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International Business

International Business

Simon Collinson | Rajneesh Narula | Alan M. Rugman

(2016)

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Book Details

Abstract

This textbook connects tried-and-tested theory, analytical frameworks, data and case examples to deliver a comprehensive guide to the subject from authors who keep pace with the ongoing developments in both theory and practice.

Table of Contents

Section Title Page Action Price
Cover Cover
Title Page iii
Copyright Page iv
Contents in Brief v
Contents in Detail vi
List of Figures and Tables xv
Preface xviii
Dedication xviii
Acknowledgements xviii
About the Authors xx
Guide to the Case Studies xxiii
Publisher's Acknowledgements xxx
Frameworks for This Book Our Approach to the Study of International Business xxxii
Part One The World of International Business 1
Chapter 1 An Introduction to International Business 3
Objectives of the chapter 3
Introduction 5
What is international business? 5
Globalization 6
The outcomes of globalization 6
Understanding interdependence in globalization 8
Regional integration 9
Mapping globalization 10
Technology and innovation 11
New technologies 12
The knowledge-intensive, multi-technology firm 13
Socio-political developments 13
What are institutions? 14
Institutions and supranational agreements 15
Globalization and liberalization 16
Multinational enterprises 17
Proto-globalization and the MNE in historical context 19
The industrial revolutions and the growth of private firms 20
Foreign direct investment 21
Measuring FDI and MNE activity 22
MNEs before World War II 22
The rise of the modern MNE 23
International business in the modern era 25
1950–90: the rise of the triad 25
1990–2014: the rise of new players and forms of activity 26
Modularization, outsourcing, and value chains 29
The continuing importance of the state-owned enterprise 29
Emerging economy MNEs—significant but exaggerated 30
Dominance of the triad continues 31
Small and medium-sized enterprises 32
The fragmented firm: global value chains and production networks 33
Key points 35
Key terms 36
Notes 36
Bibliography 37
Appendix: The largest importers and exporters 38
Chapter 2 General Frameworks in International Business 40
Objectives of the chapter 40
Active Learning Case 42
Starbucks: a global “coffee culture” 42
Introduction 43
Firm-specific assets/ownership advantages 43
A classification of O advantages 44
Location advantages/country-specific assets 46
A classification of L advantages 47
International Business Strategy in Action 49
US manufacturing: from China to Mexico 49
Internalization advantages 50
The eclectic paradigm: putting it all together 51
Strategic management of MNEs: an introduction 52
Steps in the strategic management process 52
A framework for global strategies: the FSA–CSA matrix 53
The FSA–CSA matrix 54
Why firms become MNEs 56
How do firms engage in international activities? 59
Entry modes 62
Non-equity entry modes 62
Equity entry modes 63
Collaborative agreements/strategic alliances 66
International new ventures and “born global” firms 68
The international activities of SMEs 69
The practical challenges for internationalizing SMEs 70
International Business Strategy in Action 71
Worrying times for Singapore’s SMEs 71
How do SME managers know which markets to enter? 72
Modes of entry and adaptation for success in foreign markets 74
Key points 75
Key term 76
Real Cases xxxvi
Toys “R” Us 76
Tesco at home and abroad 78
Notes 79
Bibliography 81
Appendix: The largest global MNEs 82
Chapter 3 Multinational Enterprises, Innovation, and Competitiveness 90
Objectives of the chapter 90
Active Learning Case 91
GE Healthcare in India: locally driven innovation 91
Introduction 92
Trends in innovation at the firm and country level 93
The resource-based view (RBV) and the VRIO framework 97
Resources and capabilities 97
The VRIO framework 98
Dynamic capabilities 101
Quick learning/incremental learning 101
Integration of new assets/radical learning 102
Modification and transformation of new assets 102
Dynamic capabilities and small firms 102
International Business Strategy in Action 103
Spreadshirt: open innovation 103
Connecting FSAs to CSAs 104
Systems of innovation 105
International dimensions of innovation 107
The location of innovation activities in the MNE 109
International Business Strategy in Action 112
Innovation networks at IBM 112
The innovative MNE as a differentiated network 114
Key points 115
Key terms 115
Real Cases 115
Canon Group 115
R&D at Hewlett-Packard 117
Notes 118
Bibliography 119
Part Two The Environment of International Business 121
Chapter 4 International Politics 123
Objectives of the chapter 123
Active Learning Case 124
How risky is foreign investment in Russia? 124
Introduction 125
Political ideologies and economics 126
Political systems 126
Economic systems 127
Government control of assets 128
Privatization in action 128
International Business Strategy in Action 129
Greece: third (bailout) time lucky 129
Government–business cooperation 130
Japan and EU assistance 130
US competitiveness 131
Economic integration 132
Trade creation and trade diversion 132
Levels of economic integration 133
Economic integration: an overall perspective 134
Ethics, environment, MNEs, and the civil society 135
International Business Strategy in Action 136
Non-governmental organizations and political power 136
The European Union (EU) 138
Other examples of economic integration 141
Economic integration and strategic management 142
Strategic alliances and acquisitions 142
Localization of business operations 143
Key points 145
Key terms 146
Review and discussion questions 146
Real Cases 147
How environmental regulations can be used as trade barriers 147
Embraer versus Bombardier 148
Notes 150
Bibliography 150
Chapter 5 International Culture 152
Objectives of the chapter 152
Active Learning Case 153
Cultures clash as big pharma gets bigger 153
Introduction 154
What is culture? 155
The importance of culture in different business contexts 156
Culture has always been important 158
International Business Strategy in Action 158
McDonald’s 158
National stereotypes and key dimensions of culture 159
Culture at two levels 159
Hofstede’s four dimensions of culture 160
Trompenaars’ seven dimensions of culture 161
The GLOBE project’s nine dimensions of culture 163
Applying the national culture frameworks 164
“The way we do things here”: the implications of cultural differences for organizations and managers 165
Cross-cultural management 168
Organization 168
Leadership 168
Communication 169
The corporate response 169
Multinational organization structures: imperialist or independent? 171
Culture clash in cross-border M&A and joint ventures 172
International Business Strategy in Action 173
The collective culture of the John Lewis Partnership 173
Culture embodied in national institutions 174
France: cultural and social characteristics that create a national distinctiveness 175
Key points 176
Key terms 177
Review and discussion questions 177
Real Cases 178
Do not throw your meishi! 178
Sport can be local and global: Manchester United 179
Notes 180
Bibliography 181
Chapter 6 International Trade 183
Objectives of the chapter 183
Active Learning Case 184
Trade of the triad and China 184
Introduction 185
International trade theory 186
Theory of absolute advantage 186
Theory of comparative advantage 187
Factor endowment theory 189
International product life cycle theory 189
Other important considerations 191
International Business Strategy in Action 192
Microsoft shows the world is not flat 192
Barriers to trade 194
Reasons for trade barriers 194
Commonly used barriers 194
Tariffs 196
International Business Strategy in Action 197
Boeing versus Airbus 197
US trade policy 199
Non-tariff barriers to trade 200
Quotas 200
“Buy national” restrictions 201
Customs valuation 201
Technical barriers 201
Anti-dumping legislation, subsidies, and countervailing duties 201
Agricultural products 202
Export restraints 202
Other economic developments 202
Countertrade 203
Trade in services 203
Free trade zones 204
Key points 205
Key terms 206
Review and discussion questions 206
Real Cases 207
Job losses and offshoring to China 207
Dumping on trade complaints 208
Notes 209
Bibliography 210
Appendix: Balance of payments 211
Chapter 7 International Financial Markets and Institutions 218
Objectives of the chapter 218
Active Learning Case 219
Barclays Bank international financial dealings 219
Introduction 220
Foreign exchange markets 221
Foreign exchange markets in the United States 222
Determination of the exchange rate 227
Purchasing power parity 227
International Fisher effect 228
Combined equilibrium relationships 229
Other factors determining exchange rates 230
Protecting against exchange risk 230
Alternatives to minimize exchange risk 231
International Business Strategy in Action 231
China 2015: the start of the next global economic meltdown? 231
Foreign money and capital markets 235
MNEs and national money markets 236
MNEs and national capital markets 236
Regional money and capital markets 237
The eurocurrency market 237
Eurocurrency interest rates 238
Other market characteristics 239
Criticisms of the euromarkets 239
Eurobonds and euroequities 240
International Business Strategy in Action 241
AngloGold Ashanti 241
The IMF system 242
Unresolved problems with the IMF system 245
MNEs and international financial markets and institutions 246
Key points 246
Key terms 246
Review and discussion questions 247
Real Cases 248
HSBC 248
Rigging LIBOR 249
Notes 250
Bibliography 251
Part Three International Business Strategies 253
Chapter 8 Multinational Strategy 255
Objectives of the chapter 255
Active Learning Case 256
Vodafone and the triad telecom market 256
Introduction 258
Strategic orientations 259
International Business Strategy in Action 261
The Big Four 261
Strategy formulation 262
External environmental assessment 262
Internal environmental assessment 266
Goal setting 270
Strategy implementation 270
Location 271
International Business Strategy in Action 271
Fuji Xerox and Xerox 271
Ownership 272
Functional strategies 274
Control and evaluation 274
Common methods of measurement 275
Key points 277
Key terms 277
Review and discussion questions 277
Real Cases 278
Mountain Equipment Co-op: a small business 278
Benetton 279
Notes 280
Bibliography 282
Appendix: Regional aspects of multinationality and performance 283
Chapter 9 Organizing Strategy 290
Objectives of the chapter 290
Active Learning Case 291
Procter & Gamble 291
Introduction 292
Organization structures 293
Early organization structures 293
International Business Strategy in Action 295
Sanofi-Aventis 295
The international division 296
Global organization structures 297
International Business Strategy in Action 302
Making the matrix work 302
Strategic management and organizing strategy 305
Analysis of key structural variables 305
Coordination 306
Key points 311
Key terms 311
Review and discussion questions 311
Real Cases 312
LVMH: organizing luxury products in the international arena 312
Command Alkon: small but increasingly global 313
Notes 314
Bibliography 315
Chapter 10 Corporate Strategy and National Competitiveness 318
Objectives of the chapter 318
Active Learning Case 319
Worldwide operations and local strategies of ABB 319
Introduction 320
The single diamond 320
Determinants and external variables 321
Critique and evaluation of the model 322
The double diamond 324
Canada and the double diamond 324
International Business Strategy in Action 328
Nokia and Ericsson: moving beyond mobiles 328
Mexico and the double diamond 329
Integration and responsiveness 332
Integration versus national responsiveness 333
International Business Strategy in Action 334
Renewed advantage through vertical integration at Floreal Knitwear 334
Balancing the trade-offs 335
Competitiveness in the triad 338
Key points 341
Key terms 341
Review and discussion questions 342
Real Cases 342
There is no global beer, only local 342
IBM 344
Notes 345
Bibliography 347
Chapter 11 Multinational Enterprises as Responsible Stakeholders 349
Objectives of the chapter 349
Active Learning Case 350
The environment, NGOs, and MNEs 350
Introduction 351
Developing effective strategies 352
Going where the action is 352
International Business Strategy in Action 354
3M 354
International business research frameworks 355
Theories of international business 355
Practical applications of the theory 356
The five partners business network framework 356
Forging new business networks 356
Coping with changing environments 358
Political environment 358
Economic environment 360
The trade and investment framework 362
Environment and MNEs 365
International Business Strategy in Action 365
Is The Body Shop an ethical business? 365
The pattern of MNE responses 368
Key points 370
Key terms 370
Review and discussion questions 371
Real Cases 371
Dell: B2C 371
Maersk Group 372
Notes 375
Bibliography 375
Part Four Functional Area Strategies 379
Chapter 12 Production Strategy 381
Objectives of the chapter 381
Active Learning Case 382
GE production: from Six Sigma to the GE Store 382
Introduction 383
Research, development, and innovation 384
Speed-to-market 386
Generation of goods and services 388
Global sourcing 388
International Business Strategy in Action 389
Gap Inc.: a successful “hollow corporation” 389
Manufacturing of goods 391
International Business Strategy in Action 391
End of an era: the Goodyear plant closure 391
Developing a strong service orientation 396
International logistics 398
Transportation 398
Packaging 400
Storage 401
Different kinds of global production systems 401
Strategic management and production strategy 402
Technology and production design 402
Continuous improvement 403
Alliances and acquisitions 403
Key points 409
Key terms 410
Review and discussion questions 410
Real Cases 411
Flextronics 411
Nike 413
Notes 414
Bibliography 414
Chapter 13 Marketing Strategy 416
Objectives of the chapter 416
Active Learning Case 417
Adidas: promoting a global sports brand 417
Introduction 419
International market assessment 420
Initial screening: basic need and potential 420
Second screening: financial and economic conditions 420
Third screening: political and legal forces 421
Fourth screening: socio-cultural forces 421
Fifth screening: competitive environment 422
Final selection 422
Product strategies 423
Little or no modification 423
Moderate to high modification 423
International Business Strategy in Action 426
Weeby buys Tappy 426
Promotion 427
Nature of the product 427
Advertising 428
International Business Strategy in Action 428
IKEA in international markets 428
Personal selling 430
Pricing 431
Government controls 431
Market diversity 431
Currency fluctuations 432
Price escalation forces 432
Place 433
Different distribution systems 433
Choosing the best distribution system 434
Strategic management and marketing strategy 434
Ongoing market assessment 434
Internet marketing and “open innovation” 438
Key points 439
Key terms 440
Review and discussion questions 440
Real Cases 441
Bang & Olufsen 441
Mirum—never lose your sense of wonder! 443
Notes 444
Bibliography 444
Chapter 14 Human Resource Management Strategy 447
Objectives of the chapter 447
Active Learning Case 448
The Coca-Cola Company thinks local 448
Introduction 449
Selection and repatriation 450
International screening criteria and selection procedures 450
Repatriation of expats 452
Training and development 454
Types of training 454
International Business Strategy in Action 455
The glass ceiling 455
Compensation 457
Common elements in an international compensation package 457
Compensation trends and comparisons 459
Labor relations 460
Labor relations practices 462
International Business Strategy in Action 463
Primark: putting global stakeholders first 463
Industrial democracy 465
Industrial democracy in action 465
Strategic management and IHRM strategies 466
Language training 466
Cultural adaptation 468
Competitive compensation 468
Specially designed HRM programs 469
Key points 470
Key terms 471
Review and discussion questions 471
Real Cases 472
Offshoring to India 472
Executive search firms 473
Notes 474
Bibliography 475
Chapter 15 Political Risk and Negotiation Strategy 477
Objectives of the chapter 477
Active Learning Case 478
Nestlé in Nigeria 478
Introduction 479
Generic PEST analysis 479
Political risk 481
Deregulation and political risk 482
The nature of political risk 483
Sources of political risk 484
Country analysis and political risk assessment 485
Online risk information resources 485
Quantifying risk vulnerability 486
Accounting for country risk 489
Negotiation strategies 490
Behavioral characteristics of the participants in negotiations 492
International Business Strategy in Action 493
Political risk for De Beers 493
International Business Strategy in Action 494
Intel effect 494
Transparency and corruption: politically sensitive political risk 497
Strategic management and political risk 500
Use of integrative and protective/defensive techniques 500
Key points 503
Key terms 504
Review and discussion questions 504
Real Cases 505
Yukos and the Russian oligarchs 505
Problems with ports 506
Notes 508
Bibliography 509
www resources 510
Chapter 16 International Financial Management 511
Objectives of the chapter 511
Active Learning Case 512
Financial transparency at Siemens 512
Introduction 513
Determining parent–subsidiary relationships 515
Polycentric solution 515
Ethnocentric solution 515
Geocentric solution 516
Managing global cash flows 516
Internal funds flows 516
Funds positioning techniques 517
Multilateral netting 520
International Business Strategy in Action 522
Worldwide tax havens 522
Managing cash 524
International Business Strategy in Action 525
Sovereign wealth funds 525
Exchange risk management 527
Transaction risk 527
Translation risk 527
Economic risk 528
An example of exchange risk management 529
Developing forecasting and reporting systems 531
Capital budgeting in the MNE 532
Use of NPV 534
Institutional features 535
International financing in the MNE 536
Financial structure 537
Control: identifying objectives, evaluating affiliate performance, and making performance consistent with goals 538
Strategic international finance 539
Establishing overseas operations 539
Reducing financial risk 540
Key points 540
Key terms 541
Review and discussion questions 541
Real Cases 542
Skandia 542
Ford and Volvo 543
Notes 545
Bibliography 545
Part Five Regional Strategies 547
Chapter 17 European Union 549
Objectives of the chapter 549
Active Learning Case 550
The future is Orange 550
The EU environment 551
Emergence of a Single European Market 553
The competitive status of the EU 556
Conducting a strategic analysis 559
Using competitive intelligence 559
International Business Strategy in Action 560
VW scandal 560
Evaluating locations 562
Strategy issues 562
Overall strategic analysis for the EU 564
Exporting 565
Strategic acquisitions and alliances 567
Marketing considerations 568
International Business Strategy in Action 568
Deutsche Bahn: more than a railroad 568
Manufacturing considerations 570
Management considerations 572
Barriers to EU market access 573
Key points 574
Key terms 575
Review and discussion questions 575
Real Cases 576
Accor budget hotels 576
Carrefour 578
Notes 579
Bibliography 580
Chapter 18 Japan 582
Objectives of the chapter 582
Active Learning Case 583
Doing business in Japan 583
Introduction 585
Political, social, and cultural characteristics 585
A traditionally strong government role in the economy 585
Distinctive cultural characteristics 586
Economic characteristics 587
Japan and China: the new Asian powerhouse? 592
Business characteristics 593
Manufacturing strengths 593
Strong applied R&D 593
Keiretsu 594
International Business Strategy in Action 597
Kirin Beer goes international 597
Distribution, retailing, and customer orientation 598
Japanese corporations 598
A changing nation 601
Restructuring capital markets 601
Deregulation, increased M&A, and inward FDI 602
International Business Strategy in Action 604
Wal-Mart takes Seiyu 604
Restructuring corporations 605
The decline of manufacturing and distribution keiretsu 606
The growth of outward FDI and offshore manufacturing 606
The decline of lifetime employment and changing HRM practices 607
Diversification strategies 607
Conclusions 608
Key points 609
Key terms 610
Review and discussion questions 610
Real Cases 610
Renault and Nissan: no pain, no gain 610
Sony: diversifying into the automobile industry? 613
Notes 615
Bibliography 616
www resources 618
Chapter 19 North America 619
Objectives of the chapter 619
Active Learning Case 620
NAFTA 620
Introduction 622
Canada 622
Canada’s economy 623
Differences in the business environment 624
International Business Strategy in Action 625
Bombardier 625
Canada’s multinationals 630
Multilateral agreement on investment (MAI) 631
Business opportunities in Canada 632
Franchising 634
Mexico 634
Mexico’s economy 634
Mexico and NAFTA 635
Regional trade agreements 636
Doing business in Mexico 636
International Business Strategy in Action 637
Mexico and NAFTA 637
Key points 641
Key terms 642
Review and discussion questions 642
Real Cases 643
Jumex of Mexico 643
GlaxoSmithKline in the United States 644
Notes 645
Bibliography 646
Chapter 20 Emerging Economies 648
Objectives of the chapter 648
Active Learning Case 649
Acer Taiwan goes international 649
Introduction 650
Triad firms and emerging economy firms: why the mutual interest? 651
An overview of emerging economies, by region 652
Asia–Pacific and the Middle East 655
Central and eastern Europe 659
Latin America and the Caribbean 659
Africa 660
International Business Strategy in Action 661
From Oserian to Tesco: the Kenyan cut flower industry 661
Shifting patterns of comparative and competitive advantage 663
Flying Geese model 664
Emerging economies as sources of innovation 667
Market access to the triad 669
International Business Strategy in Action 669
Korean chaebols: Hyundai and Samsung 669
Key points 672
Key terms 673
Review and discussion questions 673
Real Cases 673
The Indian IT, software, and services industry 673
Bumrungrad International in Thailand 676
Notes 678
Bibliography 679
www resources 681
Chapter 21 China 682
Objectives of the chapter 682
Active Learning Case 683
Oxford Instruments in China 683
Introduction 684
Unprecedented scale, scope, and speed of growth 685
The role of government 688
MNE investment into China 689
International Business Strategy in Action 690
Airbus in China 690
Foreign R&D investment 693
Getting into China 695
Outward investment and the new multinationals from China 698
International Business Strategy in Action 701
Haier goes global 701
Key points 704
Key terms 704
Review and discussion questions 705
Real Cases 705
Citigroup in China 705
Nanjing Auto makes the MG 707
Notes 708
Bibliography 710
www resources 712
Glossary 713
A 713
B 713
C 713
D 715
E 715
F 716
G 717
H 717
I 717
J 718
K 718
L 718
M 719
N 719
O 720
P 720
Q 720
R 720
S 721
T 721
U 722
V 722
W 722
Z 722
Index 723
A 723
B 724
C 725
D 729
E 730
F 733
G 734
H 736
I 737
J 739
K 740
L 740
M 742
N 744
O 745
P 746
Q 748
R 748
S 750
T 752
U 753
V 754
W 755
X 755
Y 755
Z 755