
			Point-Counterpoint: Building a Better Value Chain: The Superiority of Convention
		Global Integration Versus Local Responsiveness
			Pressures for Global Integration
			Pressures for Local Responsiveness
			When Pressures Interact
		Types of Strategy
			International Strategy
			Multidomestic Strategy
			Global Strategy
			Transnational Strategy
			Case: Indian Factor of Production and Market Advantage: A Case of Indian Automobile and Auto Component Manufacturing
			Case: Tata Motors: Crafting Growth Strategies in a Global Industry
			Case: The Multinational Enterprise of the Future: Forecasts and Scenarios
		Summary
		Key Terms
		Endnotes
	Chapter 13: Country Evaluation and Selection
		Case: Burger King
		Introduction
		How Does Scanning Work?
			Scanning Versus Detailed Analysis
		What Information Is Important in Scanning?
			Opportunities: Sales Expansion
			Opportunities: Resource Acquisition
			Risks
			Does Geography Matter? Don’t Fool with Mother Nature
		Indian insurance industry
			Introduction
			Market Size
			Life Insurance
			Non-Life Insurance
			Health Insurance
		Collecting and Analyzing Data
			Some Problems with Research Results and Data
			External Sources of Information
			Internally Generated Data
		Country Comparison Tools
			Point-Counterpoint: Should Companies Operate in and Send Employees to Violent Areas?
			Matrices
		Allocating Among Locations
			Alternative Gradual Commitments
			Geographic Diversification Versus Concentration
			Reinvestment and Harvesting
		Noncomparative Decision Making
			Looking to the Future: Will Prime Locations Change?
			Case: Carrefour
		Summary
		Key Terms
		Endnotes
	Chapter 14: Export and Import
		Case: SpinCent: The Decision to Export
		Introduction
		Exporting
			Who Are Exporters?
			The Matter of Advantages
			Characteristics of Exporters
		Why Export?
			Profitability
			Productivity
			Diversification
		Export: Initiation and Development
			Sequences and Increments
			Born Globals
			Interaction: Time and Place
			The Wildcard Role of Serendipity
		Approaches to Exporting
			Which Approach When?
		Importing
		Who Are Importers?
			Input Optimizers
			Opportunistic
			Arbitrageurs
			Characteristics of Importers
		Why Import?
			Specialization of Labor
			Global Rivalry
			Local Unavailability
			Diversification
			Point-Counterpoint: Exporting E-waste: A Useful Solution?
		Importing and Exporting: Problems and Pitfalls
			Financial Risks
			Customer Management
			International Business Expertise
			Marketing Challenges
			Top Management Commitment
			Government Regulation
			Trade Documentation
		Importing and Exporting: Resources and Assistance
			Government Agencies
			Export Intermediaries
			Customs Brokers
			Freight Forwarders
			Third-Party Logistics
		Reconciling Opportunity and Challenge: An Export Plan
			Looking to the Future: Technology and International Trade
		Countertrade
			Costs
			Benefits
			Case: A Little Electronic Magic at Alibaba.com
		Summary
		Key Terms
		Endnotes
	Chapter 15: Direct Investment and Collaborative Strategies
		Case: Meliá Hotels International
		Introduction
		Why Exporting May Not Be Feasible
			When It’s Cheaper to Produce Abroad
			When Transportation Costs Too Much
			When Domestic Capacity Isn’t Enough
			When Products and Services Need Altering
			When Trade Restrictions Hinder Imports
			When Country of Origin Becomes an Issue
		Noncollaboration: FDI
			Reasons for Foreign Direct Investment
			Acquisition Versus Greenfield
		Why Companies Collaborate
			Alliance Types
			General Motives for Collaborative Arrangements
			International Motives for Collaborative Arrangements
		Types of Collaborative Arrangements
			Some Considerations in Collaborative Arrangements
			Point-Counterpoint: Should Countries Limit Foreign Control of Key Industries?
			Licensing
			Franchising
			Management Contracts
			Turnkey Operations
			Joint Ventures
			Equity Alliances
		Problems with Collaborative Arrangements
			Relative Importance
			Divergent Objectives
			Questions of Control
			Comparative Contributions and Appropriations
			Culture Clashes
		Managing International Collaborations
			Country Attractiveness and Operational Options
			Problems of Switching Modes
			Learning from Experience
			Dealing with Partners
			Looking to the Future: Why Innovation Breeds Collaboration
			Case: The oneworld Airline Alliance
		Summary
		Key Terms
		Endnotes
	Chapter 16: The Organization of International Business
		Case: Building a Global Organization at Johnson & Johnson
		Introduction
		Changing Situations, Changing Organizations
			Building a “Magical” Organization
		Organization Structure
			Vertical Differentiation
			A Dynamic Balance
		Horizontal Differentiation
			Functional Structure
			Divisional Structures
			Matrix Structure
			Mixed Structure
		Neoclassical Structures
			Changing Times, Changing Strategies, Changing Structures
			The Ideal of Boundarylessness
			Network Structure
			Virtual Organization
			Pitfalls of Neoclassical Structures
		Coordination Systems
			Coordination by Standardization
			Point-Counterpoint: Hierarchy: The Superior Structure?
			Coordination by Plan
			Coordination by Mutual Adjustment
		Control Systems
			Bureaucratic Control
			Market Control
			Clan Control
			Control Mechanisms
			Which Control System When?
		Organization Culture
			A Key Piece of the Performance Puzzle
			Culture’s Increasing Importance
			Building an Organization Culture
			Organization Culture and Strategy
			Looking to the Future: The Rise of Corporate Universities
			Case: Infosys: Mission-led and Principle-Driven
		Summary
		Key Terms
		Endnotes
Part 6: Managing International Operations
	Chapter 17: Marketing Globally
		Case: Tommy Hilfiger
		Introduction
		Marketing Strategies
			Marketing Orientations
			Segmenting and Targeting Markets
		Product Policies
			Why Firms Alter Products
			Point-Counterpoint: Should Home Governments Regulate Their Companies’ Marketing in Developing Countries?
			Alteration Costs
			The Product Line: Extent and Mix
		Pricing Strategies
			Potential Obstacles in International Pricing
		Promotion Strategies
			The Push-Pull Mix
			Some Problems in International Promotion
		Branding Strategies
			Worldwide Brand Versus Local Brands
		Distribution Strategies
			Deciding Whether to Standardize
			Does Geography Matter? Is Necessity the Mother of Invention?
			Self-Handling or Not?
			Distribution Partnership
			Distribution Challenges and Opportunities
			E-Commerce and the Internet
		Managing the Marketing Mix
			Gap Analysis
			Looking to the Future: Evolving Challenges to Segment Markets
			Case: Grameen Danone Foods in Bangladesh
			Case: Creating Value in an Emerging Economy: A Case Study of IndusInd Bank
		Summary
		Key Terms
		Endnotes
	Chapter 18: Global Manufacturing and Supply-Chain Management
		Case: Apple’s Global Supply Chain
		Introduction
			What Is Supply Chain Management?
		Global Supply Chain Strategies
			Factors in Supply Chain Strategy
		Supplier Networks
			Global Sourcing
			Major Sourcing Configurations
			The Make-or-Buy Decision
			Point-Counterpoint: Should Firms Outsource Innovation?
			Supplier Relations
			The Purchasing Function
		Information Technology and Global Supply-Chain Management
			Electronic Data Interchange (EDI)
			Enterprise Resource Planning/Material Requirements Planning
			Radio Frequency ID (RFID)
			E-Commerce
		Quality
			Zero Defects
			Lean Manufacturing and Total Quality Management (TQM)
			Six Sigma
			Quality Standards
		Foreign Trade Zones
			General-Purpose Zones and Subzones
		Transportation Networks
			Looking to the Future: Uncertainty and the Global Supply Chain
			Case: Nokero: Lighting the World
		Summary
		Key Terms
		Endnotes
	Chapter 19: International Accounting and Finance Issues
		Case: Parmalat: Europe’s Enron
		Introduction
			The Crossroads of Accounting and Finance
		Differences in Financial Statements Internationally
			Differences in the Presentation of Financial Information
		Accounting Objectives
		Factors Affecting Accounting Standards and Practices
			Cultural Differences in Accounting
		International Standards and Global Convergence
			Mutual Recognition Versus Reconciliation
			The First Steps in Convergence
			The International Accounting Standards Board
			Point-Counterpoint: Should U.S. Companies Be Allowed to Close the GAAP?
		Transactions in Foreign Currencies
			Recording Transactions
			Correct Procedures for U.S. Companies
		Translating Foreign-Currency Financial Statements
			Translation Methods
		International Financial Issues
			Capital Budgeting in a Global Context
			Internal Sources of Funds
			Global Cash Management
		Foreign-Exchange Risk Management
			Types of Exposure
			Exposure-Management Strategy
			Looking to the Future: Will IFRS Become the Global Accounting Standard?
			Case: H&M: The Challenges of Global Expansion and the Move to Adopt International Financial Reporting Standards
		Summary
		Key Terms
		Endnotes
	Chapter 20: International Human Resource Management
		Case: Globalizing Your Career
		Introduction
		Human Resource Management
			HRM and the Global Company
		Strategizing HRM
			A Case in Point: GE’s Evolution
		The Perspective of the Expatriate
			Who’s Who
			Trends in Expatriate Assignments
			Cost Considerations
			The Enduring Constant
		Staffing Frameworks in the MNE
			The Ethnocentric Framework
			The Polycentric Framework
			The Geocentric Framework
			Which Framework When?
		Managing Expatriates
			Expatriate Selection
			Expatriate Assessment and Preparation
			Point-Counterpoint: English: Destined to Be the World’s Language?
			Compensating Expatriates
			Repatriating Expatriates
			Managing Repatriation
			Expatriate Failure
			Looking to the Future: I’m Going Where? The Changing Locations of International Assignments
			Case: Tel-Comm-Tek: Staffing the Indian Operation (TCT)
		Summary
		Key Terms
		Endnotes
Additional Case Studies
	Case: Bharti Airtel: Developing a Value Position in a Dynamic Environment
	Case: Consumer Electronics in India
	Case: Maruti Suzuki Ltd.-Strategies at the Bottom of the Pyramid in Emerging Economies
	Cae: TCS: Customer Value Proposition
	Case: Indian MNCs: A Road Map Havells
Glossary
Company Index and Trademarks
Name Index
Subject Index