Preface | p. xii |
Globalization | p. 2 |
Globalization | p. 2 |
Opening Case: Planet Starbucks | p. 2 |
Introduction | p. 4 |
What is Globalization? | p. 7 |
The Globalization of Markets | p. 7 |
The Globalization of Production | p. 8 |
The Emergence of Global Institutions | p. 9 |
Drivers of Globalization | p. 11 |
Declining Trade and Investment Barriers | p. 11 |
The Role of Technological Change | p. 14 |
The Changing Demographics of the Global Economy | p. 18 |
The Changing World Output and World Trade Picture | p. 18 |
The Changing Foreign Direct Investment Picture | p. 20 |
The Changing Nature of the Multinational Enterprise | p. 22 |
The Changing World Order | p. 23 |
The Global Economy of the 21st Century | p. 25 |
The Globalization Debate | p. 26 |
Antiglobalization Protests | p. 26 |
Globalization, Jobs, and Income | p. 28 |
Globalization, Labor Policies, and the Environment | p. 30 |
Globalization and National Sovereignty | p. 32 |
Globalization and the World's Poor | p. 34 |
Managing in the Global Marketplace | p. 35 |
Key Terms | p. 37 |
Summary | p. 37 |
Critical Thinking and Discussion Questions | p. 38 |
Research Task | p. 38 |
Closing Case: Ecuadorean Valentine Roses | p. 39 |
Closing Case: Who's Reading Your X-Ray? | p. 40 |
Sustainability in Practice: Adidas-Solomon: Supply-Chain Management | p. 42 |
Country Differences | p. 44 |
National Differences in Political Economy | p. 44 |
Opening Case: The Poorest Continent | p. 44 |
Introduction | p. 46 |
Political Systems | p. 48 |
Collectivism and Individualism | p. 48 |
Democracy and Totalitarianism | p. 51 |
Economic Systems | p. 53 |
Market Economy | p. 53 |
Command Economy | p. 54 |
Mixed Economy | p. 54 |
Legal Systems | p. 55 |
Different Legal Systems | p. 55 |
Differences in Contract Law | p. 56 |
Property Rights | p. 57 |
The Protection of Intellectual Property | p. 59 |
Product Safety and Product Liability | p. 63 |
The Determinants of Economic Development | p. 63 |
Differences in Economic Development | p. 63 |
Broader Conceptions of Development: Amartya Sen | p. 67 |
Political Economy and Economic Progress | p. 70 |
Geography, Education, and Economic Development | p. 72 |
States in Transition | p. 73 |
The Spread of Democracy | p. 73 |
The New World Order and Global Terrorism | p. 75 |
The Spread of Market-Based Systems | p. 77 |
The Nature of Economic Transformation | p. 78 |
Implications of Changing Political Economy | p. 82 |
Focus on Managerial Implications | p. 83 |
Benefits | p. 83 |
Costs | p. 84 |
Risks | p. 84 |
Overall Attractiveness | p. 85 |
Key Terms | p. 86 |
Summary | p. 86 |
Critical Thinking and Discussion Questions | p. 87 |
Research Task | p. 87 |
Closing Case: The Changing Political Economy of India | p. 88 |
Differences in Culture | p. 90 |
Opening Case: Guanxi-Ties That Bind | p. 90 |
Introduction | p. 93 |
What is Culture? | p. 94 |
Values and Norms | p. 94 |
Culture, Society, and the Nation-State | p. 96 |
The Determinants of Culture | p. 96 |
Social Structure | p. 97 |
Individuals and Groups | p. 97 |
Social Stratification | p. 99 |
Religious and Ethical Systems | p. 102 |
Christianity | p. 104 |
Islam | p. 105 |
Hinduism | p. 107 |
Buddhism | p. 108 |
Confucianism | p. 110 |
Language | p. 111 |
Spoken Language | p. 111 |
Unspoken Language | p. 112 |
Education | p. 113 |
Culture and the Workplace | p. 114 |
Cultural Change | p. 116 |
Focus on Managerial Implications | p. 121 |
Cross-Cultural Literacy | p. 121 |
Culture and Competitive Advantage | p. 122 |
Key Terms | p. 123 |
Summary | p. 124 |
Critical Thinking and Discussion Questions | p. 124 |
Research Task | p. 125 |
Closing Case: McDonald's and Hindu Culture | p. 125 |
Ethics in International Business | p. 128 |
Opening Case: Nike | p. 128 |
Introduction | p. 130 |
Ethical Issues in International Business | p. 131 |
Employment Practices | p. 132 |
Human Rights | p. 132 |
Environmental Pollution | p. 134 |
Corruption | p. 137 |
Moral Obligations | p. 139 |
Ethical Dilemmas | p. 140 |
The Roots of Unethical Behavior | p. 141 |
Philosophical Approaches to Ethics | p. 145 |
Straw Men | p. 146 |
Utilitarian and Kantian Ethics | p. 149 |
Rights Theories | p. 150 |
Justice Theories | p. 151 |
Ethical Decision Making | p. 152 |
Hiring and Promotion | p. 153 |
Organization Culture and Leadership | p. 153 |
Decision-Making Processes | p. 154 |
Ethics Officers | p. 156 |
Moral Courage | p. 157 |
Summary of Decision-Making Steps | p. 157 |
Key Terms | p. 158 |
Summary | p. 158 |
Critical Thinking and Discussion Questions | p. 159 |
Research Task | p. 159 |
Closing Case: Etch-A-Sketch Ethics | p. 159 |
Sustainability in Practice: BC Hydro's Aboriginal Relations Program | p. 161 |
Cross-Border Trade and Investment | p. 162 |
International Trade Theory | p. 162 |
Opening Case: Hollowing Out the U.S. Knowledge-Based Economy | p. 162 |
Introduction | p. 164 |
An Overview of Trade Theory | p. 165 |
The Benefits of Trade | p. 166 |
The Pattern of International Trade | p. 166 |
Trade Theory and Government Policy | p. 167 |
Mercantilism | p. 169 |
Absolute Advantage | p. 170 |
Comparative Advantage | p. 172 |
The Gains from Trade | p. 173 |
Qualifications and Assumptions | p. 174 |
Simple Extensions of the Ricardian Model | p. 175 |
Heckscher-Ohlin Theory | p. 177 |
The Leontief Paradox | p. 178 |
The Product Life-Cycle Theory | p. 179 |
Evaluating the Product Life-Cycle Theory | p. 180 |
New Trade Theory | p. 182 |
Increasing Product Variety and Reducing Costs | p. 183 |
Economies of Scale, First-Mover Advantages, and the Pattern of Trade | p. 183 |
Implications of New Trade Theory | p. 184 |
National Competitive Advantage: Porter's Diamond | p. 186 |
Factor Endowments | p. 187 |
Demand Conditions | p. 187 |
Related and Supporting Industries | p. 187 |
Firm Strategy, Structure, and Rivalry | p. 188 |
Evaluating Porter's Theory | p. 190 |
Focus on Managerial Implications | p. 190 |
Location | p. 190 |
First-Mover Advantages | p. 191 |
Government Policy | p. 191 |
Key Terms | p. 192 |
Summary | p. 192 |
Critical Thinking and Discussion Questions | p. 193 |
Research Task | p. 194 |
Closing Case: Logitech | p. 194 |
The Political Economy of International Trade | p. 196 |
Opening Case: The Politics of Trade in Steel | p. 196 |
Introduction | p. 198 |
Instruments of Trade Policy | p. 200 |
Tariffs | p. 200 |
Subsidies | p. 201 |
Import Quotas and Voluntary Export Restraints | p. 203 |
Local Content Requirements | p. 205 |
Administrative Policies | p. 205 |
Antidumping Policies | p. 206 |
The Case for Government Intervention | p. 206 |
Political Arguments for Intervention | p. 206 |
Economic Arguments for Intervention | p. 211 |
The Revised Case for Free Trade | p. 213 |
Retaliation and Trade War | p. 213 |
Domestic Politics | p. 214 |
Development of the World Trading System | p. 214 |
From Smith to the Great Depression | p. 215 |
1947-1979: GATT, Trade Liberalization, and Economic Growth | p. 215 |
1980-1993: Protectionist Trends | p. 216 |
The Uruguay Round and the World Trade Organization | p. 216 |
WTO: Experience to Date | p. 218 |
The Future of the WTO: Unresolved Issues and the Doha Round | p. 222 |
Focus on Managerial Implications | p. 226 |
Trade Barriers and Firm Strategy | p. 226 |
Policy Implications | p. 227 |
Key Terms | p. 228 |
Summary | p. 228 |
Critical Thinking and Discussion Questions | p. 230 |
Research Task | p. 230 |
Closing Case: Agricultural Subsidies Development | p. 230 |
Foreign Direct Investment | p. 232 |
Opening Case: The Globalization of Toyota | p. 232 |
Introduction | p. 235 |
Foreign Direct Investment in the World Economy | p. 236 |
Trends in FDI | p. 236 |
The Direction of FDI | p. 238 |
The Source of FDI | p. 241 |
The Form of FDI: Acquisitions versus Green-Field Investments | p. 242 |
Foreign Direct Investment in the World Economy | p. 245 |
Why Foreign Direct Investment? | p. 245 |
The Pattern of Foreign Direct Investment | p. 247 |
The Eclectic Paradigm | p. 249 |
Political Ideology and Foreign Direct Investment | p. 250 |
The Radical View | p. 250 |
The Free Market View | p. 251 |
Pragmatic Nationalism | p. 252 |
Shifting Ideology | p. 253 |
Benefits and Costs of FDI | p. 253 |
Host-Country Benefits | p. 253 |
Host-Country Costs | p. 257 |
Home-Country Benefits | p. 258 |
Home-Country Costs | p. 259 |
International Trade Theory and FDI | p. 259 |
Government Policy Instruments and FDI | p. 260 |
Home-Country Policies | p. 260 |
Host-Country Policies | p. 261 |
International Institutions and the Liberalization of FDI | p. 262 |
Focus on Managerial Implications | p. 263 |
The Theory of FDI | p. 263 |
Government Policy | p. 265 |
Key Terms | p. 265 |
Summary | p. 266 |
Critical Thinking and Discussion Questions | p. 266 |
Research Task | p. 267 |
Closing Case: Ford and General Motors in Russia | p. 267 |
Regional Economic Integration | p. 270 |
Opening Case: Drug Companies and the European Union | p. 270 |
Introduction | p. 272 |
Levels of Economic Integration | p. 274 |
The Case for Regional Integration | p. 276 |
The Economic Case for Integration | p. 276 |
The Political Case for Integration | p. 276 |
Impediments to Integration | p. 277 |
The Case against Regional Integration | p. 277 |
Regional Economic Integration in Europe | p. 279 |
Evolution of the European Union | p. 280 |
Political Structure of the European Union | p. 280 |
The Single European Act | p. 282 |
The Establishment of the Euro | p. 285 |
Enlargement of the European Union | p. 288 |
Regional Economic Integration in the Americas | p. 289 |
The North American Free Trade Agreement | p. 289 |
The Andean Community | p. 293 |
MERCOSUR | p. 294 |
Central American Common Market and CARICOM | p. 295 |
Free Trade Area of the Americas | p. 295 |
Regional Economic Integration Elsewhere | p. 296 |
Association of Southeast Asian Nations | p. 296 |
Asia-Pacific Economic Cooperation | p. 297 |
Regional Trade Blocs in Africa | p. 298 |
Focus on Managerial Implications | p. 299 |
Opportunities | p. 299 |
Threats | p. 300 |
Key Terms | p. 301 |
Summary | p. 301 |
Critical Thinking and Discussion Questions | p. 302 |
Research Task | p. 303 |
Closing Case: Increasing Competition in the European Automobile Market | p. 303 |
Sustainability in Practice: Foreign Investment for Sustainable Community Development: Multinationals Learning from the Grameen Example | p. 305 |
Global Money System | p. 308 |
The Foreign Exchange Market | p. 308 |
Opening Case: Volkswagen's Hedging Strategy | p. 308 |
Introduction | p. 310 |
The Functions of the Foreign Exchange Market | p. 311 |
Currency Conversion | p. 311 |
Insuring against Foreign Exchange Risk | p. 313 |
The Nature of the Foreign Exchange Market | p. 317 |
Economic Theories of Exchange Rate Determination | p. 319 |
Prices and Exchange Rates | p. 319 |
Interest Rates and Exchange Rates | p. 325 |
Investor Psychology and Bandwagon Effects | p. 326 |
Summary | p. 326 |
Exchange Rate Forecasting | p. 327 |
The Efficient Market School | p. 327 |
The Inefficient Market School | p. 327 |
Approaches to Forecasting | p. 328 |
Currency Convertibility | p. 330 |
Focus on Managerial Implications | p. 332 |
Transaction Exposure | p. 332 |
Translation Exposure | p. 332 |
Economic Exposure | p. 332 |
Reducing Translation and Transaction Exposure | p. 333 |
Reducing Economic Exposure | p. 334 |
Other Steps for Managing Foreign Exchange Risk | p. 334 |
Key Terms | p. 335 |
Summary | p. 336 |
Critical Thinking and Discussion Questions | p. 337 |
Research Task | p. 337 |
Closing Case: Hedging the Euro at Axis | p. 337 |
The International Monetary System | p. 340 |
Opening Case: China's Exchange Rate Policy | p. 340 |
Introduction | p. 342 |
The Gold Standard | p. 344 |
Mechanics of the Gold Standard | p. 344 |
Strength of the Gold Standard | p. 344 |
The Period between the Wars: 1918-1939 | p. 345 |
The Bretton Woods System | p. 346 |
The Role of the IMF | p. 347 |
The Role of the World Bank | p. 348 |
The Collapse of the Fixed Exchange Rate System | p. 348 |
The Floating Exchange Rate Regime | p. 350 |
The Jamaica Agreement | p. 350 |
Exchange Rates since 1973 | p. 350 |
Fixed versus Floating Exchange Rates | p. 352 |
The Case for Floating Exchange Rates | p. 352 |
The Case for Fixed Exchange Rates | p. 353 |
Who Is Right? | p. 354 |
Exchange Rate Regimes in Practice | p. 355 |
Pegged Exchange Rates | p. 355 |
Currency Boards | p. 356 |
Crisis Management by the IMF | p. 357 |
Financial Crises in the Post-Bretton Woods Era | p. 357 |
Mexican Currency Crisis of 1995 | p. 359 |
The Asian Crisis | p. 361 |
Evaluating the IMF's Policy Prescriptions | p. 365 |
Focus on Managerial Implications | p. 369 |
Currency Management | p. 369 |
Bustiness Strategy | p. 369 |
Corporate-Government Relations | p. 370 |
Key Terms | p. 371 |
Summary | p. 372 |
Critical Thinking and Discussion Questions | p. 373 |
Closing Case: The Tragedy of the Congo (Zaire) | p. 373 |
Sustainability in Practice: A Tax on Currency Speculation to Finance Sustainable Development and Other Suggestions for a Sustainable Global Economy | p. 375 |
Competing in a Global Marketplace | p. 376 |
The Strategy of International Business | p. 376 |
Opening Case: Wal-Mart's Global Expansion | p. 376 |
Introduction | p. 379 |
Strategy and the Firm | p. 380 |
Value Creation | p. 380 |
Strategic Positioning | p. 382 |
Operations: The Firm as a Value Chain | p. 383 |
Organization: The Implementation of Strategy | p. 385 |
In Sum: Strategic Fit | p. 387 |
Profiting from Global Expansion | p. 388 |
Location Economies | p. 388 |
Experience Effects | p. 391 |
Leveraging Core Competencies | p. 393 |
Leveraging Subsidiary Skills | p. 394 |
Pressures for Cost Reductions and Local Responsiveness | p. 395 |
Pressures for Cost Reductions | p. 396 |
Pressures for Local Responsiveness | p. 397 |
Strategic Choices | p. 400 |
International Strategy | p. 400 |
Multidomestic Strategy | p. 401 |
Global Strategy | p. 402 |
Transnational Strategy | p. 403 |
Strategy Summary | p. 406 |
Strategic Alliances | p. 406 |
The Advantages of Strategic Alliances | p. 406 |
The Disadvantages of Strategic Alliances | p. 407 |
Making Alliances Work | p. 408 |
Key Terms | p. 411 |
Summary | p. 411 |
Critical Thinking and Discussion Questions | p. 412 |
Research Task | p. 412 |
Closing Case: Global Strategy at MTV Networks | p. 413 |
Entering Foreign Markets | p. 416 |
Opening Case: Diebold | p. 416 |
Introduction | p. 418 |
Basic Entry Decisions | p. 419 |
Which Foreign Markets? | p. 419 |
Timing of Entry | p. 420 |
Scale of Entry and Strategic Commitments | p. 421 |
Summary | p. 424 |
Entry Modes | p. 426 |
Exporting | p. 426 |
Turnkey Projects | p. 427 |
Licensing | p. 427 |
Franchising | p. 429 |
Joint Ventures | p. 432 |
Wholly Owned Subsidiaries | p. 433 |
Selecting an Entry Mode | p. 435 |
Core Competencies and Entry Mode | p. 436 |
Pressures for Cost Reductions and Entry Mode | p. 436 |
Green-Field Venture or Acquisition? | p. 437 |
Pros and Cons of Acquisitions | p. 437 |
Pros and Cons of Green-Field Ventures | p. 440 |
Green-Field or Acquisition? | p. 440 |
Key Terms | p. 441 |
Summary | p. 441 |
Critical Thinking and Discussion Questions | p. 442 |
Research Task | p. 443 |
Closing Case: Merrill Lynch in Japan | p. 443 |
Exporting, Importing, and Countertrade | p. 446 |
Opening Case: Exporting by Small U.S. Finns | p. 446 |
Introduction | p. 448 |
The Promise and Pitfalls of Exporting | p. 449 |
Improving Export Performance | p. 450 |
An International Comparison | p. 450 |
Information Sources | p. 450 |
Utilizing Export Management Companies | p. 452 |
Export Strategy | p. 452 |
Export and Import Financing | p. 453 |
Lack of Trust | p. 453 |
Letter of Credit | p. 456 |
Draft | p. 457 |
Bill of Lading | p. 458 |
A Typical International Trade Transaction | p. 458 |
Export Assistance | p. 460 |
Export-Import Bank | p. 460 |
Export Credit Insurance | p. 461 |
Countertrade | p. 461 |
The Incidence of Countertrade | p. 462 |
Types of Countertrade | p. 462 |
The Pros and Cons of Countertrade | p. 463 |
Key Terms | p. 464 |
Summary | p. 465 |
Critical Thinking and Discussion Questions | p. 465 |
Research Task | p. 466 |
Closing Case: Megahertz Communications | p. 466 |
Global Production, Outsourcing, and Logistics | p. 468 |
Opening Case; Microsoft-Outsourcing Xbox Production | p. 468 |
Introduction | p. 470 |
Strategy, Production, and Logistics | p. 471 |
Where to Produce | p. 474 |
Country Factors | p. 474 |
Technological Factors | p. 475 |
Product Factors | p. 479 |
Locating Production Facilities | p. 480 |
The Strategic Role of Foreign Factories | p. 481 |
Outsourcing Production: Make-or-Buy Decisions | p. 484 |
The Advantages of Make | p. 484 |
The Advantages of Buy | p. 486 |
Trade-offs | p. 488 |
Strategic Alliances with Suppliers | p. 489 |
Managing a Global Supply Chain | p. 490 |
The Role of Just-in-Time Inventory | p. 490 |
The Role of Information Technology and the Internet | p. 491 |
Key Terms | p. 492 |
Summary | p. 492 |
Critical Thinking and Discussion Questions | p. 493 |
Research Task | p. 493 |
Closing Case: Competitive Advantage at Dell | p. 493 |
Global Marketing and R&D | p. 496 |
Opening Case: Astro Boy-Marketing Japanese Anime to the World | p. 496 |
Introduction | p. 498 |
The Globalization of Markets and Brands | p. 499 |
Market Segmentation | p. 500 |
Product Attributes | p. 502 |
Cultural Differences | p. 503 |
Economic Development | p. 503 |
Product and Technical Standards | p. 504 |
Distribution Strategy | p. 504 |
Differences between Countries | p. 505 |
Choosing a Distribution Strategy | p. 507 |
Communication Strategy | p. 508 |
Barriers to International Communication | p. 508 |
Push versus Pull Strategies | p. 509 |
Global Advertising | p. 513 |
Pricing Strategy | p. 515 |
Price Discrimination | p. 515 |
Strategic Pricing | p. 516 |
Regulatory Influences on Prices | p. 518 |
Configuring the Marketing Mix | p. 518 |
New-Product Development | p. 519 |
The Location of R&D | p. 521 |
Integrating R&D, Marketing, and Production | p. 522 |
Cross-Functional Teams | p. 523 |
Building Global R&D Capabilities | p. 524 |
Key Terms | p. 525 |
Summary | p. 526 |
Critical Thinking and Discussion Questions | p. 526 |
Research Task | p. 527 |
Closing Case: Procter & Gamble in Japan | p. 527 |
Global Human Resource Management | p. 530 |
Opening Case: Molex | p. 530 |
Introduction | p. 533 |
The Strategic Role of International HRM | p. 534 |
Staffing Policy | p. 534 |
Types of Staffing Policy | p. 535 |
Expatriate Managers | p. 538 |
Training and Management Development | p. 543 |
Training for Expatriate Managers | p. 543 |
Repatriation of Expatriates | p. 544 |
Management Development and Strategy | p. 545 |
Performance Appraisal | p. 546 |
Performance Appraisal Problems | p. 546 |
Guidelines for Performance Appraisal | p. 547 |
Compensation | p. 547 |
National Differences in Compensation | p. 547 |
Expatriate Pay | p. 549 |
International Labor Relations | p. 551 |
The Concerns of Organized Labor | p. 551 |
The Strategy of Organized Labor | p. 551 |
Approaches to Labor Relations | p. 552 |
Key Terms | p. 553 |
Summary | p. 553 |
Critical Thinking and Discussion Questions | p. 554 |
Research Task | p. 554 |
Closing Case: Degrussa: Strategy and Human Resources in China | p. 555 |
Sustainability in Practice: Interface: An Environmentally Sustainable Commitment to Business and Material Management | p. 556 |
Glossary | p. 559 |
Notes | p. 569 |
Index | p. 603 |
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