Challenges and Opportunities in International Business v. 1.0

Table of Contents About the Authors................................................................................................................. 1 Acknowledgements............................................................................................................... 3 Dedications............................................................................................................................. 4 Preface..................................................................................................................................... 5 Chapter 1: Introduction....................................................................................................... 9 What Is International Business?................................................................................................................. 18 Who Is Interested in International Business? ........................................................................................... 23 What Forms Do International Businesses Take?....................................................................................... 28 The Globalization Debate ............................................................................................................................ 32 Ethics and International Business.............................................................................................................. 42 End-of-Chapter Questions and Exercises................................................................................................... 47 Chapter 2: International Trade and Foreign Direct Investment .............................. 50 What Is International Trade Theory? ........................................................................................................ 56 Political and Legal Factors That Impact International Trade ................................................................. 67 Foreign Direct Investment.......................................................................................................................... 82 Tips in Your Entrepreneurial Walkabout Toolkit..................................................................................... 92 End-of-Chapter Questions and Exercises................................................................................................... 94 Chapter 3: Culture and Business...................................................................................... 96 What Is Culture, Anyhow? Values, Customs, and Language.................................................................. 103 What Are the Key Methods Used to Describe Cultures? ........................................................................ 110 Understanding How Culture Impacts Local Business Practices............................................................ 124 Global Business Ethics ............................................................................................................................... 132 Tips in Your Entrepreneurial Walkabout Toolkit................................................................................... 146 End-of-Chapter Questions and Exercises................................................................................................. 150 Additional References ............................................................................................................................... 154 Chapter 4: World Economies........................................................................................... 155 Classifying World Economies.................................................................................................................... 167 Understanding the Developed World ...................................................................................................... 181 Developing World ...................................................................................................................................... 191 Emerging Markets...................................................................................................................................... 207 Tips in Your Entrepreneurial Walkabout Toolkit................................................................................... 230 End-of-Chapter Questions and Exercises................................................................................................. 235 iii Chapter 5: Global and Regional Economic Cooperation and Integration ............. 237 International Economic Cooperation among Nations............................................................................ 248 Regional Economic Integration ................................................................................................................ 257 The United Nations and the Impact on Trade......................................................................................... 280 End-of-Chapter Questions and Exercises................................................................................................. 293 Chapter 6: International Monetary System................................................................. 295 What Is the International Monetary System?......................................................................................... 301 What Is the Role of the IMF and the World Bank?.................................................................................. 321 Understanding How International Monetary Policy, the IMF, and the World Bank Impact Business Practices...................................................................................................................................................... 340 Tips in Your Entrepreneurial Walkabout Toolkit................................................................................... 345 End-of-Chapter Questions and Exercises................................................................................................. 346 Chapter 7: Foreign Exchange and the Global Capital Markets................................ 348 What Do We Mean by Currency and Foreign Exchange?....................................................................... 353 Understanding International Capital Markets ....................................................................................... 364 Venture Capital and the Global Capital Markets.................................................................................... 380 Tips in Your Entrepreneurial Walkabout Toolkit................................................................................... 386 End-of-Chapter Questions and Exercises................................................................................................. 391 Chapter 8: International Expansion and Global Market Opportunity Assessment......................................................................................................................... 393 Global Strategic Choices............................................................................................................................ 400 PESTEL, Globalization, and Importing ..................................................................................................... 410 International-Expansion Entry Modes .................................................................................................... 423 CAGE Analysis............................................................................................................................................. 433 Scenario Planning and Analysis ............................................................................................................... 442 End-of-Chapter Questions and Exercises................................................................................................. 449 Chapter 9: Exporting, Importing, and Global Sourcing............................................ 451 What is Importing and Exporting?........................................................................................................... 456 Countertrade .............................................................................................................................................. 471 Global Sourcing and Its Role in Business................................................................................................. 475 Managing Export and Import ................................................................................................................... 483 What Options Do Companies Have for Export and Import Financing? ................................................491 Tips in Your Walkabout Toolkit ............................................................................................................... 498 End-of-Chapter Questions and Exercises................................................................................................. 502 iv Chapter 10: Strategy and International Business ...................................................... 506 Business and Corporate Strategy ............................................................................................................. 512 Generic Strategies...................................................................................................................................... 519 International Strategy............................................................................................................................... 530 The Five Elements of Strategy .................................................................................................................. 539 Managing the International Business with the P-O-L-C Framework....................................................546 End-of-Chapter Questions and Exercises................................................................................................. 552 Chapter 11: Global Entrepreneurship and Intrapreneurship ................................. 554 Entrepreneurship....................................................................................................................................... 562 What Do Entrepreneurs Do? ..................................................................................................................... 571 Business Entrepreneurship across Borders............................................................................................. 585 From Entrepreneurship to Born-Global Firms........................................................................................ 595 From Entrepreneurship to Intrapreneurship ......................................................................................... 601 End-of-Chapter Questions and Exercises................................................................................................. 609 Chapter 12: Winning through Effective, Global Talent Management.................... 612 The Changing Role of Strategic Human Resources Management in International Business.............620 The Global War for Talent......................................................................................................................... 631 Effective Selection and Placement Strategies......................................................................................... 639 The Roles of Pay Structure and Pay for Performance............................................................................ 649 Tying It All Together—Using the HRM Balanced Scorecard to Gauge and Manage Human Capital, Including Your Own................................................................................................................................... 659 Tips in Your Walkabout Toolkit ............................................................................................................... 667 End-of-Chapter Questions and Exercises................................................................................................. 668 Chapter 13: Harnessing the Engine of Global Innovation ........................................ 671 An Introduction to Research and Development (R&D).......................................................................... 676 Intellectual Property Rights around the Globe....................................................................................... 684 How to Organize and Where to Locate Research and Development Activities ...................................691 Increasing Speed and Effectiveness of International Innovation......................................................... 699 Innovation for the Bottom of the Pyramid ............................................................................................. 706 End-of-Chapter Questions and Exercises................................................................................................. 711 v Chapter 14: Competing Effectively through Global Marketing, Distribution, and Supply-Chain Management............................................................................................. 714 Fundamentals of Global Marketing.......................................................................................................... 720 Critical Decision Points in Global Marketing .......................................................................................... 734 Standardized or Customized Products .................................................................................................... 739 Global Sourcing and Distribution............................................................................................................. 746 Global Production and Supply-Chain Management............................................................................... 753 End-of-Chapter Questions and Exercises................................................................................................. 762 Chapter 15: Understanding the Roles of Finance and Accounting in Global Competitive Advantage.................................................................................................... 764 International Accounting Standards ....................................................................................................... 773 Accounting in International Business...................................................................................................... 778 Fundamentals of Finance .......................................................................................................................... 783 Financial Management in International Business.................................................................................. 794 Global Money Management: Moving Money across Borders ................................................................ 803 End-of-Chapter Questions and Exercises................................................................................................. 810