hiL10544_fm_i-xxvi.indd Page i 1/11/07 8:11:05 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm Global Business Today hiL10544_fm_i-xxvi.indd Page ii 1/11/07 8:11:05 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm hiL10544_fm_i-xxvi.indd Page iii 1/11/07 8:11:05 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm fifth edition Global Business Today Charles W L Hill University of Washington Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St Louis Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto hiL10544_fm_i-xxvi.indd Page iv 1/22/07 9:41:01 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm GLOBAL BUSINESS TODAY Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020 Copyright © 2008 by The McGraw-Hill Companies, Inc All rights reserved No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper DOW/DOW ISBN 978-0-07-321054-4 MHID 0-07-321054-4 Editorial director: John E Biernat Development editor I : Kirsten Guidero Associate marketing manager : Margaret A Beamer Media producer: Lynn Bluhm Project manager: Jim Labeots Senior production spervisor: Carol Bielski Senior designer: Kami Carter Photo research coordinator: Kathy Shive Photo researcher: Teri Stratford Senior media project manager: Susan Lombardi Cover design: Mary Kazak Interior design: Mary Kazak Typeface: 10/12 Janson Text Roman Compositor: Techbooks Printer: R R Donnelley Library of Congress Cataloging-in-Publication Data Hill, Charles W L Global business today / Charles W L Hill — 5th ed p cm Includes index ISBN-13: 978-0-07-321054-4 (alk paper) ISBN-10: 0-07-321054-4 (alk paper) International business enterprises—Management International trade Investments, Foreign Capital market I Title HD62.4.H548 2008 658Ј.049—dc22 2006100722 www.mhhe.com hiL10544_fm_i-xxvi.indd Page v 1/11/07 8:11:05 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm r Fo J e un and Mike Hill, my pa ren ts v hiL10544_fm_i-xxvi.indd Page vi 1/11/07 8:11:05 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm about the author Charles W L Hill is the Hughes M Blake Professor of International Business at the School of Business, University of Washington Professor Hill received his PhD in industrial organization economics in 1983 from the University of Manchester’s Institute of Science and Technology (UMIST) in Great Britain In addition to his position at the University of Washington, he has served on the faculties of UMIST, Texas A&M University, and Michigan State University Professor Hill has published more than 40 articles in peer-reviewed academic journals He has also published four college textbooks, one on strategic management, one on principles of management, and the other two on international business (one of which you are now holding) He serves on the editorial boards of several academic journals and previously served as consulting editor at the Academy of Management Review Professor Hill teaches in the MBA and executive MBA programs at the University of Washington and has received awards for teaching excellence in both programs He has also taught in several customized executive programs He lives in Seattle with his wife Lane and children vi hiL10544_fm_i-xxvi.indd Page i 1/11/07 8:11:05 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm Global Business Today hiL10544_fm_i-xxvi.indd Page vii 1/11/07 8:11:06 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm brief contents PREFACE xv PART ONE Introduction and Overview Chapter One PART TWO Globalization Country Differences 40 Chapter Two National Differences in Political Economy 41 Chapter Three Differences in Culture 87 Chapter Four Ethics in International Business 123 PART THREE Cross-Border Trade and Investment 154 PART FOUR PART FIVE Chapter Five International Trade Theory 155 Chapter Six The Political Economy of International Trade 191 Chapter Seven Foreign Director Investment 227 Chapter Eight Regional Economic Integration 261 Global Money System 294 Chapter Nine The Foreign Exchange Market 295 Chapter Ten The International Monetary System 325 Competing in a Global Marketplace 358 Chapter Eleven The Strategy of International Business 359 Chapter Twelve Entering Foreign Markets 397 Chapter Thirteen Exporting, Importing, and Countertrade 423 Chapter Fourteen Global Production, Outsourcing, and Logistics 445 Chapter Fifteen Global Marketing and R&D 473 Chapter Sixteen Global Human Resource Management 507 GLOSSARY 534 ENDNOTES 543 INDEX 569 vii hiL10544_fm_i-xxvi.indd Page viii 1/11/07 8:11:06 PM elhi /Volumes/108/MHID016/mhhiL/hiL5fm contents PREFACE xv PART ONE PART TWO Chapter Two Introduction and Overview Chapter One Globalization Opening Case: IKEA—The Global Retailer Introduction What Is Globalization? The Globalization of Markets The Globalization of Production The Emergence of Global Institutions Drivers of Globalization 11 Declining Trade and Investment Barriers 11 The Role of Technological Change 14 The Changing Demographics of the Global Economy 18 The Changing World Output and World Trade Picture 18 The Changing Foreign Direct Investment Picture 19 The Changing Nature of the Multinational Enterprise 21 The Changing World Order 23 The Global Economy of the Twenty-First Century 25 The Globalization Debate 26 Antiglobalization Protests 26 Globalization, Jobs, and Income 27 Globalization, Labor Policies, and the Environment 30 Globalization and National Sovereignty 32 Globalization and the World’s Poor 32 Managing in the Global Marketplace 34 Key Terms 36 Summary 36 Critical Thinking and Discussion Questions 37 Research Task 38 Closing Case: The Globalization of Health Care 38 viii Country Differences 40 National Differences in Political Economy 41 Opening Case: Chavez’s Venezuela 41 Introduction 42 Political Systems 43 Collectivism and Individualism 43 Democracy and Totalitarianism 46 Economic Systems 48 Market Economy 48 Command Economy 49 Mixed Economy 50 Legal Systems 50 Different Legal Systems 50 Differences in Contract Law 52 Property Rights and Corruption 52 The Protection of Intellectual Property 56 Product Safety and Product Liability 58 The Determinants of Economic Development 59 Differences in Economic Development 59 Broader Conceptions of Development: Amartya Sen 61 Political Economy and Economic Progress 64 Geography, Education, and Economic Development 68 States in Transition 69 The Spread of Democracy 69 The New World Order and Global Terrorism 71 The Spread of Market-Based Systems 72 The Nature of Economic Transformation 73 Implications of Changing Political Economy 77 Focus on Managerial Implications 78 Key Terms 82 hiL10544_sndx_576-593.indd Page 585 1/19/07 8:26:18 PM user national competitive advantage, 117–118 new product development, 498–499 nontariff barriers, 199 social structure, 94 tariffs, 196 trading firms (sogo shosha), 427, 441 Japanese Aircraft Development Corporation, 191–192 Japanese Overseas Enterprise Association, 512 JCB, 397–398, 399, 400, 406, 409, 410, 411 JGC, 152 JIT; see Just-in-time inventory systems Joint ventures; see also Strategic alliances advantages, 409–410 definition, 409 disadvantages, 410–411 in foreign markets, 409–411 Jolibee Foods Corporation, 403, 404, 405 Judaism, 98, 101 Juniper Technologies, 389 Just distribution, 143–144 Justice theories, 143–144, 147 Just-in-time inventory systems (JIT), 465, 466–467 JVC, 13 Kantian ethics, 142 Kawasaki Heavy Industries, 191 KBR; see Kellogg, Brown & Root Keiper, 323 Kellogg, 490, 491 Kellogg, Brown & Root (KBR), 152–153 KFC, 401, 405, 409 Kia Motors, 345 Kimberly-Clark, 386, 494 Kirin, 408 Kmart, 420 Kodak, 13, 22, 126, 239, 465, 476, 493, 499, 504–505 Kokuyo, 484 Komatsu, 8, 309, 384, 398 Korea; see South Korea KPMG, 246, 415 Kwality, 248 Labor; see Workers Labor policies, globalization debate and, 30–32 Labor relations, international, 527–530 Labor unions; see Organized labor Lafarge Group, 258 Lag strategy, 319 Landmark Systems, 428 Language differences, 108–109, 486 foreign, 520–521 spoken, 108–109 unspoken, 109 /Volumes/108/MHID016/mhhiL/hil5indx Late-mover disadvantages, 78 Latin America Andean Community, 265, 282 democratization, 24–25 economic reforms, 24–25 foreign direct investment in, 231 MERCOSUR, 263, 265, 282–283 regional trade agreements, 263 Law of one price, 304 Laws; see Legal systems L/Cs; see Letters of credit Lead strategy, 319 Lean production, 237, 453–455 Learning, global, 458 Learning effects, 373–374 Legal risk, 80–81 Legal systems civil law, 51, 52 common law, 50–51, 52 contract law, 52 definition, 50 intellectual property protection, 56–58, 81 product liability laws, 58–59 product safety laws, 58–59 property rights, 52–53, 66–67, 77 theocratic, 51, 102 in transition economies, 77 Lenovo, 8, 12, 22, 23, 373 Leontief paradox, 171–172 Letters of credit (L/Cs), 433–434 Levi Strauss, 115, 126, 129, 473–474, 475, 490 LG, 13 LG Semicon, 199 Li & Fung, 445–446, 447, 450 Libya, countertrade deals, 316 Licensing advantages, 407 compared to foreign direct investment, 237–238 cross-licensing agreements, 408 definition, 236 disadvantages, 407–408 limitations, 237–238, 254 use of, 254–255 Limited, Inc., 445–446, 447 Lincoln Electric, 417, 418 Lixi, Inc., 23 Lobbying, 184–185, 354 Local content requirements, 198, 221 Local responsiveness customer preferences, 379–380, 476 pressure for, 377, 378–379 Localization strategy, 382–383, 385 Location economies, 371–373 Location externalities, 240–241, 450–451 Location selection; see Foreign markets; Global production Location-specific advantages, 239–241 Lockheed, 129–130 Logistics definition, 447 growth of industry, 448 objectives, 466 strategic objectives, 448, 450 as support activity, 367 use of technology, 467 Logitech, 188 Lotus, 420 Louvre Accord, 336 Lubricating Systems, Inc., 22–23 Maastricht Treaty, 268, 274, 275 Mafia, 53 Make-or-buy decisions; see also Outsourcing advantages of buy, 462–464 advantages of make, 460–462 definition, 460 trade-offs, 465 Malaysia ASEAN membership, 285 currency crisis, 347 exchange rate policies, 340–341 investment boom, 344 Managed-float system, 337, 339 Management; see also Expatriate managers in global markets, 34–36, 519 Management development, 519–520, 522–523 Manufacturing; see also Production flexible, 453–455 lean production, 237, 453–455 mass customization, 454, 455 Market economies, 48–49 entrepreneurship, 66 government role, 49 innovation in, 66 relationship to political systems, 67–68 spread of, 72–73 Market segmentation, 477–479 Marketing and sales functions; see also Global marketing creation of value, 366 direct selling, 488 integrating with research and production, 499–501 relationship to R&D, 366, 475 Marketing mix; see also Communication; Pricing strategies configuring, 495–496 definition, 475 distribution strategy, 480–484 product attributes, 479–480, 495–496 Markets; see also Foreign exchange market; Foreign markets differences among national, efficient, 304, 313–314 global expansion, 370–371 Subject Index 585 hiL10544_sndx_576-593.indd Page 586 1/24/07 5:07:24 PM Kumar Markets—Cont globalization of, 7–8, 16, 475–476 inefficient, 314 relatively efficient, 304 Marriott International, 364 Marxism, 44, 241 Masculinity, 111 Mass customization, 454, 455 Massachusetts General Hospital, 39, 169 Massachusetts Institute of Technology, 94 Matsushita, 13, 22, 118, 120–121, 237, 375–376, 405, 408, 413, 493, 512 Mazda, 249, 391 McCann-Erickson, 490 McDonald’s Corporation, 7, 16, 26, 27, 28, 79, 89, 104, 105, 115, 133, 253, 255, 304–305, 371, 376, 379, 381, 401, 404, 405, 408, 409, 413, 417, 418, 475, 476, 486, 495 McKinsey & Co., 39, 415 Medical tourism, 39 Megahertz Communications, 443 Megahertz International, 443 Mercantilism, 159–161 Mercedes-Benz, 124, 353 Mercer Management Consulting, 415 MERCOSUR, 263, 265, 282–283 Mergers; see also Acquisitions; Competition policy financial services industry, 273 regulatory approval, 270, 271, 289–290 Merrill Lynch, 13 Mexico; see also North American Free Trade Agreement Cemex, 258–259 currency crisis (1995), 343–344 economic recovery, 351 marketing tampons in, 487 oil industry, 267 opposition to NAFTA, 281 political system, 281–282 textile industry, 261–262, 267 Wal-Mart in, 394–395 MFA; see Multi-Fiber Agreement MG Rover, 234 Micron Technology, 199 Microprocessors, 14 Microsoft, 8, 16, 29, 58, 66, 115, 167, 175, 235, 309, 370, 385, 388, 389, 399, 465, 470–471, 499, 502, 515 Milkfood, 248 Mini-multinationals, 22–23 Minimum efficient scale, 452–453 Minnesota Mining and Manufacturing Co.; see 3M Company Minolta, 484 Mitsubishi, 484 Mitsubishi Heavy Industries, 177, 191, 389, 410 Mitsubishi Motors, 513 Mitsui & Company, 441 586 Subject Index Mittal Steel, 244 Mixed economies, 50, 66, 73, 75 MMO Music Group, 425 MNEs; see Multinational enterprises Mobil Oil, 486 Molex, 532–533 Monetary policy effects of euro, 274, 275 of European Union, 275, 277 with fixed exchange rates, 338 with floating exchange rates, 337–338 IMF supervision, 331 money supply growth, 308 Money supply relationship to inflation, 305–308 U.S policies, 332–333 Monopolies, 49 Monsanto, 141, 202, 203, 499, 521, 522 Moore’s Law, 14, 16 Moral courage, 149 Moral hazard, 349 Moral imagination, 147 Mores, 91 Motorola, 90, 182, 183, 188, 247, 380, 382, 449, 499 MTV Networks, 5, 14, 16, 71, 115, 359–360, 361, 369, 371, 376, 379, 383 Multi-Fiber Agreement (MFA), 197, 224–225 Multilateral agreement on investment, 253 Multinational enterprises (MNEs) changing nature, 21–23 definition, 21 largest, 21–22, 234 mini-, 22–23 non-U.S., 21–22 pricing power, 309 radical view of, 241 Multipoint competition, 239 Multipoint pricing, 493–494 Music piracy, 56–57, 217 Muslims; see Islam M.W Kellogg, 152, 153 Myanmar ASEAN membership, 285 human rights violations, 127, 129 Nabisco, 87 NAFTA; see North American Free Trade Agreement Nanjing Automobile Group, 234 NASDAQ, 275 National Association of Software and Service Companies (Nasscom), 19 National competitive advantage, 159 demand conditions, 179, 180 evaluation, 181–183 factor endowments, 179–180, 181–183 firm strategy, structure, and rivalry, 179, 181 /Volumes/108/MHID016/mhhiL/hil5indx policy implications, 185 Porter’s diamond, 178–179 related and supporting industries, 179, 180–181 relationship to culture, 116–118 role of education, 110 National differences; see Cultural differences Nationale-Nederlanden, 402 Neo-mercantilism, 160–161 Nepal distribution system, 482 Empower Dalit Women of Nepal, 64 Nestlé, 476, 479 Netherlands advertising regulations, 491 production in, 451 New product development, 496–497, 498 New trade theory, 159, 175 economies of scale, 175, 176–177 explanation of trade patterns, 177–178 first-mover advantages, 176, 177–178, 184 implications, 177–178 product variety and costs, 175–176 New United Motor Manufacturing, Inc., 391–392 New world order, 71 News Corporation, 132–133 Nigeria corruption, 55, 152–153 drug testing, 137 foreign oil companies, 127, 128 human rights violations, 127 toxic waste disposal, 143 Nike, 125, 146, 460, 476 Nintendo, Nippon Air, 129–130 Nissan Motor Co., 238, 243, 249, 388, 415, 528 Noblesse oblige, 132 Noise, 486–487 Nokia, 5, 180, 181, 182, 247, 295, 379, 380, 491, 498 Nonconvertible currencies, 315, 316, 438 Nonverbal communication, 109 Norms, 90–91 North American Free Trade Agreement (NAFTA) case for, 279 contents, 279 definition, 279 economic impact, 262, 263, 280, 281 enlargement issue, 282 establishment, 279 impact on world trade system, 216 implications for businesses, 288–290 job losses, 263, 267, 279–280, 281 opponents environmental concerns, 30, 280–281 hiL10544_sndx_576-593.indd Page 587 1/19/07 8:26:18 PM user fears of job losses, 250, 261, 267, 279–280 Mexican, 281 price declines due to, 262 results, 281–282 side agreements, 31 textile industry job losses in U.S., 261–262, 267 Novi, Inc., 428 Numbers, interpretations of, 486 Occidental Petroleum, 440 OECD; see Organization for Economic Cooperation and Development Offsets, 439, 463, 464 Offshore production, 250; see also Outsourcing Oil companies, 42, 127, 128, 129 Oligopolies definition, 238 foreign investment decisions, 238–239 rivalry, 238 Olivetti, 173 One One, 415 OPEC; see Organization of Petroleum Exporting Countries Operations definition, 365 primary activities, 365–366 support activities, 366–367 Optimal currency areas, 276 Oracle, 66 Organization architecture, 367–369, 510 Organization for Economic Cooperation and Development (OECD) agricultural subsidies of members, 217 agricultural subsidies study, 216 bribery convention, 54–56, 130 foreign investment studies, 245, 246 income distribution study, 30 labor relations code of conduct, 529 multilateral agreement on investment, 253 Organization of Petroleum Exporting Countries (OPEC), 334, 336, 356, 357 Organizational culture attitudes toward ethical behavior, 135–136, 146–147 clashes in acquisitions, 416 definition, 368 socialization in, 522–523 staffing policies and, 511–512 Organizational Resources Consulting, 525 Organizational structure, 367 Organized labor concerns, 527–528 international trade secretariats, 528 national differences, 528–529 relations with, 529–530 /Volumes/108/MHID016/mhhiL/hil5indx strategies, 528–529 views of free trade agreements, 250 Orthodox Church, 98–100, 107 Outflows of foreign direct investment, 229, 232–234 Output, world, 18 Outsourcing; see also Global production; Make-or-buy decisions benefits, 158 to countries with good educational systems, 110 economic exposure reductions, 353–354 employment effects, 27–30 of production, 8, 19–20 of service activities call centers, 29, 460 cost reductions, 28, 29 medical, 8–9, 38–39, 169 opposition to, 28 software development, 169, 460 use of technology, 8–9, 16, 235 strategic role, 461, 462–464 wage effects, 27–30 of white-collar jobs, 169 P&G; see Procter & Gamble P&O, 244, 357 Pakistan education, 68 Islamic banking methods, 51, 103, 104 Palm Computer, 388 Paraguay; see MERCOSUR Paris Convention for the Protection of Industrial Property, 56, 57 Patents, 56, 217, 220; see also Intellectual property Peace, promotion of, 73 Pegged exchange rates Chinese, 325–326, 340 definition, 327 use of, 339–341 People, 368; see also Human resources management PepsiCo, 233, 466, 475 Performance appraisals of expatriate managers, 510, 523–524 guidelines, 524 problems, 523–524 Personal ethics, 134–135, 145 Peru; see also Andean Community Petrodollars, 336, 356–357 Petronas, 22 Peugeot, 292 Pfizer, 137, 366, 497, 499 Pharmaceutical industry distribution system, 380 drug testing, 137 government regulation, 380–381 law of one price, 304 patents, 217, 220 pricing strategies, 495 Philip Morris, 438, 441, 490 Philippines ASEAN membership, 285 Jolibee Foods Corporation, 403, 404, 405 knowledge-based jobs, 169 Philips NV, 13, 375–376, 450, 451, 458, 498, 512 Pioneering costs, 400–401 Plaza Accord, 336, 352 Poland countertrade deals, 440 distribution system, 380 plumbers, 277 Political economy; see also Economic systems; Trade policies definition, 43 implications of changes, 77 Political risk, 79–80 Political systems collectivism, 43–45, 46 definition, 43 democracy, 46–47 democratization, 23–25, 69–71 freedom, 69, 70 individualism, 45–46 relationship to economic systems, 67–68 socialism, 44–45 totalitarianism, 46, 47–48 transitions, 23–25, 69 Political unions, 265 Pollution, relationship to income levels, 30–31; see also Environmental issues Polycentric staffing policy, 513–514 Port management, 244, 357 Poverty, globalization debate and, 32–34 Power distance, 111 PPF; see Production possibility frontier PPP; see Purchasing power parity Pragmatic nationalism, 242–243 Predatory pricing, 493 Price discrimination, 309, 491–493 Price elasticity of demand, 492–493 Price inflation; see Inflation Prices, exchange rate determination law of one price, 304 money supply and inflation, 305–308 purchasing power parity, 304–305, 308–309 Pricing strategies experience curve, 494 multipoint, 493–494 predatory, 493 price discrimination, 491–493 regulatory influences, 494–495 strategic pricing, 493–494 Primary activities, 365–366 Private action, 53 Subject Index 587 hiL10544_sndx_576-593.indd Page 588 1/24/07 5:07:24 PM Kumar Privatization, 45, 73, 75–77 Processes, 368 Procter & Gamble (P&G), 13, 22, 169, 235, 309, 370, 371, 385, 386, 395, 483, 485, 487, 494, 499, 512 Product attributes, 479–480, 495–496; see also Consumer preferences Product liability laws, 58–59 Product life cycles, shortening, 497 Product life-cycle theory explanation of foreign investment patterns, 239, 255–256 explanation of trade patterns, 158–159, 172–173 Product safety laws, 58–59 Production; see also Global production; Make-or-buy decisions; Outsourcing centralized, 456–457 creation of value, 366 definition, 447 integrating with research and marketing, 499–501 quality issues, 448–450 strategic objectives, 448, 450 Production possibility frontier (PPF), 161, 167 Products adapting to different markets, 379–380, 479–480 developing, 496–497, 498 local standards, 480 standardization, 474–475, 495–496 Profit growth, 361–362, 370 Profitability, 361, 370 Property rights; see also Intellectual property corruption and, 53–54 definition, 52 Islamic view of, 102–104 legal risk and, 80–81 required for innovation and entrepreneurship, 66–67 in transition economies, 77 violations by private action, 53 Protectionism; see also Trade policies in 1980s and 1990s, 210 in agriculture, 216–217 costs, 216–217 Protestant work ethic, 100 Protestantism, 100 Public action, 53 Pull strategy, 487–490 Purchasing power parity (PPP) definition, 59 differences among nations, 61, 62 explanations of exchange rates, 304–305, 308–309 Push strategy, 487–490 Quality international standards, 450 relationship to cost reductions, 448 588 Subject Index Six Sigma, 449 total quality management, 449 Quantum Corporation, 501 Quiksilver, 477 Quota rents, 198 Quotas import, 196–197, 198 Multi-Fiber Agreement, 197, 224–225 tariff rate, 197 R&D; see Research and development Radical view of foreign direct investment, 241, 243 Rank-Xerox, 173, 239 RCA Corporation, 237, 408, 480 Red Spot Paint & Varnish Company, 429, 430, 431 Regional economic integration in Africa, 287 in Americas, 278–279 in Asia, 285–287 benefits, 263 case against, 267–268 case for, 265–267 concerns, 263 definition, 262 economic case for, 265–266 impediments, 267 managerial implications, 288–290 political case for, 266–267 Roman Empire, 263 Regional trade agreements; see also European Union; North American Free Trade Agreement Andean Community, 265, 282 in Caribbean, 284 gains from trade, 263 in Latin America, 263 MERCOSUR, 263, 265, 282–283 number of, 262 Regulation; see also Antidumping policies; Competition policy of advertising, 491 effects on pricing strategies, 494–495 of financial services, 402 of human resources practices, 509 of mergers, 270, 271, 289–290 national differences, 380–381 REI, 482, 484 Relational capital, 391 Relatively efficient markets, 304 ReliaStar Financial Services, 402 Religions; see also Christianity; Islam Buddhism, 98, 106 business implications, 98 definition, 98 freedom, 100 Hinduism, 98, 104–106 Judaism, 98, 101 largest, 98 theocratic law systems, 51, 102 /Volumes/108/MHID016/mhhiL/hil5indx theocratic totalitarianism, 47 of world, 99 Renault SA, 50, 388, 415 Repatriation of expatriate managers, 521, 522 Reporters Without Borders, 399 Representative democracies, 47 Research and development (R&D) centralized, 498 creation of value, 365–366 global capabilities, 501–502 integrating with marketing and production, 499–501 location, 497–499 need for, 497 new product development, 496–497, 498 relationship to marketing, 366, 475 Retail systems; see also Distribution systems concentrated, 481 fragmented, 481 quality, 483 Revlon, 475 Righteous moralism, 140 Rights, of stakeholders, 147; see also Human rights issues; Property rights Rights theories, 142–143 Right-wing totalitarianism, 47–48 Risks; see also Foreign exchange risk economic, 80 in foreign markets, 79–81, 417 legal, 80–81 political, 79–80 RMC, 259 Robert Mondavi, 28 Rolex, 486 Rolls-Royce, 439 Roman Catholic Church, 98–100 Roman Empire, 263 Romania, countertrade deals, 316, 438 Rowntree, 476 Royal Dutch Shell, 127, 517, 518, 519 Russia corruption, 504 countertrade deals, 438 distribution system, 380 fall of communism, 24 foreign banks, 413 McDonald’s restaurants, 79 Mafia, 53 marketing in, 504–505 political system, 24, 69 Sadelmi SpA, 438 Sales; see Marketing and sales functions Samsung, 13, 22, 248, 405, 420, 498, 512 Sarbanes-Oxley Act of 2002, 139 SARS (severe acute respiratory syndrome), 451, 467 Saudi Arabia, countertrade deals, 438 hiL10544_sndx_576-593.indd Page 589 1/19/07 8:26:19 PM user Sazaby Inc., 227 SBA; see Small Business Administration SC Johnson, 479 SCORE; see Service Corps of Retired Executives Seagate Technologies, 188 Seattle Coffee, 228, 229 Sega, 499 Sematech, 201 Semen Gresik, 259 Service activities, outsourcing call centers, 29, 460 cost reductions, 28, 29 medical, 8–9, 38–39, 169 opposition to, 28 software development, 169, 460 use of technology, 8–9, 16, 235 Service activity, 366 Service Corps of Retired Executives (SCORE), 428–429 Service industries foreign direct investment in, 235 global account management, 466 privatization, 235 Services, trade in financial services, 212–213, 253 GATT coverage, 210, 211 telecommunications, 212, 247, 253 volume, 13 WTO agreements, 212–213, 247, 253 Sexual harassment, 513 Sharp, 484, 498 Shell; see Royal Dutch Shell Short selling, 311 Siemens AG, 123, 247, 470 Sight drafts, 435 Silicon Valley, 240–241 Singapore ASEAN membership, 285 currency crisis, 347 exports, 344 Hewlett-Packard operation, 457–459, 461, 501–502 Single European Act, 272–274, 292 Singtel, 22 Six Sigma, 449 Small Business Administration (SBA), 423, 426, 428–429 Small businesses, exports, 7, 425, 428 Smoot-Hawley Act, 209 SMS Elotherm, 323 Snecma, 390 Social democrats, 44–45, 46 Social mobility, 95–96, 97 Social responsibility, 131–133, 138 Social strata, 95–98 Social structures definition, 93 groups, 93, 94–95 individuals, 93–94 stratification, 95–98 /Volumes/108/MHID016/mhhiL/hil5indx Socialism, 44–45 Society; see also Culture definition, 90 nation-states and, 91–92 Softbank, 118 Software piracy, 56, 57–58, 217 Sony, 5, 7, 8, 13, 22, 87, 118, 183, 237, 367, 375–376, 379, 388, 390, 405, 408, 465, 475, 476, 496–497, 498, 499 Sony-Ericsson, 470 Source effects, 486 South Africa apartheid system, 126, 251 divestment movement, 126, 251 South African Airlines, 301, 320 South America; see Latin America South Korea central bank, 312–313, 348 currency crisis, 311, 312–313, 347–348 democratization, 71 education, 68 foreign direct investment in, 247 IMF rescue package, 312, 344, 348, 351 industrial conglomerates (chaebol), 312, 344, 345 investment boom, 80, 344, 345 recovery, 349 Southland, 259 Specialized assets, 461–462 Specific tariffs, 194 Speculation; see Currency speculation Speed money; see Facilitating payments Spot exchange rates, 299–300 Sprint, 270 Staffing policies comparison, 514, 515 definition, 512 ethnocentric, 512–513, 514 geocentric, 514, 524–525 goals, 511–512 polycentric, 513–514 Stakeholders, 147–148 Standard & Poor’s, 312, 318 Standard Charter Bank, 103 Standards national, 480 quality, 450 Standards of living, 59 Staples, 497 Star TV, 132, 133 Starbucks Coffee of Japan, 227–228 Starbucks Corporation, 5, 7, 27, 57, 58, 146, 227–228, 229, 230, 235, 371 Starbucks Index, 305 Starwood, 364 State-owned enterprises in Britain, 44–45 in India, 76 in Marxist systems, 44 in mixed economies, 50 privatization, 45, 73, 75–77 in socialist systems, 44–45 in Venezuela, 42 Stavia, 420 Steel imports antidumping policies, 185, 221, 494 tariffs, 185, 194, 201, 494 STMicro, 295, 296, 297, 301, 320 Stocks of foreign direct investment, 13, 20, 229, 234 Strategic alliances advantages, 387–388 definition, 387 disadvantages, 388–389, 465–466 failure rate, 389 learning benefits, 391–392 managing, 391–392 partner selection, 389–390 structures, 390–391 success factors, 389–392 with suppliers, 465–466, 470–471 Strategic behavior theory, 238–239, 255–256 Strategic commitments, 401–403 Strategic fit, 369 Strategic positioning, 363–365 Strategic pricing, 493–494 Strategic trade policy arguments against, 207–208 components, 206–207 definition, 206 theoretical arguments for, 159, 178 Strategies; see also Global expansion choosing, 381 definition, 361 differentiation, 363 evolution, 385, 387 global standardization, 381–382 international, 384–385 localization, 382–383, 385 low-cost, 363 outsourcing, 461 profit growth, 361–362, 370 profitability, 361, 370 transnational, 383–384, 458 value creation, 362–363 Stratification; see Social strata Subsidiaries, foreign skills, 376–377 wholly owned, 411 Subsidies agricultural controversies, 213 costs and benefits, 195–196 efforts to reduce, 211, 213, 216–217 Japanese, 195, 196 negative effects on developing nations, 34, 216 to aircraft companies, 191–192, 193, 195, 207 costs and benefits, 195–196 definition, 195 political arguments for, 201 Subject Index 589 hiL10544_sndx_576-593.indd Page 590 1/19/07 8:26:19 PM user Sullivan principles, 126 Sunbeam Corporation, 109 Suntory, 489 Suppliers, strategic alliances, 465–466, 470–471 Supply chain management, 448, 466–467; see also Logistics Support activities, 366–367 Supranational organizations, 11, 32 Swaps; see Currency swaps Sweatshop labor, 125–126, 138 Switch trading, 439–440 Symbols, interpretations of, 486 Tambrands, 487 Tariff rate quotas, 197 Tariffs ad valorem, 194 agricultural, 34, 216 benefits of reductions, 219 bound rates, 218 business opposition, 184–185 definition, 194 economic effects, 194–195 export, 195 future reductions, 218–219 history, 208–209 rates, 11, 195, 210, 218 on services, 218–219 specific, 194 steel imports, 185, 194, 201, 494 Tata Oil Mills, 248 Taxes, income, 527 Teams, cross-functional, 500–501 Technical analysis, 315 Technip, 152, 153 Technology; see also Information systems as driver of globalization, 14–17 production location decision factors, 452–455 proprietary, 462 role in political change, 71 Silicon Valley, 240–241 in supply chain management, 467 transfer through foreign investment, 245 transportation, 14–15 Telecommunications cell phones, 180, 182, 498 technological change, 14, 16 trade liberalization, 212, 247, 253 Telefonica, 414 Teleglobe, 415 Terrorism, 72, 101, 467 Tesco, 247, 386, 395, 420–421, 482 Texas Instruments (TI), 5, 169, 183, 243, 382, 407, 410, 499 Textile industry exports, 262 job losses due to NAFTA, 261–262, 267 in Mexico, 261–262, 267 590 Subject Index Multi-Fiber Agreement, 197, 224–225 production outsourcing, 261–262, 267 in United States, 261–262, 267 Thailand ASEAN membership, 285 countertrade deals, 438, 439 currency crisis, 25, 346–347 exchange rate policies, 340–341 exports, 344 IMF rescue package, 344, 346–347 intellectual property issues, 56, 58 investment boom, 80, 345 marketing in, 496 Theocratic law systems, 51, 102 Theocratic totalitarianism, 47 3M Company, 288, 429, 430, 441, 497 3M Global Trading, 441 TI; see Texas Instruments Tibet Beijing-Lhasa Express, 113 Chinese rule, 204 Time drafts, 435 Time Warner, 270, 271 Timing of entry, 400–401 Ting Hsin, 420 Toshiba, 183, 388, 389, 390 Total, 129 Total quality management (TQM), 449 Totalitarianism communist, 47 definition, 46 economic systems, 67 right-wing, 47–48 theocratic, 47 tribal, 47 Towers Perrin, 524 Toyota, 6, 8, 20, 108, 237–238, 243, 245, 250, 252, 370–371, 379, 381, 391–392, 454, 465, 477, 480, 512 Toys “R” Us, 64, 251, 447, 483 TQM; see Total quality management Trade acceptances, 435 Trade balance; see also Current account adjustments with fixed exchange rates, 339 adjustments with floating exchange rates, 338 equilibrium, 328–329 surpluses, 160, 161 Trade barriers; see also Tariffs administrative, 198–199 declining, 11–14 import quotas, 196–197, 198 local content requirements, 198, 221 nontariff, 199, 210 voluntary export restraints, 185, 197–198, 210 Trade creation, 267 Trade diversion, 267–268, 283 Trade liberalization; see Free trade /Volumes/108/MHID016/mhhiL/hil5indx Trade policies; see also Antidumping policies; Free trade business influence on, 184–185, 221–222 case for free trade, 207–208 case for government intervention, 200 economic arguments, 204–207 political arguments, 201–204 theoretical arguments, 159, 178 firm strategy and, 220–221 managerial implications, 220–222 mercantilist, 160 neo-mercantilist, 160 sanctions, 203 strategic trade policy, 178, 206–208 subsidies, 195–196 tariffs, 194–195 Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement, 58, 211, 217 Trade theories absolute advantage, 157–158, 161–162 benefits of trade, 157–158 comparative advantage argument for free trade, 157 description, 162 examples, 162–164 explanation of trade patterns, 158, 171 extensions, 166–167 gains from trade, 164–165 qualifications and assumptions, 165–166 Samuelson critique, 166, 168–170 explanations of trade patterns, 158–159, 171, 173 on foreign direct investment, 250 Heckscher-Ohlin, 157–159, 170–172 justification for government intervention, 159, 178 Leontief paradox, 171–172 managerial implications, 183–185 mercantilism, 159–161 national competitive advantage, 159 demand conditions, 179, 180 evaluation, 181–183 factor endowments, 179–180, 181–183 firm strategy, structure, and rivalry, 179, 181 policy implications, 185 Porter’s diamond, 178–179 related and supporting industries, 179, 180–181 neo-mercantilism, 160–161 new trade theory, 159, 175 economies of scale, 175, 176–177 explanation of trade patterns, 177–178 first-mover advantages, 176, 177–178, 184 implications, 177–178 product variety and costs, 175–176 hiL10544_sndx_576-593.indd Page 591 1/24/07 5:07:24 PM Kumar product life-cycle, 158–159, 172–173 support for free trade, 159 Trademarks, 56, 57, 58, 217; see also Intellectual property Tragedy of the commons, 128 Training, 519–521 Transaction exposure, 317, 318–319 Translation exposure, 317, 318–319 Transnational strategy, 383–384, 458 Transparency International, 42, 53, 55, 85 Transportation compared to circulatory system, 427 costs, 405, 455–456 technology, 14–15 Treaty of Rome, 268 Tribal totalitarianism, 47 TRIPS; see Trade Related Aspects of Intellectual Property Rights TRW, Inc., 390–391 Turkey economic growth, 350 IMF rescue package, 350–351 Turnkey projects, 406 Tussauds Group, 357 Tyco, 139 UAW; see United Auto Workers Uncertainty avoidance, 111 Unethical behavior; see Business ethics Unilever, 22, 78, 87, 146, 149, 248, 288, 309, 395, 478, 482, 488, 489, 514 Unions; see Organized labor United Auto Workers (UAW), 528 United Nations Convention on Contracts for the International Sale of Goods (CIGS), 52 United Nations (UN) definition, 10 establishment, 9, 10 foreign direct investment studies, 12, 230, 247 Human Development Index, 55, 64, 65 Iraq oil for food program, 123–124 trade reports, 426 Universal Declaration of Human Rights, 142–143, 146 United States agricultural subsidies, 195 class divisions, 96 exports, 18–19 GDP per capita, output, 18 trade deficits, 210 U.S Department of Commerce, 199, 229, 423, 427–428 U.S Department of Justice, 270 U.S dollar; see Dollar, U.S U.S Federal Reserve, 341, 342 U.S Federal Trade Commission, 198 United States and Foreign Commercial Service Agency, 427 U.S Office of Tariff Affairs and Trade Agreements, 195 United Technologies, 149 Universal Declaration of Human Rights, 142–143, 146 Universal needs, 378, 456 University of California–Los Angeles, 281 University of Michigan, Institute for Social Research, 114 Unocal, 127, 129, 244 Upjohn, 499 Urban Institute, 30 Uruguay; see MERCOSUR Uruguay Round, 11, 209, 210–211 U.S Magnesium, 199, 200 Utilitarian approaches to ethics, 141 Value chain education as part of, 362 firm as, 365 Value creation activities, 365–368 definition, 363 strategies, 362–363 Values; see also Ethical systems changes in, 114–115 corporate, 136 definition, 90 Value-to-weight ratio, 455–456 Vehicle currencies, 303 Veil of ignorance, 143, 144, 148 Venezuela; see also Andean Community; MERCOSUR corruption, 41–42, 43 countertrade deals, 316, 438 economic situation, 41 foreign oil companies, 25, 243 political risk, 80 state role in economy, 25, 41–42 VERs; see Voluntary export restraints Vertical integration, 460–462; see also Make-or-buy decisions Viacom, 359 Vietnam ASEAN membership, 285 distribution system, 496 facilitating payments, 139 marketing in, 496 sweatshop labor, 125 Vodafone, 414, 415 Volkswagen AG, 78, 87, 88, 289, 292, 370, 509 Voluntary export restraints (VERs) benefits, 198 bilateral, 210 definition, 197 on Japanese automobile imports to United States, 197, 198, 210 use of, 185 Volvo, 123, 124, 248, 398, 415 /Volumes/108/MHID016/mhhiL/hil5indx Wal-Mart, 168, 247, 366, 375, 378, 386, 394–395, 420, 421, 473, 474, 481, 482–483 Warner Brothers, 387, 446, 447 WEF; see World Economic Forum Weir Group, 123 West Virginia, Development Office, 423 Wholly owned subsidiaries, 229, 411; see also Acquisitions; Greenfield investments Windam International, 519 Wipro Ltd., 169 Women, international assignments, 513 Workers child labor, 133, 138, 214 immigrants, 127 labor relations, 527–530 mobility within European Union, 266, 277 sweatshop conditions, 125–126, 138 World Bank, 10, 19 debt relief program, 34 establishment, 9, 10, 327, 330 implications for businesses, 354 loans, 332, 347 regulation study, 41 role, 332 study of Indonesia, 85 study of nontariff barriers, 210 trade liberalization studies, 218, 220 World Economic Forum (WEF), 5, 193 World Health Organization, 205 World Intellectual Property Organization, 56 World Trade Organization (WTO) agricultural tariffs and subsidies study, 34 aircraft manufacturing subsidies dispute, 193 Chinese membership, 204, 225, 233, 451 critics, 32 definition, dispute settlement, 211, 212 Doha Round, 11–12, 218, 219–220 enforcement mechanisms, 211, 212 establishment, 11, 193, 211 foreign direct investment regulations, 253 free trade agreement rules, 268 future issues agricultural protectionism, 216–217 antidumping actions, 215–216 intellectual property protection, 217 tariff reductions, 218–219 goals, 207 hormone-treated beef dispute, 28, 205 intellectual property issues, 57 members, 9, 212 Multi-Fiber Agreement expiration, 224–225 Subject Index 591 hiL10544_sndx_576-593.indd Page 592 1/19/07 8:26:20 PM user World Trade Organization—Cont notification of regional trade agreements, 262 prohibition of government subsidies, 192 responsibilities, 9–10, 32 scope, 212–213 Seattle meeting (1999), 26, 28, 213–215 South Korea and, 348 steel tariffs dispute, 194 trade data, 13 592 Subject Index trade liberalization goals, 5, 10 Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement, 58, 211, 217 World trading system, development of, 208–209, 210 World Values Survey, 114–115 World War I, 329 World Wide Web; see Internet WorldCom, 139, 270 WTO; see World Trade Organization /Volumes/108/MHID016/mhhiL/hil5indx Xerox, 126, 173, 239, 385, 389, 391, 407, 408, 409, 410, 470 Xing Ba Ke Coffee Shop, 57 YKK, 446 Zero-sum games, 160 Zodiac, 353 hiL10544_sndx_576-593.indd Page 593 1/19/07 8:26:20 PM user /Volumes/108/MHID016/mhhiL/hil5indx 160° 140° 120° 100° 80° 60° 80° 40° 20° GREENLAND GREEN (DENMARK) (DENM Arctic U.S ICE 60° UNI UNITED KINGDO CANADA IRELAND ANDOR NORTH PACIFIC OCEAN 40° UNITED STATES PORTUGAL NORTH ATLANTIC OCEAN Tropic of Cancer U.S 20° MAURITANIA MAU COLOMBIA Equator 0° ECUADOR GUYANA SURINAME FRENCH GUIANA (FR) VENEZUELA P E B R A Z I L R CHILE 70° 300 Miles 300 Kilometers 40° CUBA MEXICO JAMAICA HAITI DOMINICAN REPUBLIC PUERTO RICO BELIZE EL SALVADOR ST KITTS AND NEVIS ANTIGUA AND BARBUDA CARIBBEAN HONDURAS DOMINICA SEA 60° MARTINIQUE ST LUCIA ST VINCENT AND THE GRENADINES Antarctic Circle BARBADOS NICARAGUA GRENADA A R G E N T I N A U.S.80° THE BAHAMAS GUATEMALA CONGO RE PARAGUAY Tropic of Capricorn 90° CAM CENTRAL CENTRA AFRICAN SÃO TOMÉ AND P EQUATORIAL E BOLIVIA TONGA 20° CAPE VERDE U WESTERN SAMOA 20° MOROCCO MEXICO URUGUAY SOUTH ATLANTIC OCEAN SOUTH PACIFIC OCEAN GA G B Antarctic Circle 10° A 10° COSTA RICA TRINIDAD AND TOBAGO PANAMA COLOMBIA VENEZUELA 0 1000 2000 Miles Scale: to 111,922,000 0 594 Part One Part Title hiL10544_map_594-598.indd 594 1000 2000 3000 Kilometers Note: All world maps are Robinson projection 2/3/07 10:57:00 PM 0° 20° A NORWAY 100 Kilometers LTI RUSSIA NETHERLANDS 100 Miles LATVIA BA DENMARK 55° ESTONIA C SE SWEDEN NORTH SEA RUSSIA LITHUANIA BELARUS GERMANY POLAND BELGIUM LUXEMBOURG CZECH REPUBLIC UKRAINE SLOVAKIA FRANCE LIECHTENSTEIN MOLDOVA AUSTRIA SWITZERLAND HUNGARY SLOVENIA ROMANIA CROATIA BLACK SEA SAN BOSNIAMARINO HERZEGOVINA MONACO SERBIA ITALY MONTENEGRO ALBANIA 0° 20° 40° 60° 40° 80° 100° 120° 140° BULGARIA MACEDONIA 160° 80° GREECE MEDITER R ARCTIC OCEAN TURKEY A N EAN S EA Circle ELAND EN SW ED NORWAY MALTA FINLAND R U S S I A 60° OM KAZAKSTAN UZBEKISTAN SPAIN CYPRUS LEBANON ISRAEL TUNISIA O ALGERIA SYRIA IRAQ LIBYA EGYPT CHAD AN OM ERITREA NIGER YEM SUDAN NEPAL BHUTAN MYANMAR (BURMA) SAUDI ARABIA MALI EN UNITED ARAB EMIRATES TAIWAN THAILAND VIETNAM ETHIOPIA SRI LANKA SOMALIA SINGAPORE KENYA BURUNDI TANZANIA ANGOLA N D INDIAN OCEAN ZAMBIA MADAGASCAR MAURITIUS SOUTH AFRICA PALAU BRUNEI MALAYSIA I MARSHALL ISLANDS MICRONESIA O N E S I K NAURU A PAPUA NEW GUINEA SEYCHELLES MALAWI COMOROS MOZAMBIQUE NAMIBIA BOTSWANA PHILIPPINES CAMBODIA (KAMPUCHEA) I AT IB IR MALDIVES Equator RWANDA DEM REP OF THE CONGO 20° LAOS BANGLADESH DJIBOUTI UGANDA Tropic of Cancer INDIA NIGERIA MEROON REPUBLIC RINCIPE GUINEA GABON EPUBLIC 40° JAPAN SOUTH KOREA C H I N A AFGHANISTAN IRAN KUWAIT QATAR PAKISTAN JORDAN BAHRAIN NORTH KOREA KYRGYZSTAN TAJIKISTAN TURKMENISTAN TURKEY NORTH PACIFIC OCEAN MONGOLIA FRANCE RRA SOLOMON ISLANDS 0° TUVALU EAST TIMOR FIJI VANUATU 20° Tropic of Capricorn AUSTRALIA ZIMBABWE SWAZILAND LESOTHO 40° MAURITANIA NEW ZEALAND MALI SENEGAL 50° NIGER MBIA 100 Miles CASPIAN 100 Kilometers BURKINA FASO GUINEABISSAU SEA RUSSIA 60° GUINEA BENIN ATLANTIC Antarctic Circle BLACK SIERRA LEONE IVORY COAST OCEAN NIGERIA GHANA AZERBAIJAN 80° LIBERIA 150 GEORGIA SEA 40° ARMENIA 300 Miles TOGO 150 300 Kilometers 10° 0° TURKEY AZERBAIJAN IRAN Chapter One Chapter Title 595 hiL10544_map_594-598.indd 595 2/3/07 10:57:00 PM ACRONYM PROPER NAME ACRONYM PROPER NAME ADB Asian Development Bank IDB Inter-American Development Bank AfDB African Development Bank IEC International Electrotechnical Commission AFIC Asian Finance and Investment Corporation IFC International Finance Corporation AFTA Asian Free Trade Agreement IMF International Monetary Fund ASEAN Association of Southeast Asian Nations IPLC International Product Life Cycle ATPA Andean Trade Preference Act IRC International Revenue Code BIS Bank for International Settlements ISA International Seabed Authority BOP Balance of Payments ISO International Organization for Standardization CIM Computer-Integrated Manufacturing CIS Commonwealth of Independent States CISG UN Convention on Contracts for the International Sale of Goods CEMA Council for Mutual Economic Assistance CRA Country Risk Assessment DB Development Bank DC Developed Country DFIs Development Finance Institutions ITA International Trade Administration JIT Just-in-Time JV Joint Venture LAIA Latin American Integration Association (formerly LAFTA) LDC Less Developed Country LIBOR London Interbank Offer Rate LOST Law of the Sea Treaty DISC Domestic International Sales Corporation MERCOSUR Free Trade Agreement between Argentina, Brazil, Paraguay, and Uruguay EBRD European Bank for Reconstruction and Development MNC Multinational Company ECOWAS Economic Community of West African States NAFTA North American Free Trade Agreement EMU Economic and Monetary Union EEA European Economic Area EFTA European Free Trade Association EMs Export Management Companies EMCF European Monetary Cooperation Fund MNE Multinational Enterprise NATO North Atlantic Treaty Organization NIC Newly Industrializing Country NTBs Nontariff Barriers OECD Organization for Economic Cooperation & Development EMS European Monetary System OPEC Organizational of Petroleum Exporting Countries EPO European Patent Organization PPP Purchasing Power Parity ETC Export Trading Company PRC People’s Republic of China ETUC European Trade Union Confederation PTA Preferential Trade Area for Eastern and Southern Africa EU European Union FCPA Foreign Corrupt Practices Act SACC Southern African Development Coordination Conference FDI Foreign Direct Investment SBA Small Business Administration FSC Foreign Sales Corporation SBC Strategic Business Center FTAA Free Trade Agreement of the Americas SBU Small Business Unit FTZ Foreign Trade Zone SDR Special Drawing Rights Fx Foreign Exchange SEZ Special Economic Zone G7 Group of Seven TQM Total Quality Management GATT General Agreement on Tariffs and Trade UN United Nations GC Global Company UNCTAD UN Conference on Trade and Development GDP Gross Domestic Product VAT Value Added Tax GNP Gross National Product VER Voluntary Export Restraint GSP Generalized System of Preferences VRAs Voluntary Restraints Agreements IAC International Anti-counterfeiting Coalition WEC World Energy Council IC International Company WIPO World Intellectual Property Organization IDA International Development Association WTO World Trade Organization hiL10544_map_594-598.indd 596 1/2/07 8:18:54 PM COUNTRY CAPITAL COUNTRY CAPITAL COUNTRY Afghanistan Albania Algeria Andorra Angola Antigua and Barbuda Argentina Armenia Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bhutan Bolivia Bosnia and Herzegovina Botswana Brazil Brunei Kabul Tirana Algiers Andorra la Vella Luanda Germany Ghana Greece Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras Hungary Iceland India Indonisia Iran Iraq Ireland Israel Italy Jamaica Japan Jordan Kazakhstan Kenya Kiribati Korea, North Korea, South Kuwait Kyrgyzstan Laos Latvia Lebanon Lesotho Liberia Libya Liechtenstein Lithuania Luxembourg Macedonia, The Former Yugoslav Republic of Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Micronesia Moldova Monaco Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nauru Nepal The Netherlands New Zealand Nicaragua Niger Nigeria Norway Oman Berlin Accra Athens St George’s Guatemala City Conakry Bissau Georgetown Port-au-Prince Tegucigalpa Budapest Reykjavik New Delhi Jakarta Tehran Baghdad Dublin Jerusalem Rome Kingston Tokyo Amman Astana Nairobi Tarawa Pyongyang Seoul Kuwait City Bishkek Vientiane Riga Beirut Maseru Monrovia Tripoli Vaduz Vilnius Luxembourg Pakistan Islamabad Palau Koror Panama Panama City Papua New Guinea Port Moresby Paraguay Asuncion Peru Lima Philippines Manila Poland Warsaw Portugal Lisbon Qatar Doha Romania Bucharest Russia Moscow Rwanda Kigali Saint Kitts and Nevis Basseterre Saint Lucia Castries Saint Vincent and the Grenadines Kingstown San Marino San Marino Sao Tome and Principe Sao Tome Saudi Arabia Riyadh Senegal Dakar Serbia Belgrade Seychelles Victoria Sierra Leone Freetown Singapore Singapore Slovakia Bratislava Slovenia Ljubljana Solomon Islands Honiara Somalia Mogadishu South Africa Pretoria Spain Madrid Sri Lanka Colombo Sudan Khartoum Suriname Paramaribo Swaziland Mbabane Sweden Stockholm Switzerland Bern Syria Damascus Taiwan Taipei Tajikistan Dushanbe Tanzania Dar-es-Salaam Thailand Bangkok Togo Lome Tonga Nuku’alofa Trinidad and Tobago Port-of-Spain Tunisia Tunis Turkey Ankara Turkmenistan Ashgabat Tuvalu Funafuti Uganda Kampala Ukraine Kiev United Arab Emirates Abu Dhabi United Kingdom London United States of America Washington, DC Uruguay Montevideo Uzbekistan Tashkent Vanuatu Vila Vatican City Venezuela Caracas Vietnam Hanoi Western Samoa Apia Yemen Sanaa Zambia Lusaka Zimbabwe Harare Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Central African Republic Chad Chile China Colombia Comoros Congo Congo (formerly Zaire) Costa Rica Cote d’Ivoire Croatia Cuba Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Finland France Gabon The Gambia Georgia St John’s Buenos Aires Yerevan Canberra Vienna Baku Nassau Manama Dhaka Bridgetown Minsk Brussels Belmopan Porto-Novo Thimphu La Paz Sarajevo Gaborone Brasilia Bandar Seri Begawan Sofia Ouagadougou Bujumbura Phnom Penh Yaounde Ottawa Praia Bangui N’Djamena Santiago Beijing Bogota Moroni Brazzaville Kinshasa San Jose Yamoussoukro Zagreb Havana Nicosia Prague Copenhagen Djibouti Roseau Santo Domingo Quito Cairo San Salvador Malabo Asmara Tallinn Addis Ababa Suva Helsinki Paris Libreville Banjul Tbilisi Skopje Antananarivo Lilongwe Kuala Lumpur Male Bamako Valletta Majuro Nouakchott Port Louis Mexico City Palikir Chisinau Monaco Ulaanbaatar Podgorica Rabat Maputo Rangoon Windhoek Yaren Kathmandu Amsterdam Wellington Managua Niamey Abuja Oslo Muscat CAPITAL ISBN 0-07-321054-4 hiL10544_map_594-598.indd 597 1/2/07 8:18:54 PM hiL10544_map_594-598.indd 598 1/2/07 8:18:55 PM ... Chapter One Globalization Opening Case: IKEA—The Global Retailer Introduction What Is Globalization? The Globalization of Markets The Globalization of Production The Emergence of Global Institutions... Hill, Charles W L Global business today / Charles W L Hill — 5th ed p cm Includes index ISBN-13: 978-0-07-321054-4 (alk paper) ISBN-10: 0-07-321054-4 (alk paper) International business enterprises—Management... Changing World Order 23 The Global Economy of the Twenty-First Century 25 The Globalization Debate 26 Antiglobalization Protests 26 Globalization, Jobs, and Income 27 Globalization, Labor Policies,