Global Business Environments and Strategies: Managing for Global Competitive Advantage

by Hough, Johan; Neuland, Ernst; Daniels, John; Radebaugh, Tim; Erwee, Ronel

• ISBN13: 9780195718522
• ISBN10: 0195718526
• Format: Paperback
• Copyright: 2001-01-25
• Publisher: Oxford University Press

Summary

This book aims to increase understanding of global business issues and help managers to develop a global business mindset. Approaching international business from a Southern African and global point of view, the authors put Southern Africa's place in the 'global village' in perspective.

Table of Contents

Acknowledgements	xvi
Preface	xvii
PART I The scope and dynamics of global business	1	(68)
An Overview of Global Business	3	(27)
Introduction	3	(2)
Global business defined	5	(1)
Types of international business	6	(1)
Trends in the internationalisation of business	6	(2)
Macro-economic determinants of international business	8	(3)
Theory of comparative advantage - comparative cost benefits in international trade	8	(1)
Technological renewal and production expertise	8	(1)
Theories on direct foreign investment	9	(1)
International agreements and institutions	10	(1)
The product life cycle theory and international trade cycles	10	(1)
The oligopoly model	10	(1)
The international transfer of resources	11	(1)
The balance of payments	11	(1)
Growth in global business and foreign investment	11	(3)
Growth in global business activities	11	(2)
Factors influencing foreign investment	13	(1)
Profile of South African companies involved in international business	14	(1)
Internationalisation and evolution of multinational enterprises	14	(6)
Strategies for international commitments in the internationalisation process	14	(1)
Evolution of multinational enterprises	14	(6)
Summary	20	(10)
Case study: Multotec Cyclones (Pty) Ltd	21	(8)
Endnotes	29	(1)
International Trade and Economic Integration	30	(39)
Introduction	30	(1)
Globalisation of the world economy	31	(1)
International trade theories	32	(4)
The theory of absolute advantage	32	(1)
The theory of comparative advantage	33	(1)
Factor proportions theory or factor endowments theory	34	(1)
The Leontief paradox	34	(1)
Product cycle theory or product life cycle theory	34	(1)
Competitive advantage of nations: Porter's diamond model	34	(2)
Free trade and trade regulation	36	(4)
International trade barriers	37	(1)
The General Agreement on Tariffs and Trade (GATT)	37	(2)
The World Trade Organisation (WTO)	39	(1)
Economic integration and modern trading blocs	40	(6)
Principle of economic integration	40	(1)
Major trading blocs	40	(6)
Implications of regional trading blocs and trade agreements for South African businesses	46	(2)
Summary	48	(21)
Case study: Iscor Mining	50	(8)
Endnotes	58	(1)
Appendix: South Africa/European Union negotiations: Trade. Development and Co-operation Agreement	59	(10)
PART II Global business environments	69	(128)
International Cultural Environments Facing Business	71	(32)
Introduction	71	(1)
The nation as a definition of a society	72	(1)
The concept of culture	73	(2)
Causes of cultural difference and change	73	(2)
Behavioural practices affecting business	75	(2)
Group affiliations	75	(1)
Role of competence	76	(1)
Importance of different group memberships	76	(1)
Importance of work	77	(5)
Protestant ethic	78	(1)
Belief in success and reward	78	(1)
Work as a habit	79	(1)
High-need achievement	79	(1)
Needs hierarchy	80	(1)
Importance of occupation	81	(1)
Self-reliance	82	(4)
Superior-subordinate relationships	82	(1)
Uncertainty avoidance	82	(1)
Trust	82	(1)
Degree of fatalism	82	(1)
Individual versus group	82	(1)
Communication	83	(1)
Silent language	84	(1)
Perception and processing	85	(1)
Obtaining and evaluating information	85	(1)
Reconciliation of international differences	86	(1)
Cultural awareness	86	(1)
Grouping countries	87	(1)
Cultural needs in the internationalisation process	87	(3)
Polycentrism	89	(1)
Ethnocentrism	89	(1)
Geocentrism	90	(1)
Value systems	90	(4)
Cost benefit of change	90	(1)
Resistance to too much change	90	(1)
Participation	91	(1)
Reward-sharing	91	(1)
Opinion-leaders	91	(1)
Timing	91	(1)
Value judgement and ethics	91	(1)
Learning abroad	92	(1)
Countervailing forces	93	(1)
Summary	94	(9)
Case study: Parris-Rogers International (PRI)	96	(4)
Endnotes	100	(3)
The Political and Legal Environments Facing Business	103	(27)
Introduction	103	(1)
The political environment	103	(1)
The political system and its functions	103	(11)
Basic political ideologies	105	(7)
The impact of the political system on management decisions	112	(1)
Formulating and implementing political strategies	113	(1)
The legal environment	114	(3)
Kinds of legal systems	114	(2)
The legal profession	116	(1)
Legal issues in international business	116	(1)
Evolution of legal and political strategies in the internationalisation process	117	(1)
The future political situation	118	(1)
Ethical dilemmas in global business	119	(2)
Summary	121	(9)
Case study: Bata Shoes	122	(4)
Endnotes	126	(1)
Appendix: Comparative measures of freedom	127	(3)
The Economic Environment	130	(35)
Introduction	130	(1)
Classifying economic systems	130	(4)
Market economy	132	(1)
Centrally planned economy	132	(1)
Mixed economy	132	(2)
Political-economic synthesis	134	(1)
Classifying countries	134	(6)
Purchasing power	136	(1)
Quality of life	136	(3)
Structure of production	139	(1)
Key macro-economic issues in international business	140	(8)
Economic growth	140	(1)
Inflation	141	(1)
Surpluses and deficits - international transactions	142	(1)
Impact of different balances on business	143	(1)
External debt	144	(1)
Deficits	145	(1)
Privatisation	146	(2)
Transformation to a market economy	148	(4)
Political and economic volatility	149	(1)
The process of transformation	150	(1)
Russia's transformation	150	(1)
Eastern Europe's transformation	151	(1)
China's transformation	151	(1)
Keys to a successful transition to market economies	152	(2)
Economic shocks	152	(1)
Soft budgets	152	(1)
Environmental damage	152	(1)
Human capital	153	(1)
Privatisation in CEITs	153	(1)
Adapting to foreign economic environments in the internationalisation process	154	(1)
Ethical dilemmas	155	(1)
Summary	156	(9)
Case study: Pizza Hut in Brazil	157	(6)
Endnotes	163	(2)
The Global Monetary System and Foreign Exchange Market	165	(32)
Introduction	165	(1)
The International Monetary System	165	(6)
Development of the International Monetary System	166	(1)
The gold standard, 1876-1944	166	(1)
The Bretton Woods Agreement, 1944-1973	166	(1)
The floating exchange rate system, 1973-present	166	(1)
Development of the European Monetary System and the Economic and Monetary Union	167	(4)
The foreign exchange market	171	(2)
The functioning of the foreign exchange market	171	(1)
The foreign exchange market - structure and participants	171	(2)
Foreign exchange markets and rates	173	(6)
Concepts in foreign exchange	173	(3)
Currency swaps	176	(1)
Cross-rates and arbitrage	177	(2)
Exchange rate determination	179	(4)
Exchange rate determinants	179	(1)
Exchange rates and price levels	179	(1)
Exchange rates, interest rates and inflation rates	180	(3)
Market effects and investor behaviour	183	(1)
Exchange rate forecasting	183	(2)
Market efficiency and exchange rate forecasting	183	(1)
Approaches to exchange rate forecasting	184	(1)
International capital markets	185	(3)
Scope, structure and functions of international capital markets	185	(1)
The eurocurrency market	186	(1)
The international bond market	187	(1)
The international equity market	188	(1)
Summary	188	(9)
Case study: The Zimbabwean foreign exchange market	189	(7)
Endnotes	196	(1)
PART III Global business leadership and strategies	197	(144)
International Management and Leadership: Developing a Global Mindset	199	(31)
Introduction	199	(1)
International management and leadership	200	(14)
Basic concepts	200	(2)
The environment of international management	202	(2)
Managing in the 21st century	204	(3)
Toward cross-cultural leadership	207	(7)
The need for a global mindset	214	(3)
Overview and definition of a global mindset	214	(1)
Traditional and global mindsets	215	(1)
Global mindsets and personal characteristics	216	(1)
Developing global competencies	217	(3)
Competencies and characteristics	218	(2)
Focus on training efforts	220	(2)
Training for different types of global operations	221	(1)
Socialising the new breed of, global managers in multinational corporations	222	(1)
Summary	222	(8)
Case study: McDonald's Corporation	223	(4)
Endnotes	227	(3)
Strategic International Human Resource Management	230	(22)
Introduction	230	(2)
The SIHRM model	232	(1)
Expatriate selection	233	(6)
Staffing policies	233	(2)
Expatriate sources and human resource planning	235	(1)
Selection and preparation	236	(1)
Dual career couples	237	(1)
Hiring HCNs and TCNs	238	(1)
Compliance with local laws	238	(1)
Training, management development and career planning	239	(4)
Training of expatriates	239	(1)
Cross-cultural training	239	(2)
Career management - a South African example	241	(1)
International management development	242	(1)
Performance management, international compensation and benefits	243	(3)
Performance evaluation	243	(1)
International compensation and benefits	244	(1)
Approaches to compensation for expatriates	245	(1)
Cost factors	245	(1)
Designing a compensation strategy for multinationals	246	(1)
Summary	247	(5)
Case study: Global human resource management at Coca-Cola	248	(3)
Endnotes	251	(1)
Global Marketing Strategy	252	(48)
Introduction	252	(1)
Globalisation of markets	253	(1)
Strategic importance of international marketing	254	(1)
The environment and cultural dimensions of international marketing	255	(6)
The environment of international marketing	255	(3)
Cultural dimensions of international marketing	258	(3)
The organisation and structure of international marketing	261	(2)
International market assessment	263	(2)
Initial screening: basic need and potential	263	(1)
Second screening: financial and economic conditions	263	(1)
Third screening: political and legal forces	264	(1)
Fourth screening: sociocultural forces	265	(1)
Fifth screening: competitive environment	265	(1)
Final selection	265	(1)
Market entry strategies	265	(9)
Overview	265	(2)
Alternative market entry modes	267	(4)
Selecting a market entry mode	271	(3)
International marketing strategy	274	(15)
The marketing mix and strategies for international firms	274	(3)
International product strategy	277	(4)
International distribution strategy	281	(3)
International promotion and communications strategy	284	(3)
International pricing strategy	287	(2)
Managing the international marketing mix	289	(1)
Summary	289	(11)
Case study: How has the Nando's franchise fared?	289	(5)
Endnotes	294	(2)
Appendix: Franchising as a mode of international market entry: a South African perspective	296	(4)
International Financial Management and Strategy	300	(41)
Introduction	300	(1)
Activities and scope of international financial management	301	(2)
The goal of international financial management	303	(1)
International working capital and global money management	304	(8)
Global money management	304	(8)
Foreign exchange risk management	312	(6)
Introduction	312	(1)
Types of foreign exchange exposure	312	(3)
Strategies and tactics for managing foreign exchange risk	315	(3)
Policy guidelines for managing foreign exchange risk	318	(1)
International investment analysis and capital budgeting	318	(9)
International investment	318	(1)
Capital budgeting	319	(8)
International financing decisions	327	(4)
Sources of funds	328	(2)
Financial structure and cost of capital	330	(1)
Summary	331	(10)
Case study: The Sentrachem experience	332	(3)
Endnotes	335	(1)
Appendix: International tax issues	336	(5)
PART IV Southern Africa and Africa: international co-operation and future perspectives	341	(30)
Global Collaboration and Strategic Alliances	343	(14)
Introduction	343	(1)
Modes of entry into foreign markets	344	(1)
Defining strategic alliances	344	(1)
The importance of strategic alliances in South Africa	345	(1)
Strategic alliances profile of South African companies	346	(1)
Strategic alliance linkages by South African companies	347	(1)
Motivations for entering into strategic alliances	348	(1)
Success of strategic alliances	349	(2)
Factors to be considered when forming strategic alliances	351	(1)
Summary	352	(5)
Case study: Schwinn in a joint venture with Csepel Bicycle	354	(2)
Endnotes	356	(1)
Southern Africa - An Emerging Regional Market	357	(14)
Introduction	357	(1)
Southern Africa as an emerging regional market	358	(1)
Globalisation as the context of regional integration and development	359	(1)
Research into the strategic issues facing the southern African region	360	(1)
Key factors affecting direct investment flows into the southern African region	361	(2)
Identification of business sectors which reflect high growth opportunities in southern Africa	363	(1)
Perceptions on global competitiveness	364	(2)
Factors enhancing competitiveness	366	(2)
Competitiveness in South Africa's manufacturing industries	368	(1)
Strategies to develop southern Africa as a global player	368	(2)
Summary	370	(1)
Endnotes	370	(1)
Index	371