GLOBALBUSINESSTODAY. Charles W.L. Hill. Thomas Cronk. Rumintha Wickramasekera. McGraw-Hill Irwin

Transcription

1 GLOBALBUSINESSTODAY AN ASIA-PACIFIC PERSPECTIVE Charles W.L. Hill Thomas Cronk Rumintha Wickramasekera McGraw-Hill Irwin Boston Burr Ridge, IL Dubuque, IA Madison, Wl New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

2 CONTENTS IN FULL Highlights of this Edition xiii Organisation and Content xiv Text at a Glance xvi Preface xviii E-Student and E-lnstructor xx About the Authors xxi Acknowledgements xxii PART ONE GLOBALISATION 2 Chapter 1 Globalisation 3 Opening Case: IKEA The Global Retailer What is Globalisation? 8 The Globalisation of Markets 8 The Globalisation of Production 9 The Emergence of Global Institutions 11 Drivers of Globalisation 13 Declining Trade and Investment Barriers 13 The Role of Technological Change 16 The Changing Character of the Global Economy 23 The Changing World Output and World Trade Picture 23 The Changing Foreign Direct Investment Picture 25 The Changing Nature of the Multinational Enterprise 26 The Changing World Order 28 The Global Economy of the 21st Century 30 The Globalisation Debate 31 Anti-Globalisation Protests 32 Globalisation, Jobs and Income 33 Globalisation, Labour Policies and the Environment 36 Globalisation and National Sovereignty 38 Globalisation and the World's Poor 39 Managing in the Global Marketplace Closing Case: Globalisation and SMEs: The Case of Oakwood Products 46 PART TWO CROSS-BORDER LINKAGES: TRADE, INVESTMENT AND EXCHANGE 48 Chapter 2 Theories of Trade, Investment and Internationalisation 49 Opening Case: Hollowing out the Manufacturing-Based Economy Mercantilism 52 Absolute Advantage 53 Comparative Advantage 54 Heckscher-Ohlin Theory 54 The Leontief Paradox 55 The Product Life-Cycle Theory 56 Evaluating the Product Life-Cycle Theory 57 New Trade Theory 59 Increasing Product Variety and Reducing Costs 59 Economies of Scale, First-Mover Advantages and the Patterns of Trade 60 Implications of New Trade Theory 61 National Competitive Advantage: Porter's Diamond 62 Factor Endowments 64 Demand Conditions 64 Related and Supporting Industries 64 Firm Strategy, Structure and Rivalry 65 Evaluating Porter's Theory 67 Focus on Managerial Implications: Trade Theories 67 Location 67 First-Mover Advantages 68 Government Policy 68 Foreign Direct Investment in the World Economy 68 Why Foreign Direct Investment? 69 The Pattern of Foreign Direct Investment 71 The Eclectic Paradigm 72 The Stage Models of Internationalisation 73 Born Globals 76 Focus on Managerial Implications 77 The Theory of FDI 77 Government Policy Closing Case: Logitech 80 VII

3 CONTENTS CONTINUED Chapter 3 The Political Economy of Trade and Investment 83 Opening Case: Boeing, Airbus and the World Trade Organization Instruments of Trade Policy Tariffs Subsidies Import Quotas and Voluntary Export Restraints 90 Local Content Requirements 91 Administrative Policies 91 Anti-dumping Policies 92 Why Governments Intervene 93 Political Arguments for Intervention 93 Economic Arguments for Intervention 96 Benefits and Costs of FDI 100 Host-Country Benefits 101 Host- Country Costs 103 Home-Country Benefits 103 Home-Country Costs 104 Government Policy Instruments and FDI 104 Home-Country Policies 105 Host-Country Policies 106 Trade and Investment Liberalisation 108 Trade Liberalisation and the WTO 108 Liberalisation of FDI 114 Regional Economic Integration 115 The Move Towards Regional Economic Integration 115 Levels of Economic Integration 118 The Case for Regional Economic Integration 119 The Case Against Regional Economic Integration 121 Focus on Managerial Implications 121 Barriers and Firm Strategy 122 Policy Implications 122 Opportunities of Regional Economic Integration 123 Threats of Regional Economic Integration Closing Case: Food Exports to India 128 Chapter 4 Foreign Exchange and Finance 131 Opening Case: China's Managed Float The Functions of the Foreign Exchange Market 134 Currency Conversion 134 Insuring Against Foreign Exchange Risk 135 The Nature of the Foreign Exchange Market 140 Determination of the Exchange Rate 141 Prices and Exchange Rates 141 Interest Rates and Exchange Rates 143 Investor Psychology and Bandwagon Effects 145 The International Monetary System 147 Exchange Rate Regimes in Practice 148 Motives and Means for Managing the Foreign Exchange Rate 149 Functions of an International Monetary System 151 The Bretton Woods System and the International Monetary Fund 152 The Demise of the Bretton Woods System 154 The Floating Exchange Rate Regimes of Australia and New Zealand 157 A Role for the IMF 158 Financing Trade 160 Lack of Trust 161 Letter of Credit 164 Draft 165 Bill of Lading 165 A Typical International Trade Transaction 167 Government Assistance 167 Countertrade 168 Focus on Managerial Implications 169 Transaction Exposure 169 Translation Exposure 170 Economic Exposure 170 Reducing Transaction and Translation Exposure 170 Reducing Economic Exposure 171 Other Steps for Managing Foreign Exchange Risk Closing Case: Pricing Driza-Bone Exports 175 VIII

4 .,*'! PART THREE COUNTRY DIFFERENCES 178 Chapter 5 Differences in Culture 179 Opening Case: DMG Shanghai What is Culture? Values and Norms The Determinants of Culture Social Structure Individuals and Groups Social Stratification Religious and Ethical Systems Christianity Islam Hinduism Buddhism Confucianism Superstitions Language Spoken Language Unspoken Language Education Culture and the Workplace Cultural Context Cultural Change Focus on Managerial Implications Cross-Cultural Literacy Culture and Competitive Advantage Closing Case: A Tale of Two Countries Chapter 6 Political and Legal Environments Opening Case: Chavez's Venezuela Political Systems Collectivism and Individualism Democracy and Totalitarianism The Spread of Democracy The New World Order and Global Terrorism 228 Political Ideology, the MNE and Foreign Direct Investment 229 The Radical View 229 The Free Market View 230 Pragmatic Nationalism 231 Shifting Ideology 232 Legal Systems 234 Different Legal Systems 234 Differences in Contract Law 235 Property Rights and Corruption 236 Protection of Intellectual Property 240 Product Safety and Product Liability 242 Competition Law 244 Focus on Managerial Implications 245 Sources and Types of Political Risk 246 Managing Political Risk 248 Bargaining Power Closing Case: Doing Business in Fiji 252 Chapter 7 Economic Environment 257 Opening Case: Opportunities in Economic Differences Economic Endowments Natural and Created 259 Size 260 Geography 260 People 261 Infrastructure and Institutions 262 Productivity and Competitiveness 265 Economic Performance Macroconomic Stability 266 Economic Stability 267 Economic Growth and Fluctuations 268 Inflation 270 External Viability and the Balance of Payments 271 Economic Performance Economic Development 274 IX

5 CONTENTS c Differences in Economic Development Broader Conceptions of Development: Amartya Sen Economic Systems Market Economy Command Economy Mixed Economy Economic Systems and Economic Development Economies in Transition 77)e Spread of Market-Based Systems The Nature of Economic Transformation Focus on Managerial Implications Benefits Costs Risks Overall Attractiveness Closing Case: Indonesia The Troubled Giant Chapter 8 Ethics and Corporate Responsibility Opening Case: Oil for Kickbacks Ethical Issues in International Business Employment Practices Human Rights Environmental Pollution Bribery and Corruption Moral Obligations Ethical Dilemmas Child Labour The Roots of Unethical Behaviour Personal Ethics Decision-Making Processes Organisation Culture Unrealistic Performance Expectations Corporate Governance and Leadership Philosophical Approaches to Ethics 324 The Friedman Doctrine 324 Cultural Relativism 326 Righteous Moralism 327 Naive Immoralism 328 Utilitarian and Kantian Ethics 329 Rights Theories 330 Justice Theories 331 Ethical Decision-Making 332 Decision-Making Processes 334 of Managerial A ctions Closing Case: The Qantas Takeover Bid: Private Equity, Ethics and Corporate Responsibility 339 Chapter 9 Country Market Analysis 343 Opening Case: Tale of Two Dogs Foreign Direct Investment 346 The Shift to Services 346 Gross Fixed Capital Formation 348 The Promise and Pitfalls of Exporting 349 Improving Export Performance 350 An International Comparison 350 Export Promotion Agencies 351 Export Credit Insurance 353 Utilising Export Management Companies 354 Export Strategy 354 Basic Entry Decisions 356 Which Foreign Markets? 356 Macroeconomic Review 357 Timing of Entry 358 Scale of Entry and Strategic Commitments Closing Case: Barbeque Bonanza 364

6 PART FOUR COMPETING IN THE GLOBAL MARKETPLACE 368 Chapter 10 The Strategy of International Business 369 Opening Case: MTV's Global Strategy Strategy and the Firm Value Creation Strategic Positioning Operations: The Firm as a Value Chain Organisation: The Implementation of Strategy In Sum: Strategic Fit Global Expansion, Profitability and Profit Growth Expanding the Market: Leveraging Products and Competencies Location Economies Experience Effects Leveraging Subsidiary Skills Cost Pressures and Pressures for Local Responsiveness Pressures for Cost Reductions Pressures for Local Responsiveness Differences in Distribution Channels Host Government Demands Choosing a Strategy Globalisation Standardisation Strategy Localisation Strategy Transnational Strategy International Strategy The Evolution of Strategy Strategic Alliances The Advantages of Strategic Alliances The Disadvantages of Strategic Alliances Making Alliances Work Closing Case: IKEA Chapter 11 Entering Foreign Markets 409 Opening Case: JCB in India Entry Modes 411 Exporting 411 Importing 415 Turnkey Projects 415 Licensing 416 Franchising 418 Joint Ventures 419 Wholly Owned Subsidiaries 421 Selecting an Entry Mode 422 Core Competencies and Entry Mode 422 Pressures for Cost Reductions and Entry Mode 423 Greenfield Venture versus Acquisition 424 Pros and Cons of Acquisitions 424 Pros and Cons of Greenfield Ventures 427 Greenfield or Acquisition? 427 Countertrade 428 The Incidence of Countertrade 428 Types of Countertrade 429 The Pros and Cons of Countertrade Closing Case: Tesco Goes Global 432 Chapter 12 International Marketing and R&D 435 Opening Case: Levi Strauss Goes Local The Globalisation of Markets and Brands 437 Market Segmentation 439 Product Attributes 441 Cultural Differences 441 Economic Development 442 Product and Technical Standards 443 Distribution Strategy 443 Differences Between Countries 444 Choosing a Distribution Strategy 447 xi

7 CONTENTS CON Communication Strategy Barriers to International Push Versus Pull Strategies Global Advertising Pricing Strategy Strategic Pricing Predatory Pricing Regulatory Influences on Prices Configuring the Marketing Mix New Product Development The Location of R&D Communication Integrating R&D, Marketing and Production Cross-Functional Teams Building Global R&D Capabilities Closing Case: Kodak in Russia Chapter 13 International Production, Outsourcing and Logistics 473 Opening Case: Li & Fung Limited Strategy, Production and Logistics 475 Whereto Produce 478 Country Factors 478 Technological Factors 481 Product Factors 485 Locating Production Facilities 485 The Strategic Role of Foreign Factories 487 Outsourcing Production: Make-or-Buy Decisions 488 The Advantages of Make 491 The Advantages of Buy 493 Trade-offs 495 Strategic Alliances with Suppliers 496 Managing a Global Supply Chain 497 The Role of Just-in-Time Inventory 499 The Role of Information Technology and the Internet 500 Closing Case: Sustaining Competitive Advantage at Dell Chapter 14 International Human Resource Management Opening Case: XCO China The Strategic Role of HRM Staffing Policy Types of Staffing Policy Expatriate Managers Training and Management Development Training for Expatriate Managers Repatriation of Expatriates 524 Management Development and Strategy 525 Performance Appraisal 526 Performance Appraisal Problems 526 Guidelines for Performance Appraisal 527 Compensation 527 National Differences in Compensation 527 Expatriate Pay 528 International Labour Relations 532 The Concerns of Organised Labour 532 Strategy of Organised Labour 533 Approaches to Labour Relations Closing Case: Fisher & Paykel Appliances: A Thailand Adventure 537 Glossary 540 Endnotes 550 Index 578 XII