International Business: A Managerial Perspective, Ninth Edition
By Ricky W. Griffin and Michael W. Pustay
Contents:
Maps 19
Preface 21
Acknowledgments 28
About the Authors 29
PART 1 The World’s Marketplaces 30
Chapter 1 An Overview of International Business 30
The Business of the FIFA World Cup 31
What Is International Business? 32
■ BRINGING THE WORLD INTO FOCUS: Borders Do Matter 33
Why Study International Business? 33
International Business Activities 35
■ BRINGING THE WORLD INTO FOCUS: The Early Era of International Business 35
Exporting and Importing 36
International Investments 36
Other Forms of International Business Activity 37
The Contemporary Causes of Globalization 38
Strategic Imperatives 40
The Environmental Causes of Globalization 41
Globalization and Emerging Markets 41
■ EMERGING OPPORTUNITIES: Is Globalization Good for Us? 42
An Overview of the Contents of This Book 44
CHAPTER REVIEW 46 • Summary 46 • Questions for Discussion 46
- Building Global Skills 47
■ CLOSING CASE: Demography Is Destiny 47
Endnotes 50
Chapter 2 Global Marketplaces and Business Centers 52
The Northwest Passage 53
The Marketplaces of North America 54
The United States 54
■ EMERGING OPPORTUNITIES: Classifying Countries by Income Levels 56
Canada 57
Mexico 58
Central America and the Caribbean 58
■ BRINGING THE WORLD INTO FOCUS: The Canals of Commerce 58
The Marketplaces of Western Europe 59
■ BRINGING THE WORLD INTO FOCUS: The EU’s Growth Engine 61
The Marketplaces of Eastern Europe and Central Asia 62
The Marketplaces of Asia 65
Japan 65
Australia and New Zealand 65
The Four Tigers 67
China 69
India 71
Southeast Asian Countries 71
The Marketplaces of Africa and the Middle East 71
Africa 72
Middle East 72
■ EMERGING OPPORTUNITIES: Location, Location, Location 74
The Marketplaces of South America 75
CHAPTER REVIEW 77 • Summary 77 • Questions for Discussion 78 •
Building Global Skills 78
■ CLOSING CASE: Fracturing the Energy Market 79
Endnotes 81
Chapter 3 Legal, Technological, and Political Environments 82
Tiny Islands, Big Trouble 83
The Legal Environment 84
■ E-WORLD: Cyber Privacy 85
Differences in Legal Systems 85
■ VENTURING ABROAD: How Important Is the Rule of Law? 88
Domestically Oriented Laws 89
Laws Directly Affecting International Business Transactions 89
Laws Directed against Foreign Firms 90
The Impacts of MNCs on Host Countries 91
Dispute Resolution in International Business 92
The Technological Environment 94
■ VENTURING ABROAD: Technology Transfer: Does China Play Fair? 95
The Political Environment 98
Political Risk 98
CHAPTER REVIEW 101 • Summary 101 • Questions for Discussion 101 •
Building Global Skills 102
■ CLOSING CASE: Sour Oil, Soured Deal 102
Endnotes 104
Chapter 4 The Role of Culture 106
Bollywood, Hollywood, and Nollywood 107
Characteristics of Culture 108
■ E-WORLD: The Internet, National Competitiveness, and Culture 109
Elements of Culture 109
■ BRINGING THE WORLD INTO FOCUS: Japan’s Demographic and Cultural
Challenges 110
Social Structure 111
Language 112
Communication 116
Religion 118
■ BRINGING THE WORLD INTO FOCUS: Islamic Finance 120
Values and Attitudes 121
Seeing the Forest, Not the Trees 123
Hall’s Low-Context–High-Context Approach 123
The Cultural Cluster Approach 124
Hofstede’s Six Dimensions 126
Social Orientation 126
Power Orientation 128
Uncertainty Orientation 129
Goal Orientation 131
Time Orientation 131
Indulgence-Restraint Orientation 132
International Management and Cultural Differences 133
Understanding New Cultures 133
■ VENTURING ABROAD: Mcdonald’s Fits In 133
CHAPTER REVIEW 134 • Summary 134 • Questions for
Discussion 135 • Building Global Skills 135
■ CLOSING CASE: Quacking Up a Storm of Business 136
Endnotes 137
Chapter 5 Ethics and Social Responsibility in International
Business 140
A Fair Trade for Tea 141
The Nature of Ethics and Social Responsibility in
International Business 142
Ethics in Cross-Cultural and International Contexts 145
How an Organization Treats Its Employees 145
How Employees Treat the Organization 147
How Employees and the Organization Treat Other Economic Agents 147
Managing Ethical Behavior across Borders 148
Guidelines and Codes of Ethics 148
■ VENTURING ABROAD: Paying the Price? 149
Ethics Training 149
Organizational Practices and the Corporate Culture 150
Corporate Social Responsibility in Cross-Cultural and International
Contexts 151
The Economic Mission 151
Sustainability and the Natural Environment 151
■ PEOPLE, PLANET, AND PROFITS: Lions and Tigers and Bears, Oh My! 152
General Social Welfare 153
Managing Social Responsibility across Borders 155
Approaches to Social Responsibility 155
Managing Compliance 156
■ PEOPLE, PLANET, AND PROFITS: E-Waste 157
Informal Dimensions of Social Responsibility 158
Evaluating Social Responsibility 159
Difficulties of Managing CSR across Borders 160
The Anglo-Saxon Approach 160
The Asian Approach 160
The Continental European Approach 160
Regulating International Ethics and Social Responsibility 161
■ EMERGING OPPORTUNITIES: Conflict Diamonds 162
CHAPTER REVIEW 163 • Summary 163 • Questions for
Discussion 163 • Building Global Skills 164
■ CLOSING CASE: Rana Plaza 164
Endnotes 166
■ PART 1: CLOSING CASES: A Pipeline of Good Intentions 168
The Oil Curse 170
PART 2 The International Environment 172
Chapter 6 International Trade and Investment 172
Trade is Blossoming 173
International Trade and the World Economy 174
Classical Country-Based Trade Theories 175
Mercantilism 176
Absolute Advantage 176
Comparative Advantage 177
Comparative Advantage with Money 178
■ BRINGING THE WORLD INTO FOCUS: The Lincoln Fallacy 179
Relative Factor Endowments 180
Modern Firm-Based Trade Theories 183
Product Life Cycle Theory 183
Country Similarity Theory 185
New Trade Theory 185
Porter’s Theory of National Competitive Advantage 187
■ VENTURING ABROAD: Birds of a Feather Flock Together 189
An Overview of International Investment 189
Types of International Investments 189
■ VENTURING ABROAD: The New Player in Global Capital Markets: Sovereign
Wealth Funds 191
The Growth of FDI 192
FDI and the United States 192
International Investment Theories 193
Ownership Advantages 194
Internalization Theory 194
Dunning’s Eclectic Theory 194
Factors Influencing FDI 195
Supply Factors 195
Demand Factors 196
Political Factors 197
CHAPTER REVIEW 197 • Summary 197 • Questions for
Discussion 198 • Building Global Skills 198
■ CLOSING CASE: The Growing Trade in Growing Grapes 199
Endnotes 201
Chapter 7 The International Monetary System and the Balance of
Payments 202
It ain’t Necessarily so 203
History of the International Monetary System 204
The Gold Standard 204
The Collapse of the Gold Standard 205
The Bretton Woods Era 207
The End of the Bretton Woods System 210
Performance of the International Monetary System since 1971 211
■ BRINGING THE WORLD INTO FOCUS: Fixed Versus Flexible Exchange Rates 213
■ BRINGING THE WORLD INTO FOCUS: Should Bretton Woods Be Restored? 215
The BOP Accounting System 216
The Major Components of the BOP Accounting System 217
■ BRINGING THE WORLD INTO FOCUS: Ben Franklin, World Traveler 221
The U.S. BOP in 2017 222
Defining BOP Surpluses and Deficits 224
CHAPTER REVIEW 226 • Summary 226 • Questions for
Discussion 226 • Building Global Skills 227
■ CLOSING CASE: Recent U.S. BOP Performance: Is the Sky Falling? 228
Endnotes 229
Chapter 8 Foreign Exchange and International Financial Markets 230
The Dutch Disease 231
The Economics of Foreign Exchange 232
■ BRINGING THE WORLD INTO FOCUS: A Brief Hint 234
The Structure of the Foreign-Exchange Market 235
The Role of Banks 235
Spot and Forward Markets 238
Arbitrage and the Currency Market 240
■ BRINGING THE WORLD INTO FOCUS: The Big Mac Index 242
The International Capital Market 246
Major International Banks 246
■ VENTURING ABROAD: The Carry Trade 246
The Eurocurrency Market 248
The International Bond Market 248
Global Equity Markets 249
Offshore Financial Centers 250
CHAPTER REVIEW 251 • Summary 251 • Questions for
Discussion 251 • Building Global Skills 252
■ CLOSING CASE: What Is Next for Chinese Manufacturing? 252
Endnotes 253
Chapter 9 Formulation of National Trade Policies 254
Say Cheese, Please 255
Rationales for Trade Intervention 256
Industry-Level Arguments 256
National Trade Policies 260
Barriers to International Trade 263
Tariffs 263
■ VENTURING ABROAD: Toyota’s Politics Is Local 264
Nontariff Barriers 265
■ BRINGING THE WORLD INTO FOCUS: The Fight Over Rare Earths 269
Promotion of International Trade 271
Subsidies 271
Foreign Trade Zones 272
■ PEOPLE, PLANET, AND PROFITS: Cotton Subsidies and World Poverty 273
Export Financing Programs 274
Controlling Unfair Trade Practices 274
Countervailing Duties 275
Antidumping Regulations 275
Should Countries Enforce Their Unfair Trade Practice Laws? 276
Safeguards 276
CHAPTER REVIEW 277 • Summary 277 • Questions for
Discussion 277 • Building Global Skills 278
■ CLOSING CASE: Which Way for Huawei? 278
Endnotes 280
Chapter 10 International Cooperation Among Nations 282
Trade and Prosperity: The Case of Mexico 283
The General Agreements on Tariffs and Trade and the World Trade
Organization 284
The Role of the General Agreement on Tariffs and Trade 284
■ PEOPLE, PLANET, AND PROFITS: Protecting Endangered Species 285
■ BRINGING THE WORLD INTO FOCUS: Most Nations are Favored 286
The World Trade Organization 287
Regional Economic Integration 289
Forms of Economic Integration 289
The Impact of Economic Integration on Firms 290
The European Union 291
■ BRINGING THE WORLD INTO FOCUS: How do you Unscramble
an Omelette? 293
Governing the EU 294
The Struggle to Create a Common Market 298
■ VENTURING ABROAD: Lobbying the European Union 299
From Common Market to European Union 299
■ BRINGING THE WORLD INTO FOCUS: Rodrik’s Globalization Trilemma 303
Other Regional Trading Blocs 304
The North American Free Trade Agreement 304
Other Free Trade Agreements in the Americas 304
Trade Arrangements in the Asia-Pacific Region 307
■ BRINGING THE WORLD INTO FOCUS: One Belt, One Road 309
African Initiatives 310
CHAPTER REVIEW 311 • Summary 311 • Questions for
Discussion 312 • Building Global Skills 312
■ CLOSING CASE: The European Union’s Challenges 312
Endnotes 315
■ PART 2: CLOSING CASES: Twenty-First Century Pirates 316
Jumbo Battle over Jumbo Jets 317
Green Energy and Free Trade 318
PART 3 Managing International Business 322
Chapter 11 International Strategic Management 322
Global Mickey 323
The Challenges of International Strategic Management 324
■ EMERGING OPPORTUNITIES: How Does A Japanese Firm Compete In China? . . .
Act More American 327
Strategic Alternatives 328
■ VENTURING ABROAD: Master of the Furniture Universe 330
Components of an International Strategy 332
Distinctive Competence 332
Scope of Operations 332
Resource Deployment 333
Synergy 333
Developing International Strategies 334
Mission Statement 334
Environmental Scanning and the SWOT Analysis 334
Strategic Goals 336
Tactics 337
Control Framework 337
■ E-WORLD: Nokia: No Longer King of the Hill 338
Levels of International Strategy 339
Corporate Strategy 339
Business Strategy 341
Functional Strategies 342
CHAPTER REVIEW 343 • Summary 343 • Questions for
Discussion 344 • Building Global Skills 344
■ CLOSING CASE: The House of Tata 345
Endnotes 347
Chapter 12 Strategies for Analyzing and Entering Foreign Markets 348
The Business of Luxury 349
Foreign Market Analysis 350
Assessing Alternative Foreign Markets 350
■ EMERGING OPPORTUNITIES: The Bottom of the Pyramid 352
Evaluating Costs, Benefits, and Risks 353
Choosing a Mode of Entry 354
Exporting to Foreign Markets 357
Forms of Exporting 359
Additional Considerations 361
■ EMERGING OPPORTUNITIES: It is Important to know Your Importance 362
Export Intermediaries 363
International Licensing 364
Basic Issues in International Licensing 366
Advantages and Disadvantages of International Licensing 367
International Franchising 368
Basic Issues in International Franchising 368
Advantages and Disadvantages of International Franchising 369
Specialized Entry Modes for International Business 370
Contract Manufacturing 370
Management Contract 370
Turnkey Project 370
■ EMERGING OPPORTUNITIES: Business Process Outsourcing 371
Foreign Direct Investment 372
The Greenfield Strategy 372
The Acquisition Strategy 373
Joint Ventures 373
CHAPTER REVIEW 374 • Summary 374 • Questions for
Discussion 375 • Building Global Skills 375
■ CLOSING CASE: Whirlpool: A Global Vortex 376
Endnotes 378
Chapter 13 International Strategic Alliances 380
The Hanseatic League 381
International Corporate Cooperation 382
Benefits of Strategic Alliances 383
Ease of Market Entry 384
Shared Risk 384
Shared Knowledge and Expertise 385
Synergy and Competitive Advantage 385
Scope of Strategic Alliances 386
Comprehensive Alliances 386
Functional Alliances 386
■ VENTURING ABROAD: Sky-High Alliances: Gulf Carriers and
the Global Airline Alliances 388
Implementation of Strategic Alliances 390
Selection of Partners 390
Form of Ownership 391
■ VENTURING ABROAD: NASA takes Google into Space 391
■ PEOPLE, PLANET, AND PROFITS: Alliances for Good 392
Joint Management Considerations 393
Pitfalls of Strategic Alliances 395
Incompatibility of Partners 395
■ EMERGING OPPORTUNITIES: Xi’s in Charge 396
Access to Information 397
Conflicts over Distributing Earnings 397
Loss of Autonomy 397
Changing Circumstances 398
CHAPTER REVIEW 398 • Summary 398 • Questions for
Discussion 399 • Building Global Skills 399
■ CLOSING CASE: Look Before You Leap 400
Endnotes 401
Chapter 14 International Organization Design and Control 404
Alshaya’s Matrix Design 405
The Nature of International Organization Design 406
Global Organization Designs 407
Global Product Design 408
Global Area Design 409
Global Functional Design 410
Global Customer Design 410
Global Matrix Design 412
Hybrid Global Designs 413
Related Issues in Global Organization Design 415
Centralization versus Decentralization 415
Role of Subsidiary Boards of Directors 415
■ BRINGING THE WORLD INTO FOCUS: Lenovo Spreads Its Global Wings 416
Coordination in the Global Organization 417
The Control Function in International Business 418
Strategic Control 418
Organizational Control 420
Operations Control 423
Managing the Control Function in International Business 423
Establishing International Control Systems 423
■ PEOPLE, PLANET, AND PROFITS: Toward Zero Waste? 424
Essential Control Techniques 426
Behavioral Aspects of International Control 428
CHAPTER REVIEW 430 • Summary 430 • Questions for
Discussion 430 • Building Global Skills 431
■ CLOSING CASE: Mining a New Organization Design 431
Endnotes 432
Chapter 15 Leadership and Employee Behavior in International
Business 434
BP’s Dirty Reputation 435
Individual Behavior in International Business 436
Personality Differences across Cultures 436
Attitudes across Cultures 439
Perception across Cultures 440
Stress across Cultures 441
■ BRINGING THE WORLD INTO FOCUS: Stressing Out in the Call Centers 441
Motivation in International Business 442
Needs and Values across Cultures 442
Motivational Processes across Cultures 443
Need-Based Models across Cultures 443
Process-Based Models across Cultures 444
The Reinforcement Model across Cultures 445
Leadership in International Business 445
Contemporary Leadership Theory 445
The GLOBE Leadership Project 448
Decision Making in International Business 449
Models of Decision Making 449
The Normative Model across Cultures 450
The Descriptive Model across Cultures 451
Groups and Teams in International Business 452
The Nature of Group Dynamics 452
■ VENTURING ABROAD: Mixing and Matching in a Joint Venture 452
Managing Cross-Cultural Teams 453
CHAPTER REVIEW 454 • Summary 454 • Questions for
Discussion 455 • Building Global Skills 455
■ CLOSING CASE: Leadership Issues At Toyota 455
Endnotes 457
■ PART 3: CLOSING CASES: Reinventing Nissan 459
Unilever Matches Strategy and Structure 461
The European Cereal Wars 463
PART 4 Managing International Business Operations 464
Chapter 16 International Marketing 464
Conquering With Stalls 465
International Marketing Management 466
International Marketing and Business Strategies 466
The Marketing Mix 468
■ EMERGING OPPORTUNITIES: Pretty Garlic 469
Standardization versus Customization 469
Product Policy 472
Standardized Products or Customized Products? 473
Legal Forces 473
Cultural Influences 473
■ PEOPLE, PLANET, AND PROFITS: Milking Coconuts for Fun and Profit 474
Economic Factors 475
Brand Names 475
Pricing Issues and Decisions 476
Pricing Policies 476
Market Pricing 477
Promotion Issues and Decisions 479
Advertising 479
■ VENTURING ABROAD: Putting the Greek into Yogurt 480
Personal Selling 481
■ E-WORLD: ¿Qué Pasa in the Ad Agency? 482
Sales Promotion 483
Public Relations 483
Distribution Issues and Decisions 484
International Distribution 484
Channels of Distribution 485
CHAPTER REVIEW 488 • Summary 488 • Questions for
Discussion 488 • Building Global Skills 489
■ CLOSING CASE: Novica Opens Doors Across National Boundaries 489
Endnotes 490
Chapter 17 International Operations Management 492
Racing To Market 493
The Nature of International Operations Management 494
The Strategic Context of International Operations Management 495
■ PEOPLE, PLANET, AND PROFITS: Cooking up What’s Good for the World 496
Complexities of International Operations Management 496
Production Management 497
Supply Chain Management and Vertical Integration 497
Location Decisions 501
■ BRINGING THE WORLD INTO FOCUS: Unileveraging Their Strengths 501
International Logistics and Materials Management 504
■ BRINGING THE WORLD INTO FOCUS: A Stitch in Time: H&M 505
International Service Operations 507
Characteristics of International Services 507
The Role of Government in International Services Trade 508
Managing Service Operations 508
Managing Productivity in International Business 509
Managing Quality in International Business 510
Managing Information in International Business 512
CHAPTER REVIEW 513 • Summary 513 • Questions for
Discussion 514 • Building Global Skills 514
■ CLOSING CASE: From Dried Fish to Folding Phones 515
Endnotes 517
Chapter 18 International Financial Management 518
Singapore Airlines’ Worldwide Financial Management 519
Financial Issues in International Trade 519
Choice of Currency 520
Credit Checking 520
Method of Payment 520
Financing Trade 527
Managing Foreign Exchange Risk 528
Transaction Exposure 528
Translation Exposure 531
Economic Exposure 531
Management of Working Capital 534
Minimizing Working Capital Balances 534
Minimizing Currency Conversion Costs 535
Minimizing Foreign-Exchange Risk 536
International Capital Budgeting 537
Net Present Value 537
Internal Rate of Return 538
Payback Period 538
Sources of International Investment Capital 539
External Sources of Investment Capital 539
Internal Sources of Investment Capital 540
Strategic Use of Transfer Pricing 541
Tax Havens 543
■ EMERGING OPPORTUNITIES: Sun, Sand, and Shells 544
CHAPTER REVIEW 545 • Summary 545 • Questions for
Discussion 546 • Building Global Skills 546
■ CLOSING CASE: Tax Wars 547
Endnotes 549
Chapter 19 International Human Resource Management and Labor
Relations 552
An Emerging Voice for Workers 553
The Nature of International Human Resource Management 554
Strategic Significance of HRM 554
International Managerial Staffing Needs 556
Scope of Internationalization 556
Centralization versus Decentralization of Control 557
Staffing Philosophy 557
■ EMERGING OPPORTUNITIES: Competing with Local Headhunters 558
■ BRINGING THE WORLD INTO FOCUS: Schlumberger Profits from Geocentric Staffing 560
Recruitment and Selection 560
Recruitment of Managers 561
Selection of Managers 562
Expatriation and Repatriation Issues 563
Training and Development 565
Assessing Training Needs 565
Basic Training Methods and Procedures 565
Developing Younger International Managers 566
Performance Appraisal and Compensation 567
Assessing Performance in International Business 567
Determining Compensation in International Business 568
■ EMERGING OPPORTUNITIES: How about Moving to India? 571
Retention and Turnover 572
Human Resource Issues for Nonmanagerial Employees 573
■ VENTURING ABROAD: Who Gets Paid … and Who Doesn’t? 574
Recruitment and Selection 574
Training and Development 575
Compensation and Performance Appraisal 575
Labor Relations 576
Comparative Labor Relations 576
Collective Bargaining 576
Union Influence and Codetermination 577
CHAPTER REVIEW 578 • Summary 578 • Questions for
Discussion 578 • Building Global Skills 579
■ CLOSING CASE: Training for the World 579
Endnotes 580
■ Part 4: CLOSING CASES: The Aramco Advantage 582
The Power of Microfinance: The Grameen Bank 583
The Elephant Bikers 583
Glossary 586
Name Index 599
Company Index 602
Subject Index 606