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Contents Preface About the Authors Part I Background for International Business Chapter 1 Globalization and International Business Case: The Globalization of Professional Sports Why Are Globalization and International Business Important? The Forces Behind Globalization Increase in and Expansion of Technology Liberalization of Cross-Border Trade and Resource Movements Development of Services That Support International Business Growing Consumer Pressures Increased Global Competition Changing Political Situations Expanded Cross-National Cooperation Criticisms of Globalization Threats to National Sovereignty Economic Growth Growing Income Inequality Why Companies Engage in International Business To Expand Sales Point - Counterpoint Is Offshoring Good or Bad? Acquire Resources Minimize Risk Modes of International Business Merchandise Exports and Imports Service Exports and Imports Investments International Companies and Terms to Describe Them Why International Business Differs from Domestic Business Physical and Societal Factors The Competitive Environment Looking to the Future Is Globalization Inevitable? Summary Case: Carnival Cruise Line Chapter Notes Part II Comparative Environmental Frameworks Chapter 2 The Cultural Environments Facing Business Case The Java Lounge: Adjusting to Saudi Arabian Culture Introduction Cultural Awareness Identification and Dynamics of Cultures The Nation as a Point of Reference Cultural Formation and Dynamics Language as a Cultural Stabilizer Religion as a Cultural Stabilizer Does Geography Matter? Behavioral Practices Affecting Business Social Stratification Systems Work Motivation Relationship Preferences Risk-Taking Behavior Information and Task Processing Communications Dealing with Cultural Differences Accommodation to Foreigners Cultural Distance: Usefulness and Limitations Culture Shock Point - Counterpoint Does International Business Lead to Cultural Imperialism? Company and Management Orientations Strategies for Instituting Change Looking to the Future What Will Happen to National Cultures? Summary Case Charles Martin in Uganda Chapter Notes Chapter 3 The Political and Legal Environments Facing Business Case China's Business Environment Introduction The Political Environment Individualism and Collectivism Political Ideology Democracy Totalitarianism Trends in Political Systems Looking to the Future Will Democracy Survive? Political Risk Point-Counterpoint Political Risk Management The Legal Environment Diffusion of Legal Systems Legal Issues in International Business Operational Concerns Strategic Concerns Intellectual Property Rights Summary Case Global Software Piracy Chapter Notes Chapter 4 The Economic Environment Case McDonald's and Russia's Economic Transition Introduction International Economic Analysis Elements of the Economic Environment Gross National Income Improving the Power of GNI Features of an Economy Inflation Unemployment Debt Income Distribution Poverty The Balance of Payments Point-Counterpoint Trade Deficits: Advantage or Crisis Integrating Economic Analysis Types of Economic Systems Freedom, Markets, and Transition Economic Freedom: Idea, Performance, and Trends Transition to a Market Economy The Means of Transition Looking to the Future The Future of Transition Summary Case Meet the BRICs Chapter Notes Chapter 5 Globalization and Society Case Environmental Challenges for Newmont Mining in Indonesia Introduction Evaluating the Impact of FDI Trade-offs Among Constituencies Cause-Effect Relationships Individual and Aggregate Effects Potential Contributions of MNEs Economic Impact of the MNE Balance-of-Payments Effects Growth and Employment Effects Foundations of Ethical Behavior Cultural Foundations for Ethical Behavior Legal Foundations for Ethical Behavior Ethics and Bribery Point-Counterpoint Is Bribery Ever Justified? Ethical Behavior and Environmental Issues Global Warming Does Geography Matter? The Amazon Ethical Dilemmas and Pharmaceutical Sales Ethical Dimensions of Labor Conditions Corporate Codes of Ethics Looking to the Future Will FDI Be Welcome and Will Foreign Investors Act More Responsibly as the Twenty-First Century Progresses? Summary Case Anglo American in South Africa Chapter Notes Part III Theories and Institutions: Trade and Investment Chapter 6 International Trade and Factor Mobility Theory Case Costa Rican Trade, Foreign Investment, and Economic Transformation Introduction Interventionist Theories Mercantilism Neomercantilism Free Trade Theories Theory of Absolute Advantage Comparative Advantage Some Assumptions and Limitations of the Theories of Specialization Theories Explaining Trade Patterns How Much Does a Country Trade? What Types of Products Does a Country Trade? With Whom Do Countries Trade? Does Geography Matter? The Dynamics of Trade Product Life Cycle (PLC) Theory The Porter Diamond Point-Counterpoint Should Countries Follow Strategic Trade Policies? Factor Mobility Why Production Factors Move Effects of Factor Movements The Relationship of Trade and Factor Mobility Looking to the Future Summary Case LUKoil Chapter Notes Chapter 7 Governmental Influence on Trade Case Textile and Clothing Trade Introduction Conflicting Results of Trade Policies Economic Rationales for Governmental Intervention Unemployment Infant-Industry Argument Industrialization Argument Economic Relationships with Other Countries Noneconomic Rationales for Government Intervention Maintaining Essential Industries Dealing with "Unfriendly" Countries Point-Counterpoint Should Countries Eliminate the Use of Trade Sanctions? Maintaining Spheres of Influence Preserving Cultures and National Identity Instruments of Trade Control Tariffs Nontariff Barriers: Direct Price Influences Nontariff Barriers: Quantity Controls Dealing with Governmental Trade Influences Looking to the Future Summary Case U.S.-Cuban Trade Chapter Notes Chapter 8 Cross-National Cooperation and Agreements Case Toyota in Europe Introduction The World Trade Organization (WTO) Gatt: The Predecessor The WTO The Rise of Bilateral Agreements Regional Economic Integration The Effects of Integration Major Regional Trading Groups The European Union The EU's Organizational Structure The Single European Act EU Expansion Trade Disputes Between the EU and the U.S. Implications of the EU for Corporate Strategy Main Challenges Facing the EU North American Free Trade Agreement (NAFTA) Rules of Origin and Regional Content Special Provisions of NAFTA Impact of NAFTA NAFTA Expansion Implications of NAFTA for Corporate Strategy Regional Economic Integration in the Americas Point-Counterpoint Is CAFTA a Good Idea? Regional Economic Integration in Asia Regional Economic Integration in Africa Commodity Agreements Producers' Alliances and ICCAs The Organization of Petroleum Exporting Countries (OPEC) Looking to the Future Will the WTO Overcome Bilateral and Regional Integration Efforts? Summary Case Wal-Mart de Mexico Chapter Notes Part IV World Financial Environment Chapter 9 Global Foreign Exchange and Capital Markets Case Western Union Introduction Major Characteristics of the Foreign-Exchange Market Brief Description of Foreign-Exchange Instruments The Size, Composition, and Location of the Foreign-Exchange Market Geography Matters Foreign Exchange Trades Major Foreign-Exchange Instruments The Spot Market The Forward Market Options Futures Foreign-Exchange Convertibility How Companies Use Foreign Exchange The Foreign-Exchange Trading Process Commercial and Investment Banks Global Capital Markets Eurocurrencies International Bonds: Foreign, Euro, and Global Equity Securities and the Euroequity Market Point-Counterpoint Speculation in Capital Markets Looking to the Future The Future of Foreign Exchange and Global Capital Markets Summary Case HSBC and the Peso Crisis in Argentina Chapter Notes Chapter 10 The Determination of Exchange Rates Case El Salvador and the U.S. Dollar Introduction The International Monetary Fund IMF Assistance Special Drawing Rights (SDRs) Evolution to Floating Exchange Rate Exchange-Rate Arrangements From Pegged to Floating Currencies The Euro Point-Counterpoint Should Africa Develop a Common Currency? Black Markets The Role of Central Banks The Determination of Exchange Rates Floating Rate Regimes Managed Fixed Rate Regime Purchasing-Power Parity Interest Rates Other Factors in Exchange-Rate Determination Forecasting Exchange-Rate Movements Fundamental and Technical Forecasting Factors to Monitor Business Implications of Exchange-Rate Changes Marketing Decisions Production Decisions Financial Decisions Looking to the Future Changing Times Will Bring Greater Exchange-Rate Flexibility Summary Case The Chinese Yuan-To Revalue or Not to Revalue, That Is the Question Chapter Notes Chapter 11 The Strategy of International Business Case Zara: Value Creation in the Global Apparel Industry Introduction Industry, Strategy, and Firm Performance The Idea of Industry Structure Industry Change Strategy and Value Creating Value The Firm as a Value Chain Using the Value Chain Configuration Does Geography Matter? Labor Costs and Location Decisions Coordination Value Chains and Change Point-Counterpoint Value Chains: Real or Virtual? Global Integration versus Local Responsiveness Pressures for Global Integration Globalization of Markets Efficiency Gains of Standardization Pressures for Local Responsiveness Interaction Strategy Types International Strategy Multidomestic Strategy Global Strategy Transnational Strategy Looking to the Future New Strategy Types? The Mix of Reality Summary Case The Globalization of eBay Chapter Notes Part V Global Strategy, Structure, and Implementation Chapter 12 Country Evaluation and Selection Case Carrefour Introduction Scanning and Detailed Examination Compared What Information Is Important? Opportunities Risks Does Geography Matter? Don't Fool with Mother Nature Collect and Analyze Data Problems with Research Results and Data External Sources of Information Internal Generation of Data Point-Counterpoint Should Companies Forego Direct Investments in Violent Areas? Country Comparison Tools Grids Matrices Allocating Among Locations Reinvestment versus Harvesting Interdependence of Locations Geographic Diversification versus Concentration Noncomparative Decision Making Making Final Country Selections Looking to the Future Will the Prime Locations Change? Summary Case FDI in South Africa Chapter Notes Chapter 13 Export and Import Strategies Case Grieve: A Small-Business Export Strategy Introduction Export Strategy Strategic Advantages of Exports Characteristics of Exporters Stages of Export Development Pitfalls of Exporting Designing an Export Strategy Import Strategy Strategic Advantages of Imports The Role of Customs Agencies Import Documentation Point-Counterpoint A Dirty Dilemma: Exporting Hazardous Waste The Export Process Indirect Selling Export Management Companies Export Trading Companies Foreign Trading Companies Direct Selling Direct Selling Through the Internet Export Documentation Foreign Freight Forwarders Looking to the Future The Technology of Trade Sources of Assistance Countertrade Barter Buybacks Offset Trade Summary Case Sunset Flowers of New Zealand, Ltd. Chapter Notes Part V Global Strategy, Structure, and Implementation Chapter 14 Direct Investment and Collaborative Strategies Case Cisco Systems Introduction Why Exporting May Not Be Feasible Cheaper to Produce Abroad Transportation Costs Lack of Domestic Capacity Need to Alter Products and Services Trade Restrictions Country of Origin Effects Noncollaborative Foreign Equity Arrangements Foreign Direct Investment and Control Methods for Making FDI Motives for Collaborative Arrangements 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 of Collaborative Arrangements Collaboration's Importance to Partners Differing Objectives Control Problems Partners' Contributions and Appropriations Differences in Culture Managing Foreign Arrangements Dynamics of Collaborative Arrangements Finding Compatible Partners Negotiating Process Contractual Provisions Performance Assessment Looking to the Future Why Innovation Breeds Collaboration Summary Case International Airline Alliances Chapter Notes Chapter 15 The Organization of International Business Case Johnson & Johnson Introduction The Causes of Change Organization in the International Business Organizational Structure Vertical Differentiation: Centralization versus Decentralization Horizontal Differentiation: The Design of the Formal Structure Functional Structure Divisional Structures Matrix Structure Mixed Structure Contemporary Structures Network Structure Virtual Organization Project Structure Point-Counterpoint Hierarchies or Hyperarchies? Coordination and Control Systems Coordination Systems Control Systems Control Mechanisms Organization Culture The Growing Importance of Culture Challenges and Pitfalls Strategy and Organization Culture Looking to the Future The Role and Rise of Corporate Universities Organization in Special Situations Acquisitions Shared Ownership Dynamic Nature of Performance The Role of Legal Structures Branch and Subsidiary Organizations Types of Subsidiaries and Operating Form Summary Case GE Hungary Chapter Notes Part VI Managing International Operations Chapter 16 Marketing Globally Case Avon Filling Global Needs and Wants Marketing Strategies Marketing Orientations Targeting and Segmenting Markets Product Policy Reasons for Making Product Alterations Point-Counterpoint Should First World Governments Regulate Their Companies' Marketing in Third World Countries? Alteration Costs Extent and Mix of the Product Line Product Life-Cycle Considerations Pricing Governmental Intervention Greater Market Diversity Price Escalation in Exporting Currency Value and Price Changes Fixed versus Variable Pricing Company to Company Pricing Promotion The Push-Pull Mix Standardization of Advertising Programs Branding Language Factors Brand Acquisitions Country-of-Origin Images Generic and Near-Generic Names Distribution Does Geography Matter? Difficulty of Standardization Choosing Distributors and Channels Hidden Costs in Distribution The Internet and Electronic Commerce Managing the Marketing Mix Looking to the Future Will the "Haves" and the "Have-Nots" Meet the "Have Somes"? Summary Case NeoPets Chapter Notes Chapter 17 Global Manufacturing and Supply Chain Management Case Samsonite's Global Supply Chain Introduction Global Manufacturing Strategies Manufacturing Compatibility Manufacturing Configuration Coordination and Control Information Technology and Global Supply Chain Management Quality Total Quality Management Quality Standards Supplier Networks Make or Buy Decision Point-Counterpoint Should Firms Outsource Innovation? Supplier Relations The Purchasing Function Inventory Management Just-in-Time Systems Foreign Trade Zones Transportation Networks Looking to the Future The Role of China in the Supply Chain Summary Case Denso Corporation and Global Supplier Relations Chapter Notes Chapter 18 International Accounting Issues Case Parmalat-Europe's Enron Introduction Factors Influencing the Development of Accounting Worldwide Accounting Objectives Cultural Differences in Accounting Classification of Accounting Systems International Accounting Standards and Global Convergence Looking to the Future Will IASB GAAP Become the Global Accounting Standard? Transactions in Foreign Currencies Recording of Transactions Correct Procedures for U.S. Companies Translation of Foreign Currency Financial Statements Translation Methods Disclosure of Foreign-Exchange Gains and Losses Environmental Reports Performance Evaluation and Control Foreign Exchange in the Budget Process Budgeting and Currency Practices Point-Counterpoint Should Local Subsidiary Management Be Held Responsible for Exchange Rate Changes? Transfer Pricing and Performance Evaluation The Balanced Scorecard Summary Case Vivendi Universal Chapter Notes Chapter 19 The Multinational Finance Function Case Nu Skin Enterprises in Asia Introduction The Treasury and Finance Functions Capital Structure Offshore Financial Centers Point-Counterpoint Offshore Financial Centers Should Be Shut Down Capital Budgeting in a Global Context Internal Sources of Funds Global Cash Management Multilateral Netting Cash Flow Aspects of Imports and Exports Foreign-Exchange Risk Management Translation Exposure Transaction Exposure Economic Exposure Exposure-Management Strategy Taxation of Foreign Source Income Foreign Branch Foreign Subsidiary Transfer Prices Tax Credit Non-U.S. Tax Practices Value-Added Tax Tax Treaties: The Elimination of Double Taxation Looking to the Future Technology and Cash Flows Summary Case Dell Mercosur Chapter Notes Chapter 20 Human Resource Management Case A Career in International Business Introduction The Strategic Function of International HRM Staffing Policies The Ethnocentric Approach The Polycentric Approach The Geocentric Approach Summary Expatriate Selection Technical Competence Adaptiveness Leadership Ability Expatriate Failure Expatriate Preparation and Development General Country Understanding Cultural Sensitivity Practical Skills Training Gaps and Trends Point-Counterpoint Learning a Foreign Language: Still Useful? Expatriate Compensation Types of Compensation Plans Key Aspects of Expatriate Compensation Complications Posed by Nationality Differences Expatriate Repatriation Managing Repatriation International Labor Relations Labor's Concerns About MNEs Product and Resource Flows Value Activity Switching Scale and Complexity of MNEs Labor's Actions Toward MNEs Labor's Success and Struggle Looking to the Future Which Countries Will Have the Jobs of the Future? Trends in the Relationship Between MNEs and Labor Summary Case Tel-Comm-Tek (TCT) Chapter Notes Glossary Photo Credits Company Index and Trademark Name Index Subject Index
Library of Congress Subject Headings for this publication:
International business enterprises.
International economic relations.