International Business The Challenges of Globalization

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Cover Title Page Copyright Page Pearson’s Commitmentto Diversity, Equity, and Inclusion Brief Contents Contents Preface Acknowledgments About the Authors PART 1 Global Business Environment Chapter 1 Globalization Today Apple’s Global iMpact 1.1 Introduction and Key Players 1.1.1 Key Players in International Business GLOBAL MANAGER: The Keys to Global Success 1.2 What is Globalization? 1.2.1 Evolution of Globalization 1.2.2 Globalization of Markets 1.2.3 Globalization of Production 1.3 Drivers of Globalization 1.3.1 Falling Barriers to Trade and Investment 1.3.2 Global E-commerce 1.3.3 Digital Transformation 1.3.4 Communication and Transportation 1.4 Globalization Debate 1.4.1 Globalization Harms Jobs and Wages 1.4.2 Globalization Improves Jobs and Wages 1.4.3 Debate about Income Inequality 1.4.4 Globalization and Culture CULTURE INSIGHTs: The Culture Debate 1.4.5 Globalization and National Sovereignty 1.4.6 Globalization and the Environment 1.5 Workplace Skills 1.5.1 Skills for Your Career 1.5.2 The Global Business Environment Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Appendix World Atlas Chapter 2 Ethics, Social Responsibility, and Sustainability Tony’s Chocolonely 2.1 Ethics Theories 2.1.1 Utilitarianism 2.1.2 Rights Theory 2.1.3 Theory of Justice 2.1.4 Cultural Relativism 2.2 Business Ethics 2.2.1 Resolving Ethical Dilemmas 2.2.2 Codes of Ethics 2.2.3 Sources of Unethical Behavior 2.3 Corporate Social Responsibility 2.3.1 Efficiency and Profits as Social Responsibility 2.3.2 Business Responsibilities to Society CULTURE INSIGHTS: Speaking in Fewer Tongues 2.3.3 Stakeholder Theory 2.4 Sustainability 2.4.1 Carbon Footprints and Climate Change GLOBAL MANAGER: Three Sustainable Strategies for Three Markets 2.4.2 A Circular Economy 2.4.3 Greenwashing 2.5 Additional Key Global Issues 2.5.1 Bribery and Corruption 2.5.2 Working Conditions and Human Rights 2.5.3 Diversity, Equity, and Inclusion Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE PART 2 National Business Environment Chapter 3 Cross-Cultural Business Vans: Off The Wall 3.1 What Is Culture? 3.1.1 Cross-Cultural Literacy 3.1.2 National Culture 3.1.3 Subcultures 3.1.4 Physical Environment 3.1.5 Material Culture 3.2 Values, Attitudes, and Behavior 3.2.1 Values 3.2.2 Attitudes 3.2.3 Aesthetics 3.2.4 Behaviors CULTURE INSIGHTS: A Globetrotter’s Guide to Meetings 3.3 Social Structure and Education 3.3.1 Social Group Associations 3.3.2 Social Status 3.3.3 Social Mobility 3.3.4 Education GLOBAL MANAGER: Social Flexibility 3.4 Religion 3.4.1 Christianity 3.4.2 Islam 3.4.3 Hinduism 3.4.4 Buddhism 3.4.5 Judaism 3.4.6 Confucianism 3.5 Personal Communication 3.5.1 Spoken and Written Language 3.5.2 Body Language 3.6 Culture in the Global Workplace 3.6.1 Perception of Time 3.6.2 View of Work 3.6.3 Cultural Change 3.6.4 Kluckhohn-Strodtbeck Framework 3.6.5 Hofstede Framework Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 4 Political, Economic, and Legal Systems TikTok Rocks 4.1 Political Systems 4.1.1 Totalitarianism GLOBAL MANAGER: From Civil War to Civil Society 4.1.2 Democracy 4.2 Economic Systems 4.2.1 Centrally Planned Economy 4.2.2 Mixed Economy 4.2.3 Market Economy 4.3 Legal Systems 4.3.1 Common Law 4.3.2 Civil Law CULTURE INSIGHTS: Playing by the Rules 4.3.3 Theocratic Law 4.4 Global Legal Issues 4.4.1 Intellectual Property 4.4.2 Product Safety and Liability 4.4.3 Antitrust Regulations 4.4.4 Taxation Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 5 Economic Development of Nations Paytm in India 5.1 Economic Development 5.1.1 Classifying Countries 5.1.2 National Production 5.1.3 Purchasing Power Parity 5.1.4 Human Development 5.2 Political Risk 5.2.1 Conflict and Violence GLOBAL MANAGER: Your Global Security Checklist 5.2.2 Property Seizure 5.2.3 Government Policies 5.3 Managing Political Risk 5.3.1 Adaptation 5.3.2 Information Gathering 5.3.3 Political Influence 5.3.4 International Relations 5.3.5 The United Nations 5.4 Economic Transition 5.4.1 Transition Obstacles 5.4.2 China’s Economic Transition CULTURE INSIGHTS: Guidelines for Good Guanxi 5.4.3 Russia’s Economic Transition Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE PART 3 International Trade and Investment Chapter 6 International Trade Theory Tesla Charges Ahead 6.1 The Nature of International Trade 6.1.1 Benefits of Trade 6.1.2 Economic Importance of Trade 6.1.3 Top Trading Nations 6.1.4 Global Trade and Output 6.1.5 Trade Interdependence CULTURE INSIGHTS: Business Culture in the Pacific Rim 6.2 Mercantilism 6.2.1 How Mercantilism Worked 6.2.2 Flaws of Mercantilism 6.3 Theories of Absolute and Comparative Advantage 6.3.1 Absolute Advantage 6.3.2 Comparative Advantage 6.4 Factor Proportions Theory 6.4.1 Labor Versus Land and Capital Equipment 6.4.2 Evidence on Factor Proportions Theory: The Leontief Paradox 6.5 International Product Life Cycle 6.5.1 Stages of the Product Life Cycle 6.5.2 Limitations of the Theory GLOBAL MANAGER: Five Fulfillment Mistakes 6.6 New Trade Theory 6.6.1 First-Mover Advantage 6.7 National Competitive Advantage 6.7.1 Factor Conditions 6.7.2 Demand Conditions 6.7.3 Related and Supporting Industries 6.7.4 Firm Strategy, Structure, and Rivalry 6.7.5 Government and Chance Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 7 Governments and Trade Netflix Reinvents TV 7.1 Why Do Governments Intervene in Trade? 7.1.1 Political Motives CULTURE INSIGHTS: A Culture of Business Security 7.1.2 Economic Motives 7.1.3 Cultural Motives 7.2 Instruments of Trade Promotion 7.2.1 Subsidies 7.2.2 Export Assistance GLOBAL MANAGER: Experts in Exporting 7.2.3 Foreign Trade Zones 7.2.4 Special Government Agencies 7.3 Instruments of Trade Restriction 7.3.1 Tariffs 7.3.2 Quotas 7.3.3 Other Nontariff Barriers 7.4 Global Trading System 7.4.1 General Agreement on Tariffs and Trade (GATT) 7.4.2 World Trade Organization (WTO) Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 8 Foreign Direct Investment Spotify for Every Mood 8.1 The Nature of Foreign Direct Investment 8.1.1 Forms of Foreign Direct Investment CULTURE INSIGHTS: Cross-Cultural Mergers and Acquisitions 8.1.2 Worldwide Flows of FDI 8.1.3 Recipients and Sources of FDI 8.2 Theories of Foreign Direct Investment 8.2.1 International Product Life Cycle 8.2.2 Market Imperfections 8.2.3 Eclectic Theory 8.2.4 Market Power 8.3 Management Issues and Foreign Direct Investment 8.3.1 Control 8.3.2 Purchase-or-Build Decision 8.3.3 Production Costs GLOBAL MANAGER: Surprises of Investing Abroad 8.3.4 Customer Knowledge 8.3.5 Following Clients 8.3.6 Following Rivals 8.4 Why Governments Intervene in FDI 8.4.1 Balance of Payments 8.4.2 Reasons for Intervention by the Host Country 8.4.3 Reasons for Intervention by the Home Country 8.5 Government Policy Instruments and FDI 8.5.1 Host Countries: Promotion 8.5.2 Host Countries: Restriction 8.5.3 Home Countries: Promotion 8.5.4 Home Countries: Restriction Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 9 Regional Economic Integration NestlÉ’s Global Recipe 9.1 The Nature of Regional Integration Efforts 9.1.1 Levels of Regional Integration 9.1.2 The Case for Regional Integration 9.1.3 The Case Against Regional Integration 9.2 Integration in Europe 9.2.1 European Union CULTURE INSIGHTS: Czech List 9.2.2 European Free Trade Association (EFTA) 9.3 Integration in the Americas 9.3.1 United States-Mexico-Canada Agreement (USMCA) 9.3.2 Central American Free Trade Agreement (CAFTA-DR) 9.3.3 Andean Community (CAN) 9.3.4 Southern Common Market (MERCOSUR) 9.3.5 Central America and the Caribbean 9.4 Integration in Asia and Africa 9.4.1 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 9.4.2 Association of Southeast Asian Nations (ASEAN) GLOBAL MANAGER: The Ins and Outs of ASEAN 9.4.3 Regional Comprehensive Economic Partnership (RCEP) 9.4.4 Asia Pacific Economic Cooperation (APEC) 9.4.5 Africa’s Integration Efforts Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE PART 4 International Financial System Chapter 10 International Financial Markets Samsung’s Number Won 10.1 The International Capital Market 10.1.1 Benefits of the International Capital Market 10.1.2 International Bond Market CULTURE INSIGHTS: Big Results from Microfinance 10.1.3 International Equity Market 10.1.4 Eurocurrency Market 10.2 The Foreign Exchange Market 10.2.1 Functions of the Foreign Exchange Market 10.2.2 Exchange-Rate Risk 10.3 Currency Rates and Instruments 10.3.1 Spot and Forward Rates 10.3.2 Forward Contracts, Swaps, and Options 10.4 Market Structure and Convertibility 10.4.1 Financial Centers GLOBAL MANAGER: Managing Foreign Exchange 10.4.2 Interbank Market 10.4.3 Currency Convertibility Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 11 International Monetary System The Euro 11.1 Importance of Currency Values 11.1.1 Desire for Stability and Predictability 11.1.2 Efficient Versus Inefficient Market View 11.1.3 Forecasting Techniques CULTURE INSIGHTS: The Long Arm of the Law 11.2 Factors That Determine Exchange Rates 11.2.1 Law of One Price 11.2.2 Purchasing Power Parity 11.2.3 Evaluating Purchasing Power Parity 11.3 Fixed Exchange-Rate Systems 11.3.1 The Gold Standard 11.3.2 Bretton Woods Agreement 11.4 Floating Exchange-Rate System 11.4.1 Today’s Exchange-Rate Arrangements 11.4.2 Recent Financial Crises GLOBAL MANAGER: Adjusting to Currency Swings 11.4.3 Future of the International Monetary System Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE PART 5 International Business Management Chapter 12 International Strategy and Organization Ryanair Soars Above 12.1 Company Analysis 12.1.1 Company Mission and Goals 12.1.2 Core Competency and Value Creation 12.1.3 Business Environment CULTURE INSIGHTS: Researching Business Environments 12.2 Strategy Formulation 12.2.1 Two International Strategies 12.2.2 Corporate-Level Strategies 12.2.3 Business-Level Strategies 12.2.4 Department-Level Strategies GLOBAL MANAGER: Questions to Ask Before Going International 12.3 Issues of Organizational Structure 12.3.1 Centralization Versus Decentralization 12.3.2 Coordination and Flexibility 12.4 Types of Organizational Structure 12.4.1 International Division Structure 12.4.2 International Area Structure 12.4.3 Global Product Structure 12.4.4 Global Matrix Structure 12.4.5 Work Teams Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 13 Analyzing International Opportunities Starbucks’ Global Expansion 13.1 Basic Appeal and National Factors 13.1.1 Identify Basic Appeal 13.1.2 Assess the National Business Environment GLOBAL MANAGER: Expanding Globally Online 13.2 Measure and Select the Market or Site 13.2.1 Measure Market or Site Potential 13.2.2 Select the Market or Site 13.3 Secondary Market Research 13.3.1 Public Information Sources 13.3.2 Private Information Sources 13.3.3 Issues with Secondary Research 13.4 Primary Market Research 13.4.1 Trade Shows and Trade Missions CULTURE INSIGHTS: Is the World Your Oyster? 13.4.2 Interviews and Focus Groups 13.4.3 Surveys and Environmental Scanning 13.4.4 Issues with Primary Research Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 14 Selecting and Managing Entry Modes Marvel Entertains 14.1 Exporting and Countertrade 14.1.1 Why Companies Export 14.1.2 Developing an Export Strategy: A Four-Step Model 14.1.3 Degree of Export Involvement 14.1.4 Countertrade 14.2 Export/Import Financing 14.2.1 Advance Payment 14.2.2 Documentary Collection 14.2.3 Letter of Credit 14.2.4 Open Account GLOBAL MANAGER: Collecting International Debts 14.3 Contractual Entry Modes 14.3.1 Licensing 14.3.2 Franchising 14.3.3 Management Contracts 14.3.4 Turnkey Projects 14.4 Investment Entry Modes 14.4.1 Wholly Owned Subsidiaries 14.4.2 Joint Ventures 14.4.3 Strategic Alliances 14.4.4 Partner Selection CULTURE INSIGHTS: Negotiating Market Entry Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 15 Developing and Marketing Products Wings for Life 15.1 Developing Product Strategies 15.1.1 Laws and Culture 15.1.2 Brand and Product Names 15.1.3 Other Product Issues 15.2 Creating Promotional Strategies 15.2.1 Push and Pull Strategies GLOBAL MANAGER: Managing an International Sales Force 15.2.2 International Advertising 15.2.3 Communicating Promotional Messages 15.2.4 Blending Product and Promotional Strategies CULTURE INSIGHTS: Localizing Digital Advertising 15.3 Designing Distribution Strategies 15.3.1 Designing Distribution Channels 15.3.2 Special Distribution Issues 15.4 Developing Pricing Strategies 15.4.1 Worldwide Pricing 15.4.2 Dual Pricing 15.4.3 Factors That Affect Pricing Decisions Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 16 Managing International Operations Toyota Races Ahead 16.1 Production Strategy 16.1.1 Capacity Planning 16.1.2 Facilities Location Planning 16.1.3 Process Planning 16.1.4 Facilities Layout Planning 16.2 Acquiring Physical Resources 16.2.1 Reasons to Make 16.2.2 Reasons to Buy 16.2.3 Raw Materials 16.2.4 Fixed Assets 16.3 Key Production Concerns 16.3.1 Quality Improvement Efforts GLOBAL MANAGER: World-Class Standards 16.3.2 Shipping and Inventory Costs 16.3.3 Reinvestment versus Divestment 16.4 Financing Business Operations 16.4.1 Borrowing 16.4.2 Issuing Equity 16.4.3 Internal Funding CULTURE INSIGHTS: Financing Business from Abroad 16.4.4 Capital Structure Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Chapter 17 Hiring and Managing Employees IKEA Togetherness 17.1 International Staffing Policies 17.1.1 Ethnocentric Staffing 17.1.2 Polycentric Staffing 17.1.3 Geocentric Staffing 17.2 Recruiting and Selecting Human Resources 17.2.1 Human Resource Planning GLOBAL MANAGER: Growing Global 17.2.2 Recruiting Human Resources 17.2.3 Selecting Human Resources 17.2.4 Culture Shock 17.2.5 Reverse Culture Shock CULTURE INSIGHTS: A Shocking Ordeal 17.3 Training and Development 17.3.1 Methods of Cultural Training 17.3.2 Compiling a Cultural Profile 17.3.3 Nonmanagerial Worker Training 17.4 Compensation, Labor, and Management 17.4.1 Managerial Employees 17.4.2 Nonmanagerial Workers 17.4.3 Labor–Management Relations Chapter Summary Key Terms Talk About It Teaming Up Ethical Challenge Writing Assignments PRACTICING INTERNATIONAL MANAGEMENT CASE Endnotes Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Glossary A B C D E F G H I J K L M N O P Q R S T U V W Z Name Index A B C D E F G H I J K L M N O P R S T U V W X Y Z Subject Index A B C D E F G H I J K L M N O P Q R S T U V W Z