chapter seven Natural Resources and Environmental Sustainability McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc All rights reserved Learning Objectives Describe the role of location, topography, climate, and natural resources as factor conditions in Porter’s diamond model Explain how surface features contribute to economic, cultural, political, and social differences among nations and among regions of a single country Comprehend the importance of inland waterways and outlets to the sea Recognize that climate exerts a broad influence on business Understand the options available for nonrenewable and renewable energy sources Explain how factor conditions can impact innovation Describe environmental sustainability and its characteristics Draw on the stakeholder theory as a framework for environmental sustainability 7-3 Why Switzerland Makes Watches • Mostly mountainous • Close to populated lowlands of Western Europe • Transportation across mountains expensive • Has no mineral resources 7-4 Natural Resources Location • Topography • Climate • Sources of Energy • Non-fuel Minerals • Environmental sustainability 7-5 Location Political Relationships Austria took advantage of its location to Increase trade with the East Become the principal financial intermediary between Western and Eastern Europe Strengthen its role as the regional headquarters for international businesses operating in Eastern Europe Passive processing 7-6 Trade Relationships Geographical proximity Often the major reason for trade between nations Delivery faster, freight costs lower Major factor in formation of trade groups such as EU, EFTA, and NAFTA 7-7 Topography The surface features of a region Differences in topography may require products to be altered Cake mixes Internal combustion engines Includes Mountains and Plains Deserts and Tropical Forests Bodies of Water 7-8 Mountains and Plains Mountains Divide Markets in Spain Switzerland China Colombia Population Concentration Mountains also create concentrations of population 7-9 Deserts and Tropical Plains Deserts and Tropical Forests Separate markets Increase the cost of transportation Create concentration s of population 7-10 Bodies of Water • Attracts people and facilitates transportation • Inland waterways – Provide inexpensive access to markets – Rhine Waterway • Main transportation artery of Europe • Carries a greater volume of goods than the combined railways that run parallel to it 7-13 Bodies of Water Other Significant Waterways The Amazon River in South America The Tigris-Euphrates (Iraq), the Ganges (India), and the Indus (India) Rivers is Asia The Great Lakes St Lawrence and the Mississippi River in the United States 7-14 Outlets to the Sea • Permit low-cost transportation of goods and people from a country’s coast to its interior • Africa has 14 of world’s landlocked developing countries – Must construct costly, long truck routes and extensive feeder networks – Port countries exert considerable political influence 7-15 Climate Climate (temperature, precipitation, and wind) the most important element of physical forces Sets the limits on what people can both physically and economically • Climate has some influence on economic development • Climate can impede distribution 7-16 Natural Resources Anything supplied by nature on which people depend Principal types of natural resources important to businesspeople include Energy Non-fuel minerals 7-17 Energy • Non – Renewable – Petroleum – Nuclear Power – Coal – Natural Gas • Renewable – Hydroelectric – Solar – Wind – Geothermal – Waves – Tides – Biomass (ethanol) – Ocean thermal energy 7-18 Energy Petroleum Conventional sources - Oil Estimates of reserves change because New discoveries continue to be made in proven fields Governments open up their countries to exploration and production New techniques enable producers to obtain greater output from wells already in operation Automated, less expensive equipment lowers drilling costs 7-19 Energy • The World – Evolution from 1971 to 2003 of world Total Primary Energy Supply* by Fuel (Mtoe) 7-20 Energy Petroleum Unconventional sources Oil sands Located primarily in Athabasca, Alberta, Canada Oil-bearing shale Largest source is in Utah, Colorado, and Wyoming Coal Used primarily in South Africa 7-21 Energy Natural gas Has been fastest growing source of energy Nuclear Power Generates little pollution in the normal process 7-22 Energy Sources of Renewable Energy Of the eight types, hydroelectric has had an extensive application (7% of total energy consumption in the world) – Improved technology has resulted in new support for wind and solar energy – Solar energy fastest-growing energy technology in the world 7-23 Non-fuel Minerals Nearly all of the world’s chrome, manganese, platinum, and vanadium are produced by South Africa and the former Soviet Union 7-24 Sustainable Business • An economic state in which the demands placed upon the environment by people and commerce can be met without reducing capacity of environment for future generations • Three characteristics of sustainable business practices – Limits – Interdependence – Equity in distribution 7-25 Stakeholder Based View Insert Fig 7-16 7-26 The Company in a Societal Context 7-27 ... the cost of transportation Create concentration s of population 7-10 Deserts Australia Continent the size of the U.S but with only 19 million inhabitants Population concentrated Along the. .. and around the state capitals In the southeastern fifth of the nation 7-11 Tropical Forests Tropical Rain Forests Brazilian Amazon basin Occupies one-half of Brazil Four percent of population... artery of Europe • Carries a greater volume of goods than the combined railways that run parallel to it 7-13 Bodies of Water Other Significant Waterways The Amazon River in South America The