(BQ) Part 2 book Global business has contents: Entering foreign markets; managing global competitive dynamics; making alliances and acquisitions work; strategizing, structuring, and learning around the world; competing on marketing and supply chain management; managing human resources globally,...and other contents.
Find more at http://www.downloadslide.com Chapter B MATHUR/Reuters/Landov 10 Learning Objectives After studying this chapter, you should be able to 10-1 understand how institutions and resources affect the liability of foreignness 10-2 match the quest for location-specific advantages with strategic goals (where to enter) 10-3 compare and contrast first-mover and late-mover advantages (when to enter) 10-4 follow the comprehensive model of foreign market entries (how to enter) 10-5 participate in three leading debates concerning foreign market entries 10-6 draw implications for action Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com Entering Foreign Markets O p e n i n g C a s e EMERGING MARKETS: Corporate India Finds Greener Pastures—in Africa Indian billionaire Ravi Ruia has flown to Africa at least accounting firm Grant Thornton in London.“We’re ex- once a month for the past year and a half He is in- pecting to see a lot of midsize deals across a variety terested in coal mines in Mozambique, an oil refinery of sectors.” in Kenya, and a call center in South Africa Soon, he The Indians view Africa as a place where they may also have a power plant in Nigeria “Africa looks can replicate the low-cost, high-efficiency business remarkably similar to what India was 15 years ago,” model they have honed at home Like India, Africa says Firdhose Coovadia, director of African operations has hundreds of millions of underserved consumers at Essar Group, the $15 billion conglomerate headed eager to buy products tailored to their needs Con- by Ruia and his brother, Shashi “We can’t lose this sumer spending in Africa may double, to as much opportunity.” as $1.8 trillion by 2020 McKinsey & Co predicts an Faced with increasing competition and a welter increase that would be the equivalent of adding a of bureaucratic obstacles at home, Indian companies consumer market the size of Brazil As a pioneer in are looking to Africa for growth Since 2005, they have sales of single-use sachets of soap and shampoo spent $16 billion on the continent, versus at least (along with Unilever and Procter & Gamble) for lower- $31 billion spent by the Chinese, according to data income Indians, Mumbai-based Godreh Consumer compiled by Bloomberg and the Heritage Foundation, Products understands “low-cost, value-for-money respectively Bharti Airtel, India’s largest mobile-phone products,” Chairman Adi Godrej said in an inter- provider, in June 2010 paid $9 billion for the African view In June 2010, his company acquired Nigerian cellular operations of Kuwait’s Zain In 2008, India’s cosmetics maker Tura, and in 2008, it bought South Videocon Industries paid $330 million for two coal African hair-care company Kinky “We want growth mines in Mozambique, and India’s state-run fertilizer Whether it’s from inside or outside India, we are ag- maker bought an idled Senegalese phosphorus pro- nostic,” Godrej said ducer for $721 million Indian companies also see Africa as a hedge against Beyond these big deals are dozens of smaller acqui- a possible slowdown at home “If tomorrow the Indian sitions and investments by Indian companies “Com- economy was to take a U-turn, then at least you pared to India, valuations in Africa are quite attractive,” have other markets which are growing,” says Neeraj says Anuj Chande, who heads the South Asia Group at Kanwar, managing director of Apollo Tyres, India’s Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 312 Part Three Strategizing around the Globe No tiremaker His company bought South Africa’s Dunlop Tyres for $62 million in 2006, giving Apollo two manufacturing plants on the continent and brand rights in 32 African countries Apollo aims to triple sales, to $6 billion, by 2015, with 60% of revenue from abroad, versus 38% today “Africa is going to give me growth,” says Kanwar Essar has endured endless squabbles with Indian landowners who refuse to make way for steel mills Like other Indian companies tired of regulatory headaches at home, it moved into Africa and now has 2,000 employees there Bangalore-based Karuturi Global, the world’s largest rose producer, couldn’t get enough land in India to compete with European and African rivals Many times flowers wilted on the tarmac as cargo flights were delayed or cancelled, including a big Valentine’s Day shipment So in 2004, Karuturi bought a small plot in Ethiopia, and sales have since grown elevenfold, to $113 million in the year ended March 31, 2010 Karuturi now leases 1,200 square miles of land in Ethiopia—larger than the state of Rhode Island—and sells more than half a billion roses a year “Africa offered us a scale we could never reach in India,” says Managing Director Sai Ramakrishna Karuturi “I’d love to more in India, but getting even 1,000 acres near Bangalore took years.” Sources: Bloomberg Businessweek, 2010, Corporate India finds greener pastures—in Africa, November 8: 61–62 How numerous Indian firms enter Africa? Why they enter certain countries but not others? How they overcome their liability of foreignness? These are some of the key questions driving this chapter Entering foreign markets is one of the most important topics in international business (IB) This chapter first draws on the institution-based and resource-based views to discuss ways to overcome the liability of foreignness.1 Then we focus on three crucial dimensions: Where, when, and how—known as the “2W1H dimensions.” Our discussion culminates in a comprehensive model, followed by debates and extensions 10-1 L earning Objective Understand how institutions and resources affect the liability of foreignness 10-1 Overcoming the Liability of Foreignness It is not easy to succeed in an unfamiliar environment Recall from Chapter that foreign firms have to overcome a liability of foreignness, which is the inherent disadvantage that foreign firms experience in host countries because of their non-native status.2 Such a liability is manifested in at least two dimensions First, there are numerous differences in formal and informal institutions governing the rules of the game in different countries While local firms are already well versed in these rules, foreign firms have to invest resources to learn such rules Some of the rules are in favor of local firms For example, after working for years to familiarize itself with US defense procurement rules, European Aeronautic Defence and Space (EADS), the maker of Airbus, in 2008 won a major $35 billion contract to supply the US Air Force with next-generation refueling tankers Then EADS (along with its US partner, Northrop Grumman) was disappointed to find out that Boeing was able to twist the arms of politicians and change the rules so that in 2010, Boeing emerged as the winner of this rich prize, and EADS had to drop out Many governments ban foreigners and foreign firms from owning assets in certain strategic sectors For example, governments in Central and Eastern Europe are concerned about investments from Russia (see Emerging Markets 10.1) Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 313 Danny Lehman/Corbis; Björn Meyer/sitox/iStockphoto.com Chapter 10 Entering Foreign Markets E merging M arkets Ethical Dilemma Russian Firms Spread Their Wings After the fall of the Berlin Wall in 1989, Russia suffered a decade of turmoil Since 1999, the Russian economy has staged a spectacular comeback, largely thanks to consistently high prices of its main export items, oil and gas The 2008–2009 global crisis created another setback But with the Middle East up in flames since 2011 (think of Libya), the more stable oil and gas production from Russia bodes well for the country’s economic performance Accumulation of earnings and lucrative opportunities abroad have turned a series of Russian firms into multinational enterprises (MNEs), spreading their wings around the globe Russian firms active in foreign direct investment (FDI) can be found in three categories: (1) One group focuses on acquisition targets in Western Europe and North America to access technological innovations and advanced management know-how (2) Another group focuses on the “near abroad”—the Commonwealth of Independent States (CIS), whose member countries were all parts of the Soviet Union (3) A third group channels funds through offshore financial centers, such as Cyprus and the British Virgin Islands and reinvests back in Russia—a process known as capital round-tripping Experts estimate that about 10% of the Russian outward FDI is involved in round-tripping, leaving the other 90% to be real FDI Thanks to the liability of foreignness, Russian FDI abroad is not without controversies Host-country governments and the media often voice concern that Russian MNEs, especially large energy companies, may represent the “long arm of the Kremlin.” The political hard line recently taken by the Russian government (such as the war with Georgia and the decision to cut off gas supply to Ukraine) heightens such concerns, especially in sensitive Central and Eastern European countries such as Hungary, Lithuania, and Poland Russian MNEs claim that their FDI is solely driven by profit motives However, host-country governments face the dilemma of how to accommodate the legitimate economic interests of Russia MNEs, harness the FDI dollars they bring, and limit the potential damage when dealing with the bears (or eagles) from Russia In Central and Eastern Europe, this dilemma has intensified after the Great Recession, when traditionally active MNEs from Germany and Austria were pulling back while Russian firms possessed fat checkbooks ready to invest Sources: Based on (1) Bloomberg Businessweek, 2011, The Russians are buying, and buying, September 19: 17–18; (2) A Panibratov & K Kalotay, 2009, Russia outward FDI and its policy context, Columbia FDI Profiles, No 1, www.vcc.columbia.edu; (3) United Nations, 2011, World Investment Report 2010, New York: UN Second, although customers in this age of globalization supposedly no longer discriminate against foreign firms, the reality is that foreign firms are often still discriminated against, sometimes formally and other times informally For years, American rice and beef, suspected (although never proven) to contain long-term health hazards because of genetic modification, have been informally resisted by individual consumers in Japan and Europe, after formal discriminatory policies imposed by their governments were removed In India, activists singled out both Coca-Cola and Pepsi products as containing pesticides higher than permitted levels and chose not to test any Indian soft drinks that might contain even higher Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 314 Part Three Strategizing around the Globe Institutions, Resources, and Foreign Market Entries Institution-Based View - Regulatory risks - Trade and investment barriers - Differences in cultures, norms, and values Resource-Based View - Value - Rarity - Imitability - Organization Foreign Market Entries: Where When How © Cengage Learning Figure 10.1 pesticide levels in a country where pesticide residues are present in virtually all groundwater Although both Coca-Cola and Pepsi denied these charges, their sales suffered Against such significant odds, how foreign firms crack new markets? The answer boils down to our two core perspectives (Figure 10.1) The institution-based view suggests that firms need to take actions deemed legitimate and appropriate by the various formal and informal institutions governing market entries.4 Differences in formal institutions may lead to regulatory risks due to differences in political, economic, and legal systems (see Chapter 2) There may be numerous trade and investment barriers (see Chapters 5, 6, and 8) The existence of multiple currencies—and currency risks as a result—can be viewed as another formal barrier (see Chapter 7) The experience of the euro shows how much more trade and investment can take place when multiple countries remove such a barrier by adopting the same currency (see Chapter 8) Informally, numerous differences in cultures, norms, and values create another source of liability of foreignness (see Chapter 3).5 The resource-based view argues that foreign firms need to deploy overwhelming resources and capabilities to offset their liability of foreignness.6 Applying the VRIO framework introduced in Chapter to our Opening Case, we can suggest that some Indian firms possess some overwhelmingly valuable and rare capabilities in successfully penetrating African markets The winners from India excel in their low-cost, high-efficiency business model Their valuefor-money products (such as single-use sachets of soap and shampoo) and their ability to profit from such high-volume and low-price products make it very hard for rivals in Africa to imitate Entering foreign markets, financing international acquisitions, and hiring local workers require an enormous amount of organizational capabilities Honed at home, many Indian firms’ organizational capabilities have proven to be a tremendous asset in their African forays Overall, our two core perspectives shed a lot of light on firms’ internationalization.7 Next, we investigate the 2W1H dimensions associated with foreign market entries Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 315 Chapter 10 Entering Foreign Markets 10-2 Where to Enter? 10-2 Like real estate, the motto for IB is “Location, location, location.” In fact, such a spatial perspective (that is, doing business outside of one’s home country) is a defining feature of IB.8 Two sets of considerations drive the location of foreign entries: (1) strategic goals and (2) cultural and institutional distances Each is discussed next L earning Objective Match the quest for locationspecific advantages with strategic goals (where to enter) 10-2a Location-Specific Advantages and Strategic Goals Favorable locations in certain countries may give firms operating there locationspecific advantages Certain locations simply possess geographical features that are difficult for others to match For example, Miami, the self-styled “Gateway of the Americas,” is an ideal location both for North American firms looking south and Latin American companies coming north Vienna is an attractive site as MNE regional headquarters for Central and Eastern Europe Dubai is an ideal stopping point for air traffic between Asia and Europe, and between Asia and Africa Beyond geographic advantages, location-specific advantages also arise from the clustering of economic activities in certain locations, usually referred to as agglomeration (see Chapter 6) The basic idea dates back at least to Alfred Marshall, a British economist who first published it in 1890 Essentially, location-specific advantages stem from (1) knowledge spillovers among closely located firms that attempt to hire individuals from competitors, (2) industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region, and (3) industry demand that facilitates a pool of specialized suppliers and buyers to also locate in the region.9 For example, due to agglomeration, Dallas has the world’s heaviest concentration of telecom companies US firms such as AT&T, HP, Raytheon, TI, and Verizon cluster there Numerous leading foreign telecom firms such as Alcatel-Lucent, Ericsson, Fujitsu, Huawei, Siemens, and STMicroelectronics have also converged in this region Given that different locations offer different benefits, it is imperative that a firm match its strategic goals with potential locations The four strategic goals are shown in Table 10.1 Natural resource–seeking firms have to go to particular foreign locations where those resources are found For example, the Middle East, Russia, and The benefits a firm reaps from the features specific to a place Matching Strategic Goals with Locations Strategic goals Location-specific advantages Examples in the text Natural resource–seeking Possession of natural resources and related transport and communication infrastructure Oil in the Middle East, Russia, and Venezuela Market-seeking Abundance of strong market demand and customers willing to pay GM in China Efficiency-seeking Economies of scale and abundance of low-cost factors Manufacturing in China (especially in Shanghai) Innovation-seeking Abundance of innovative individuals, firms, and universities IT in Silicon Valley and Bangalore; telecom in Dallas; aerospace in Russia Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © Cengage Learning Table 10.1 Location-specific advantages Find more at http://www.downloadslide.com 316 Part Three Strategizing around the Globe IN Focus 10.1 The World’s Best Place to Make Viagra Buzz Pictures/Alamy Limited On the banks of the sleepy river Loire, across the valley from Amboise’s historical château royal, stands a model of modern high-tech French manufacturing In a neatly landscaped business park in Amboise, Pfizer, an American pharmaceutical giant, produces 80% of the world’s Viagra and the entire supply for the US market Every bottle of Viagra bought in an American drugstore will have been filled, packaged, labeled, barcoded, and shipped from this site The Amboise factory manufactures Viagra in 227 different guises, from pill jars to blister packs In all, the site turns out nearly 70 million packs or bottles of pills of various kinds of Viagra each year, labeled in 44 different languages Pfizer’s Amboise plant shows that, for foreign investors, France remains an attractive location This particular site offers a mix of high productivity, technical expertise (it has a big research facility, and nearby Tours is home to a pharmaceutical college), and reliability in a market troubled by fakes Source: Excerpted from Economist, 2006, Insiders and outsiders (p 5), October 28 (supplement: The art of the impossible: A survey of France): 5–7 Venezuela are all rich in oil Even when the Venezuelan government became more hostile, Western oil firms had to put up with it Market-seeking firms go to countries that have a strong demand for their products and services For example, China is now the largest car market in the world, and practically all the automakers in the world are now elbowing into this fast-growing market General Motors (GM) has emerged as the leader It now sells more cars in China than in the United States Efficiency-seeking firms often single out the most efficient locations featuring a combination of scale economies and cost factors (see In Focus 10.1) It is the search for efficiency that induced numerous MNEs to enter China China now manufactures two-thirds of the world’s photocopiers, shoes, toys, and microwave ovens; one-half of the DVD players, digital cameras, and textiles; one-third of the desktop computers; and one-quarter of the mobile phones, television sets, and steel Shanghai alone reportedly has a cluster of over 400 of the Fortune Global 500 firms Approximately one quarter of all foreign direct investment (FDI) in China has been absorbed by Shanghai.10 It is important to note that China does not present the absolutely lowest labor costs in the world, and Shanghai is the highest-cost city in China However, Shanghai’s attractiveness lies in its ability to enhance efficiency for foreign entrants by lowering total costs Innovation-seeking firms target countries and regions renowned for world-class innovations, such as Silicon Valley and Bangalore (in IT), Dallas (in telecom), and Russia (in aerospace).11 (See Chapter 13 for details.) What environmental factors have changed that have made this car manufacturer stop touting that its products are “made in Germany”? It is important to note that location-specific advantages may grow, change, and/or decline, prompting firms to relocate If policy makers fail Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 317 Chapter 10 Entering Foreign Markets to maintain the institutional attractiveness (for example, by raising taxes) and if companies overcrowd and bid up factor costs such as land and talents, some firms may move out of certain locations previously considered advantageous For example, BMW and Daimler-Benz had proudly projected a 100% “Made in Germany” image until the early 1990s Now both firms produce in a variety of countries, such as Brazil, China, Mexico, South Africa, the United States, and Vietnam, and instead boast “Made by BMW” and “Made by Daimler-Benz.” Both the relative decline of Germany’s location-specific advantages and the rise of other countries’ advantages prompted BMW and Daimler-Benz to this 10-2b Cultural/Institutional Distances and Foreign Entry Locations In addition to strategic goals, another set of considerations centers on cultural/institutional distances (see also Chapters and 3) Cultural distance is the difference between two cultures along some identifiable dimensions (such as individualism).12 Considering culture as an informal part of institutional frameworks governing a particular country, institutional distance is “the extent of similarity or dissimilarity between the regulatory, normative, and cognitive institutions of two countries.”13 Many Western consumer products firms, such as L’Oreal, have shied away from Saudi Arabia, citing its stricter rules of personal behavior—in essence, its cultural and institutional distances being too large Two schools of thought have emerged The first is associated with stage models, arguing that firms will enter culturally similar countries during their first stage of internationalization, and that they may gain more confidence to enter culturally distant countries in later stages.14 This idea is intuitively appealing: It makes sense for Belgian firms to first enter France, taking advantage of common cultural, language, and historical ties.15 Business between countries that share a language is, on average, three times greater than between countries without a common language Firms from common-law countries (English-speaking countries and Britain’s former colonies) are more likely to be interested in other common-law countries Colonycolonizer links (such as Britain’s ties with the Commonwealth and Spain’s with Latin America) boost trade significantly In general, MNEs from emerging economies perform better in other developing countries, presumably because of their closer institutional distance and similar stages of economic development.16 There is some evidence documenting certain performance benefits of competing in culturally and institutionally adjacent countries (see PengAtlas maps 1.2, 1.3, and 1.4).17 Citing numerous counterexamples, a second school of thought argues that considerations of strategic goals, such as market and efficiency, are more important than cultural/institutional considerations.18 For instance, natural resource–seeking firms have compelling reasons to enter culturally and institutionally distant countries (such as Papua New Guinea for bauxite and Zambia for copper) On Sakhalin Island, a remote, oil-rich part of the Russian Far East, Western oil firms have to live with Russia’s strong-arm tactics to grab more shares and profits that are described as “thuggish ways” by the Economist.19 Because Western oil firms have few alternatives elsewhere, cultural, institutional, and geographic distance in this case not seem relevant—they simply have to be there and let the Russians dictate the terms Overall, in the complex calculus underpinning entry decisions, locations represent but one of several important sets of considerations As shown next, entry timing and modes are also crucial Cultural distance The difference between two cultures along identifiable dimensions such as individualism Institutional distance The extent of similarity or dissimilarity between the regulatory, normative, and cognitive institutions of two countries Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 318 Part Three Strategizing around the Globe 10-3 L earning Objective Compare and contrast first-mover and late-mover advantages (when to enter) First-mover advantages Benefits that accrue to firms that enter the market first and that late entrants not enjoy to Enter? Entry timing refers to whether there are compelling reasons to be an early or late entrant in a particular country Some firms look for first-mover advantages, defined as the benefits that accrue to firms that enter the market first and that later entrants not enjoy.20 Speaking of the power of first-mover advantages, “Xerox,” “FedEx,” and “Google” have now become verbs, such as “Google it.” In many African countries, “Colgate” is the generic term for toothpaste Unilever, a late mover, was disappointed to find out that its African customers call its own toothpaste “the red Colgate” (!) Table 10.2 outlines such advantages First movers may gain advantage through proprietary technology Think about Apple’s iPod, iPad, and iPhone First movers may also make pre-emptive investments A number of Japanese MNEs have cherrypicked leading local suppliers and distributors in Southeast Asia as new members of the expanded keiretsu networks (alliances of Japanese businesses with interlocking business relationships and shareholdings) and have blocked access to the suppliers and distributors by late entrants from the West.21 First movers may erect significant entry barriers for late entrants, such as high switching costs due to brand loyalty Buyers of expensive equipment are likely to stick with the same producers for components, training, and services for a long time That is why American, British, French, German, and Russian aerospace firms competed intensely for Poland’s first post–Cold War order of fighters—America’s F-16 eventually won Intense domestic competition may drive some non-dominant firms abroad to avoid clashing with dominant firms head-on in their home market Matsushita, Toyota, and NEC were the market leaders in Japan, but Sony, Honda, and Epson all entered the United States in their respective industries ahead of the leading firms First-Mover Advantages and Late-Mover Advantages First-mover advantages Examples in the text Late-mover advantages Examples in the text Proprietary, technological leadership Apple’s iPod, iPad, and iPhone Opportunity to free ride on first-mover investments Ericsson won big contracts in Saudi Arabia, free-riding on Cisco’s efforts Pre-emption of scarce resources Japanese MNEs in Southeast Asia Resolution of technological and market uncertainty GM and Toyota have patience to wait until the Nissan Leaf resolves uncertainties about the electric car Establishment of entry barriers for late entrants Poland’s F-16 fighter jet contract First mover’s difficulty to adapt to market changes Greyhound is stuck with the bus depots, whereas Megabus simply uses curbside stops Avoidance of clash with dominant firms at home Sony, Honda, and Epson go to the US market ahead of their Japanese rivals Relationships with key stakeholders such as governments Citigroup, JP Morgan Chase, and Metallurgical Corporation of China enter Afghanistan © Cengage Learning Table 10.2 10-3 When Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 319 Chapter 10 Entering Foreign Markets First movers may build precious relationships with key stakeholders such as customers and governments For example, Citigroup, JP Morgan Chase, and Metallurgical Corporation of China have entered Afghanistan, earning a good deal of goodwill from the Afghan government, which is interested in wooing more FDI.22 The potential advantages of first movers may be counterbalanced by various disadvantages, which result in late-mover advantages (also listed in Table 10.2) Numerous first-mover firms—such as EMI in CT scanners and Netscape in Internet browsers—have lost market dominance in the long run It is such late-mover firms as GE and Microsoft (Explorer), respectively, that win Specifically, latemover advantages are manifested in three ways: Late movers can free-ride on first movers’ pioneering investments In Saudi Arabia, Cisco invested millions of dollars to rub shoulders with dignitaries, including the king, in order to help officials grasp the promise of the Internet in fueling economic development, only to lose out to late movers, such as Ericsson, that offered lower-cost solutions For instance, the brand new King Abdullah Economic City awarded an $84 million citywide telecom project to Ericsson, whose bid was more than 20% lower than Cisco’s—in part because Ericsson did not have to offer basic education and did not have to entertain that much “We’re very proud to have won against a company that did as much advance work as Cisco did,” an elated Ericsson executive noted.23 First movers face greater technological and market uncertainties Nissan, for example, has launched the world’s first all-electric car, the Leaf, which can run without a single drop of gasoline However, there are tremendous uncertainties After some of these uncertainties are removed, late movers such as GM and Toyota will join the game with their own electric cars As incumbents, first movers may be locked into a given set of fixed assets or reluctant to cannibalize existing product lines in favor of new ones Late movers may be able to take advantage of the inflexibility of first movers by leapfrogging them Although Greyhound, the incumbent in intercity bus service in the United States, is struggling financially, it cannot get rid of the expensive bus depots in inner cities that are often ill-maintained and dreadful Megabus, the new entrant from Britain, simply has not bothered to build and maintain a single bus depot Instead, Megabus uses curbside stops (like regular city bus stops), which have made travel by bus more appealing to a large number of passengers (see the Closing Case) Overall, evidence points out both first-mover advantages and late-mover advantages Unfortunately, a mountain of research is still unable to recommend conclusively a particular entry-timing strategy.24 Although first movers may have an opportunity to win, their pioneering status is not a guarantee of success For example, among the three first movers into the Chinese automobile industry in the early 1980s, Volkswagen captured significant advantages, Chrysler had very moderate success, and Peugeot failed and had to exit Although many of the late movers that entered in the late 1990s are struggling, GM, Honda, and Hyundai gained significant market shares It is obvious that entry timing cannot be viewed in isolation, and entry timing per se is not the sole determinant of success and failure of foreign entries It is through interaction with other strategic variables that entry timing has an impact on performance Late-mover advantages Benefits that accrue to firms that enter the market later and that early entrants not enjoy Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 622 Subject Index awareness competitive dynamics and, 350 in cultural intelligence, 85 B bailouts EU challenges concerning, 245–248 GE Capital case, 523–524 moral hazard of, 51–52 balance of payments defined, 210 foreign exchange rates and, 210–213 balance of trade, 144 balance sheet compensation approach, expatriate compensation, 502–504 Banana Republics, 89–90 bandwagon effect alliances and acquisitions and, 370 currency fluctuations, 214 Bangalore, 316 Bangladesh, microfinancing in, 297 bankruptcies, growth of, 307–308 base of pyramid (BOP) direct selling and, 28–30 in global economics, 9–10 “Battle of Seattle,” 239 beer production, emerging markets and, 467–468 Beijing Consensus, 52 Belgium, EU origins and, 242–243 below cost selling, antidumping policies and, 353 benchmarking, 97–100 management savvy and, 110–111 beneficiation agreements, De Beers case study, 448–451 best fit, human resources management and, 511 best practices, human resources management and, 511 beverage industry case study, 124–125 bid rate, 219 Big Mac Index, 208–210 big picture perspective, 555–556 bilateral investment treaties (BITs), 126–127 bilateral trade agreements, EU-Korea FTA case study, 279–282 binding arbitration, 126–127 black box components, alliances and, 376–377 black market economies, 47 Blue Ocean strategy, competitive dynamics and, 350 boards of directors, 532–534 Boeing vs Airbus, 141–142 Bolivia, nationalization of oil in, 195 bondholders, 525 bonds, defined, 525 bond yields, Greek economic crisis and, 261–262 book retailing, Japanese case study, 435–437 boomerang unemployment, 514 born global firms, 298 small and medium-sized enterprises as, 302–303 Botswana, diamond cartels in, 446–451 bounded rationality, 39–40 “branch factory” economy, 189–190 branding agreements, joint ventures and, 457–458 branding strategies, China tourism case study, 461–463 Brazil AB InBev market penetration in, 467–468 competitive advantage in, 170–171 Cuba and, 60 currency rate in, 212–213, 220 de facto reserve currency policy and, 223 direct selling in, 29–30 economic structure in, foreign direct investment by, 194–195 foreign exchange challenges in, 276–278 IMF loans in, 216 mergers and acquisitions in, 380–381 regional economic integration and, 250 Russian economy compared with, 33–34 small and medium-sized enterprises in, 294 state-owned enterprises in, 131–134 tax revenues in, 39 venture capitalism in, 296–297 “Brazil cost,” 171, 277–278 Bretton Woods system, 213–218, 221 BRIC countries (Brazil, Russia, India and China), host-country nationals from, 502 IMF and, 218 multinational enterprises in, 22, 39–40 BRICET (BRIC+Eastern Europe and Turkey), BRICM (BRIC+Mexico), BRICS (BRIC+South Africa), British Petroleum oil spill, 561 British Virgin Islands, as tax haven, 194–195 Brunei, Asian regional economic integration and, 252 build-operate-transfer (BOT) agreement foreign market entry and, 324–326 free trade agreements and, 281–282 Bulgaria, 243 bureaucracy in European Union, 245–248 regional integration and differences in, 234 Burundi institutions and entrepreneurship in, 290 per capita income in, 48 business process outsourcing (BPO), 105–106 C CAFTA (United StatesDominican RepublicCentral America Free Trade Agreement), 250 Canada Asian regional economic integration and, 251–252 Cuba and, 60 currency rate in, 212–213 international trade and, 145 Latin American regional economic integration and, 250 NAFTA impact in, 249 sovereign wealth funds in, 53 US trade with, 163, 270–271 capabilities in alliances, 375–376 competitive dynamics and, 350 defined, 95–96 international trade and, 164–166 relational (collaborative) capability, 372–373 value chain analysis, 96–100 VRIO framework, 100–104 capacity to punish, competition and, 341 capital costs, reduction of, 525–526 capital flight, currency fluctuations, 214 capitalism corporate governance and, 539–542 private ownership and, 50–52 capital outflow, foreign direct investment and, 188, 190 capital round-tripping, 313 captive sourcing, 99–100 foreign direct investment vs., 193 career development for expatriates, 500–501 for host country nationals, 502 for repatriates, 502 cartels De Beers case study, 446–451 defined, 339 price leaders and, 342 causal ambiguity, 103 Cayman Islands, as tax haven, 194–195 centers of excellence, 400 Central and Eastern Europe (CEE) debt crises in, 246–248 definitions of, 73–74 EU membership, 126–127, 246 German FDI in, 175–176 offshoring to, 107, 109 Central and Eastern Europe (CEE) countries debt crises in, 246–248 EU membership, 126–127, 246 IMF loans in, 217 offshoring to, 107, 109 state-owned enterprises in, 50–51 CEO (chief executive officer) defined, 530 duality, 532 Chapter 11 bankruptcy organization, entrepreneurship and, 308 “cheap dollar” policy, 222–224 chief executive officer (CEO), 528 Chile Asian regional economic integration and, 252 currency rate in, 212–213 China acquisitions by, 381–382 African business enterprises, 311 African currency fluctuations and, 224 antidumping laws and, 345–346, 356 Antimonopoly Law in, 355–356 Asian regional economic integration and, 251–252 auto market in, 455–458 Coca-Cola in, 124 Cuba and, 60 currency hedging by, 224–225 currency rate in, 208–210, 213 Disney resorts in, 395–396 economic structure in, 8, 47, 49 entrepreneurship and, 302 ethnocentrism in, 64–65 export competitiveness of, 141, 143, 253–256, 476 foreign direct investment by, 193–195 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 623 Subject Index foreign direct investment in, 187 foreign liability vs asset in, 326–327 Geely Volvo acquisition in, 455–458 host-country nationals compensation in, 504–505 imports into, 143 inpatriation in, 512 intellectual piracy in, 46 job migration to, 476 luxury goods marketing in, 488–489 management compensation in, 508–509 manufacturing in, 482 marketing vs relationship orientation in, 482–483 market institutions program in, 49 Microsoft in, 136–137 MNE strategy and structure in, 404, 405–407 NAFTA and competition from, 249 offshoring to, 107 outside directors in, 533 privatization of industry in, 51–52 restrictions on foreign retailers in, 480 Russian economy compared with, 33–34 social stratification in, 69 solar industry in, 154 Special Drawing Rights and, 223–224 tax revenue in, 39 tourism market in, 460–463 unemployment in, 513–514 US trade deficit with, 165–166, 206–208 venture capitalism in, 296–297 Volkswagen plants in, 184 WTO membership for, 253–256 “China Price,” 156 “China Threat,” 193–195 civilizations, culture and, 71–72 civil law, 43–44 “clash of civilizations” thesis, 71–72 clean (free) float, 213 climate change, corporate social responsibility, 565 cluster approach to culture, 71–72, 77 co-design policy, Brazilian Embraer case study, 133–134 co-marketing, foreign market entry and, 324–326 codes of conduct corporate social responsibility and, 562–564 development of, 78 private military companies, 433–434 codetermination, corporate governance and, 539 cognitive pillar, 36 corporate social responsibility and, 566 mergers and acquisitions and, 370 collaborative capability, alliances and, 372–373 collectivism culture of, 74–76 global business and, 16 human resources management and, 518–519 opportunism vs., 81, 83–84 collusion alliances with competitors as, 369–370 competition vs., 340–343 defined, 339 global dynamics and, 339–343 Japanese view of, 344 collusive price setting, 344 Colombia, Andean Community and, 250 colonial links, foreign market entry and, 317 command economy, 47 commoditization offshoring and, 107–109 value chain analysis, 98–100 commodity boom, Latin American currency rates and, 212–213 common denominator, gold standard as, 214 common law, 43–44 corporate governance and finance and, 539 foreign market entry and, 317 common market, defined, 241 Commonwealth of Independent States (CIS), 313 communication barriers, knowledge management and, 411–412 communist totalitarianism, 41 in Cuba, 59–60 economic structure under, 47 comparative advantage Brazilian case study, 170–171 classical theories vs real-world conditions, 164–166 international trade and, 148–150 variations in, 166–167 compensation expatriates, 502–504, 508–509 human resources management and, 502–505 international premium, 12 pay cuts vs force reductions, 512 principal-agent conflicts, 528–530 competition alliances with, 369–370 antidumping vs., 353 domestic and international, 343–346 formal institutions governing international competition, 345–346 global dynamics, 339–343 industry characteristics and, 340–343 policy, 343–344 private military companies, 432–434 competitive advantage foreign direct investment and, 188, 190 free trade and, 163–164 Greek economic crisis and loss of, 260–262 Huawei case study, 438–444 management savvy and, 111 value-added resources, 101–102 competitive dynamics, 338 antitrust policy vs., 353–356 attacks and counterattacks in, 350 cooperation and collusion and, 339–343 Huawei case study, 438–444 imitability and, 347 institution-based view, 343 local firms vs MNEs, 351–352 management savvy and, 353–358 Ocean Park vs Disneyland case study, 360–362 organization and, 347 rarity and, 347 resource-based view of, 346–349 resource similarity and, 348–349 value and, 346–347 war and peace and, 339 competitive intelligence/ counterintelligence, tips on, 357 competitor analysis, 338 complementary assets, 104 compromise, strategic alliances and, 367 concentrated ownership and control, 527 concentration ratio, defined, 340–341 conduct See codes of conduct “conflict diamonds,” 449–451 conflicts principal-agent, 528–530 principal-principal, 529–531, 539 Confucianism, 82–83 consumers luxury goods marketing to, 488–489 market segmentation and, 471 price and, 471–472 protection of, 163 contagion effect, 188 container shipping, 479 contender strategy, competitive dynamics, 352 context approach to culture, 70–71, 77 contracts foreign market entry and, 321–324 non-equity mode of entry and, 367 contractual (non-equity-base) alliances, 367 Brazilian Embraer case study, 133–134 control in alliances, 376 majority joint ventures as, 385–386 Convention on Combatting the Bribery of Foreign Public Officials, 80 cooperation competitive dynamics and, 350–351 global dynamics and, 339–343 Copehagen Accord, 569 Copenhagen Climate Summit, 240 copyright, 46 motion picture counterfeiting and, 128–129 core competencies, 96 outsourcing and, 99–100 corporate bankruptcies, 307–308 corporate control global perspective, 536–538 market for, 535–536 in MNEs, 413–414 corporate governance defined, 524 ethical dilemmas in, 548–550 formal institutions, 538–539 global convergence vs divergence, 543–544 informal institutions, 539–542 institutional framework, 538–542 opportunistic agents vs managerial stewards, 543 resource-based view, 542–543 tripod of, 524 corporate imperialism, in MNEs, 406–407 corporate social responsibility (CSR), 89–90 active vs inactive engagement, 568–569 Brazilian case study, 277–278 case study, 553–555 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 624 Subject Index corporate social responsibility (CSR) (cont.) De Beers case study, 449–451 defined, 554–555 free market capitalism vs., 557–561 institution-based view of, 561–566 management savvy and, 569–570 race to the bottom vs race to the top, 568 resource-based view, 566–568 shared value creation and, 559–560 stakeholder perspective, 555–556 wolf management policies case, 573–574 corruption country rankings, 80 ethics and, 79–80 in Russia, 33–34 cost of capital, 525–526 cost pressures of localization strategy, 400 MNEs and, 396–397 costs deadweight, 158–160 opportunity, 150 sunk, 192 transaction, 37–38, 83–84, 184–185, 298–299 counterattacks, competitive dynamics and, 350 counterfeiting, 46 of motion pictures, 128–129 counterintelligence, 357 country-level capabilities, international trade and, 164–166 country (regional) managers, in MNEs, 401 country-of-origin effect, 326–327 marketing and, 472–474 country of origin labeling (COOL), 270–271 crawling bands, 213 creative destruction, entrepreneurship and, 303–304 cross-border capabilities, domestic resources vs., 105 cross-border mergers and acquisitions, 368 by China and India, 381–382 Geely Volvo acquisition, 455–458 integration difficulties, 384 cross-cultural literacy, 85 expatriate failure and selection and role of, 499–500 cross-licensing agreements, 440–444 cross-listing of shares, 525–526, 544 cross-market retaliation, 343 cross-shareholding, 367 “crossvergence,” 83 CSR-economic performance puzzle, 567–568 Cuba economic system in, 47 emerging economy in, 59–60 foreign direct investment in, 187 cultural convergence vs divergence, 81, 83 globalization and, 397 cultural distance, 317 cultural diversity, EADS case study, 493–495 cultural intelligence, principles of, 84–86 culture cluster approach to, 71–72, 77 context approach to, 70–71, 77 cross-border mergers and acquisitions and, 384 defined, 65 differences in, 70–72 economic development and, 48–49 education and, 69–70 emerging markets and role of, 63–64, 395–396 export competitiveness and, 142 Geely-Volvo acquisition case, 457–458 global business and, 77 Hofstede’s dimension approach to, 74–77 marketing strategies and, 470 performance appraisal issues and, 505 currency board, 221–222 currency exchange in Africa, 224 Big Mac Index, 208–210 Brazilian case study, 276–278 Bretton Woods system and, 214 euro zone and, 243–244 examples of, 207 export competitiveness and, 142 foreign exchange rates and, 206, 218–221 foreign market entry and, 314 gold standard and, 214 investor psychology and, 213–214 management savvy and, 225–226 post-Bretton Woods system and, 215–218 productivity and balance of payments, 210–213 regional integration and, 233 currency hedging defined, 219 not hedging vs., 224–225 currency risk defined, 220 management of, 225–226 currency swaps by China, 223–224 defined, 219 current account deficit, 211–213 customer focus structure, in MNEs, 415 customs union, defined, 241 Cyprus, 243 Czech Republic binding arbitration agreements in, 126–127 EU membership, 246 D Dallas, Texas, 315 deadweight costs, international trade and, 158–160 debt, defined, 525 de facto currency reserves, 222–224 default, defined, 525 defender strategy, competitive dynamics and, 351–352 defensive strategy, 562–566 deficit spending euro zone and, 244 Greek economic crisis and, 261–262 moral hazard of, 217–218 democracy defined, 40–41 economic development and, 49 in Russia, 33–34 Democratic Republic of Congo, 48, 448 demonstration effect, foreign direct investment and, 188 Denmark, 48 refusal of euro adoption, 241 depreciation, currency, 206 deterrence of boards of directors, 533 developed economies backlash against FDI in, 193–195 clasification, emerging economies comparisons, 5–6 offshoring as threat to, 107–109 product life cycle theory and, 151–152 developing nations emerging economy MNEs in, 317 foreign direct investment in, 193–195 labor relations in, 506 product life cycle theory and, 151–152 development defined, 500 for host-country nationals, 502 for repatriates, 501–502 diamond cartels, 446–451 diamond theory of international trade, 155–156 dictatorships, 41 diffused ownership, 527 digital technology, 93–94 dimension approach to culture, 74–76, 82 direct exports foreign market entry and, 321–324 small and medium-sized enterprises, 299–300 direct monitoring and control, in alliances, 376 direct ownership advantages, foreign direct investment and, 181 direct selling base of pyramid and, 28–30 by expatriate families, 501–502 dirty (managed) float, 213 discrimination antidumping policies, 345–346 against foreign firms, 313–314 MNEs human resource management and, 507–509 regional economic integration and, 253 disloyalty, marketing and supply chain management and, 480–481 dispute resolution free trade agreements, 282 global economic integration and, 236–237 regional economic integration and, 240–241 WTO mechanisms for, 238–239 dissemination risks, 181–182 distribution channels, marketing and, 474–476 diversity, in MNE management, 406–407 Dodd-Frank law of 2010, 37, 529 dodger strategy, competitive dynamics, 352 Doha, Qatar, 338–339 Doha Round, 239–241, 256, 279–282 Doi Moi (Vietnamese market liberalization policy), 66–67 Doing Business, 290–292, 294 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 625 Subject Index domestic markets diamond theory of international trade and, 155–156 foreign market entry and, 318–319, 322–324 promotion in, 472–474 small and medium-sized enterprises, 300–301 domestic resources, international capabilities vs., 105 downstream vertical foreign direct investment, 177 DP World case study, 329, 383 DR-CAFTA, 142 Dubai, 315, 347 Dubai International Airport (DXB), 337–338, 347 Dubai World Central-Al Maktoun International (DWC) Airport, 338–339, 347 due diligence, mergers and acquisitions and, 370 dumping, international competition and, 345–346 duty drawbacks, free trade agreements and, 280–282 dynamic capabilities view, 95–96 E Eastern values cultural convergence vs divergence and, 81, 83 Western values vs., 81–82 economic development drivers of, 48–49 in Russia, 33–34 Western vs Eastern values, 82 economic freedom, 47 “economic governance” ideology, EU bailouts and, 245–248 economic systems, 47–48 economic union defined, 241–242 EU as example of, 242–243, 245 Economist, 469–471, 480–481 education, cultural importance of, 69–70 efficiency, competition policy and, 344 efficiency-seeking firms, locations for, 315–317 Egypt, revolution in, 42 electricity, institutions and entrepreneurship and, 290–292 Embraer Airlines case study, 128–132 emerging economies alliances and acquisitions in, 369–370 clasification, contributions of, 5–6 country groupings, 11–12 defined, domestic competition in, 352 market orientation in, 482–483 MNEs from, 317 MNE strategy and structure concerning, 404 mortgage loans and, 225 offshoring to, 100, 106–109 reverse innovation and, 9–10 taxation in, 39–40 typology of, emerging markets AB InBev case study, 467–468 acquisitions by China and India, 381–382 alliances and acquisitions, 365–367, 371–372 antitrust laws and, 355–356 Argentina case study, 199–201 Brazilian 3G Capital case study, 380–381 case study, 3–4 in Cuba, 59–60 cultural barriers and, 63–64, 65 defined, Disney case study, 395–396 Emirates airlines, 337–338 free market capitalism and, 558 human resources management in, 497–498 India’s entry into Africa, 311–313 in Latin America, 212–213 in Russia, 33–34 sovereign wealth funds and, 53–54 Vietnam, 66–67 empire building, in MNEs, 414 Employee Free Choice Act, 506 Endangered Species Act, 574 end-to-end design, supply chain management and, 477–478 English proficiency, globalization and, 66–68 enterprise resource planning (ERP), in MNEs, 408 entrepreneurs defined, 289 private military companies and, 431–434 entrepreneurship corporate bankruptcy and, 307–308 in Cuba, 60 defined, 289 financing for, 296–297 growth and, 293–295 innovation and, 295–296 institution-based view of, 15–16, 290–292 internationalization of, 298–301 management savvy and, 303–304 resource-based view of, 292–293 in Russia, 33–34 traits vs institutions and, 301–302 transaction costs and, 298–299 entry barriers, collusion and, 341–342 entry modes alliances and acquisitions, 369–370 in foreign markets, 320–326 environmental issues diamond industry and, 449–451 free trade and, 163 equity, defined, 525 equity-based alliances, 367 performance of, 378–379 equity modes, foreign market entry, 320–326 Estonia, EU membership, 246 ethanol production, 171 ethical imperialism, 78–79 ethical relativism, 78 ethics in Chiquita case study, 89–90 corporate governance and, 548–550 corruption and, 79–80 De Beers case study, 446–451 definition and impact, 78 foreign direct investment and, 194–195, 199–201 Hyundai case study, 110 IMF lending and moral hazard, 217–218 Latin American emerging economies and currency rates, 212–213 in Libya case study, 42–43 London case study, 541–542 norms and, 80–81 overseas management of, 78–79 principal-principal conflicts, 529–530 shared value creation and, 559–560 strategic responses to challenges, 80–81 ethnocentrism, 64–65 staffing decisions based on, 495–497 “EU la carte” ideology, 248 Eurasia, emerging markets in, 365–367 euro currency currency hedging and, 224–225 depreciation of, 220–221 European debt crisis and, 246–248 euro zone, creation of, 243–244 foreign market entry and, 314 forward rate of, 219 Greek economic crisis and, 260–262 independent monetary policies and, 241 introduction of, 243–244 regional integration and, 233 Swiss franc vs., 225 Europe debt crisis in, 246–248 state-owned enterprises in, 50–51 European Coal and Steel Community (ECSC), 242 European Community (EC), 242 European Council, 243 European Economic Community (EEC), 242 European Stability Mechanism (ESM), 261–262 European Union (EU) antitrust policies, 355–356 challenges for, 244–248 current status of, 243–244 expansion of, 246–248 government-firm disputes in, 126–127 Greek bailout and, 216, 245–248, 261–262 Korean free trade agreement, 279–282 origin and evolution, 242–243 regional economic integration and, 242–248, 253 regional integration and, 233–234 Russia compared with, 33–34 US beef import ban in, 163 exchange rates See currency exchange; foreign exchange exit-based mechanisms, 534–536 exit strategies, small and medium-sized enterprises, 301 expatriates (expats) colonial roots of, 508–509 compensation for, 502–504 conditions for, 12 cultural differences and, 63–64 defined, 495 EADS case study, 493–495 failure and selection issues, 498–500 inpatriation vs., 511–512 in Libya, 42–43 performance appraisal of, 505 role in MNEs of, 498 training for, 500–501 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 626 Subject Index expatriation defined, 495 inpatriation vs., 511–512 explicit collusion, 339 explicit knowledge licensing vs FDI and, 182 in MNEs, 409 export intermediaries, small and medium-sized enterprises and, 300–301 exports country-of-origin labeling and, 270–271 defined, 143 dollar fluctuations and, 223 foreign exchange rates and, 205–208 foreign market entry and, 321–324 Geely case study, 456–458 from Japan, 476 licensing vs FDI and, 181–182 NAFTA and, 248–249 small and medium-sized enterprises, 299–300 Swiss currency and, 229–230 US competitiveness in, 141–143 expropriation foreign direct investment and, 192, 193–195 principal-principal conflicts, 530 extender strategy, competitive dynamics, 351–352 external environment, resource-based view of global business and, 16 external governance mechanisms, 535–537 external relationships, MNE structure and, 405–407 Exxon Valdez oil spill, 561 F face-to-face discussions, 234 knowledge transfer and, 411–412 factor endowments, 150 diamond theory of international trade and, 155–156 location acquisition and neutralization, 183–184 fairness, competition policy and, 344 familiarity, mutual forbearance and, 343 family ownership, 527–528 in Indian retail sector, 272–273 principal-principal conflicts, 529–530 Federal Reserve Act, 37 femininity, 75 managerial behavior and, 77 financial companies foreign exchange market strategies, 218–220 Islamic investment principles and, 287–289 financing capital cost reduction, 525–526 defined, 524 equity and debt, 525 ethical dilemmas in, 548–550 formal institutional frameworks, 538–539 GE Capital case study, 523–524 informal institutional frameworks, 539–542 London case study, 541–542 resource-based view, 542–543 of start-up companies, 296–297 firm behavior, institution-based view of, 38–40 firm-specific resources, 16 De Beers case study, 447–451 location acquisition and neutralization, 183–184 first-mover advantages, 152–154 in alliances, 378 foreign market entry, 318–319 fixed exchange rates, 213, 221–222 Flexible Credit Line (FCL) (IMF), 217–218 floating (flexible) exchange rate, 213, 221–222 force majeure, 36 foreign aid, productivity and balance of payments and, 211–213 foreign central banks, postBretton Woods system and, 215–218 Foreign Corrupt Practices Act (FCPA), 79–80 foreign direct investment (FDI) alliances and acquisitions and, 369–370, 379–382 Argentina case study, 199–201 Brazilian case study, 278 in BRIC countries, captive sourcing, 99–100 Chinese investment in Africa, 224 corruption as barrier to, 79–80 in Cuba, 59–60 defined, 3–4 efficiency-seeking firms and, 316 facilitation vs confrontation of, 193–195 fixed exchange rates and, 221–222 flow, 177–178 flow and stock in, 177–179 foreign exchange market and, 218–219 German strategies in, 175–176 global economic integration and, 235–236 home countries’ costs and benefits, 190–192 host countries’ costs and benefits, 127–128, 187–188 in India, 15–16, 272–273 inflow, 177–178 internalization and, 184 in Japan, 16 licensing vs., 181–182 local content requirements and, 161 location and, 183–184 make-or-buy decision making and, 476–477 management savvy and, 195–196, 274–275 market failure and, 184–186 mergers and acquisitions and, 368 MNE engagement in, 180–181 MNE vs non-MNE activity, 179–181 outflow, 178–179 outsourcing vs., 192–193 politics and, 186–187 productivity and balance of payments, 210–213 real-world circumstances and, 186–190 research and development globalization, 410 Russian firms in, 313–314 small and medium-sized enterprises, 299–301 sovereign wealth funds, 53–54 stock, 178 terminology of, 176–180 turnkey projects and, 324–326 in United Kingdom, 189–190 foreign exchange market Brazilian case study, 276–278 defined, 218–219 dollars as percentage of, 222 foreign exchange rates See also currency exchange Bretton Woods system and, 214 defined, 206 determinants of, 207–214 euro zone and, 243–244 financial companies’ strategies for, 218–220 fixed vs floating rates, 221–222 floating and fixed rate policies, 213 gold standard and, 214 interest rates and money supply, 210 international monetary system development and, 214–218 investor psychology and, 213–214 management savvy and, 225–226 non-financial companies’ strategies for, 220–221 post-Bretton Woods system and, 215–218 productivity and balance of payments, 210–213 relative price differences and purchasing power parity, 208–210 strategies for management of, 218–221 supply and demand and, 206–207 wine industry case study, 205–207 foreign market entry cultural/institutional issues, 317 foreignness as liability vs asset, 326–327 global vs regional geographic diversification, 327–328 Indian case study, 311–313 institution-based view, 314, 329–330 liability of foreignness and, 312–314 location-specific advantages, 315–317 management savvy for, 329–330 Megabus case study, 333–334 modes of entry, 320–326 old-line vs emerging MNEs, 328–329 resource-based view, 314, 329–330 scale of, 320 strategic goals, 315–317 timing of, 318–319 foreignness as asset, 326–327 liability of, 16, 312–314, 326–327 foreign-owned firms, 13–14 foreign policy, free trade and, 163 foreign portfolio investment (FPI), 176–177 corporate governance and, 540 direct ownership and, 181 foresight, development of, 111 formal institutions alliances and acquisitions, 369–370 corporate finance and governance, 538–539 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 627 Subject Index corporate social responsibility, 562–566 De Beers case study, 448–451 defined, 35 domestic competition and, 343–344 entrepreneurship and, 290 export competitiveness and, 142 foreign market entry and, 312–314 government-firm disputes in EU and, 126–127 human resources management, 507–509 international competition, 345–346 management savvy and, 54–55 marketing and supply chain management and, 483–485 mergers and acquisitions, 386–387 MNE structure and, 405–407 supply chain management and, 478–480 Fortune Global 500, 22, 316, 327 forward contracts currency hedging and, 224–225 defined, 219 forward discount, 219 forward premium, 219 forward transactions, 219 “four freedoms of movement,” in European Union, 245–248 “Four Tigers,” 19–20, 82–83 France defense industry in, 163 EADS case study and, 493–495 economic patriotism in, 187 EU origins and, 242, 245 international trade and, 145 franchising foreign market entry and, 324–326 small and medium-sized enterprises, 299–301 free market capitalism, 51–52 corporate social responsibility and, 557–561 foreign direct investment and, 186–187 free rider behavior euro zone and, 244 Greek economic crisis and, 261–262 late-mover advantages and, 319 free trade absolute advantage and, 146–148 classical economic theories and, 163–164, 164–166 Doha Round and, 239–240 economic arguments against, 162 Latin American economic integration and, 249–250 political arguments against, 162–163 regional economic integration and, 240–241 free trade agreements (FTAs), 142 EU-Korea FTA case study, 279–282 free trade area (FTA), defined, 241 Free Trade Area of the Americas (FTAA), 250 Fukushima nuclear power meltdown, 561 G game theory, 339–340 General Agreement on Tariffs and Trade (GATT), 256 creation of, 237 defined, 235 dispute resolution mechanisms in, 238 multilateral trading system, 236–237 General Agreement on Trade in Services (GATS), 238 generally accepted accounting principles (GAAP), 545 international competition and, 345–346 Geneva Convention, 432–434 geocentric staffing decisions, 495–497 geographic area structure, in MNEs, 401–402 geography Brazilian comparative advantage and, 170–171 economic development and, 48–49 emerging markets and, 337–338 foreign direct investment and, 183–184 foreign market entry and, 315 offshoring and onshoring and, 100 Germany advertising restrictions in, 479–480 bankruptcy laws in, 307–308 currency rates in, 213, 215 EADS case study and, 493–495 EU bailouts and, 245–248 EU origins and, 242 export declines in, 141, 143, 166–167, 175–176, 253–254, 476 foreign direct investment strategy and, 175–176 GM-Opel partnership and, 274–275 Greek economic crisis and, 261–262 imports into, 143 labor relations with MNEs from, 506 Glass-Steagall law, 37 global account structure, in MNEs, 415 global brands, 461–463 global business culture and, 77 defined, 3–5 globalization and, 21–25 institution-based view of, 38–40 questions facing, 10–11 resource-based view, 109–111 unified framework for, 14 global convergence and divergence, corporate governance and, 544 global diversification, foreign market entry and, 327–328 global economic integration acquisitions and, 383–384 barriers and incentives for, 253 Bretton Woods system and, 214 defined, 234 economic benefits of, 236–237 evolution of, 234–235 management savvy and, 256–257 political benefits, 235–236 global economic pyramid, 8–9 global economy, survey of, 21–25 globalization cultural convergence and, 397 defined, 18 EU expansion and, 247–248 future debate on, 22–23 language and, 66 national governments and, 412–413 opinions concerning, 24 pendulum view of, 19–20 perspectives on, 18–19 regionalization vs., 327–328 global matrix structure, 402–403, 415 global product division structure, 401–402, 404 global standardization strategy, 400, 404 knowledge management and, 409–410 staffing approaches and, 496–497 global sustainability, 555–556 global system for mobile communications (GSM), 366 global value chain, 11 global virtual teams, 411 GLOBE (Global Leadership and Organizational Behavior Effectiveness) clusters, 71–72 going public, in alliances, 378 going rate compensation approach, expatriate compensation, 502–503 gold standard, 214 governance mechanisms, 534–536 government See also formal institutions alliances and acquisitions, 369–370 corporate finance and governance, 538–539 corporate social responsibility, 562–566 De Beers case study, 448–451 defined, 35 domestic competition and, 343–344 entrepreneurship and, 290 export competitiveness and, 142 foreign market entry and, 312–314 government-firm disputes in EU and, 126–127 human resources management, 507–509 international competition, 345–346 management savvy and, 54–55 marketing and supply chain management and, 483–485 mergers and acquisitions, 386–387 MNE structure and, 405–407 supply chain management and, 478–480 government-sponsored enterprises (GSEs), 51–52 gray market, 38–39 Great Britain See United Kingdom Great Depression, 20, 50 contraction of world trade during, 235 currency rates during, 214 global economic integration and, 234–235 Great Recession, 20 dollar fluctuations and, 223–224 EU challenges and, 246–248 export competitiveness and, 141–142 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 628 Subject Index Great Recession (cont.) foreign direct investment and, 176 free market capitalism and, 559 human resource management in, 513–514 international trade and, 163–164 luxury goods marketing in, 488–489 protectionism and, 236 Greece debt crisis in, 20–21, 246–248, 261–262 EU loans to, 216, 245–248 greenfield operations, foreign market entry and, 321–326 gross domestic product (GDP) BRIC countries, defined, 5–6 EU contries’ contributions to, 246 international trade growth and, 143–145 of Russia, 33–34 state-owned enterprises and, 50–51 venture capital as percentage of, 296–297 gross national income (GNI), defined, gross national product (GNP), defined, Group of 20 (G-20), 11–12, 218 growth, entrepreneurship and, 293–295 guanxi (Chinese personal relationships), 55, 483 H harvest strategies, small and medium-sized enterprises, 301 “haven currency,” Swiss franc as, 229–230 headquarters relocation by MNEs, case study of, 419–421 Hecksher-Ohlin theory, 150 diamond theory of international trade and, 155–156 herd mentality mergers and acquisitions and, 381–382 norms and, 36 heteroarchical structure, EADS case study, 494 hierarchical structure, EADS case study, 494 high-context cultures, 70–71 hire-back practices, 514 Hispanic market, strategies for targeting, 470 HIV/AIDS disaster, diamond industry and, 449–451 Hofstede’s dimensions of culture, 74–77 home countries foreign direct investment costs and benefits in, 190–192 labor relations in, 505–506 MNE executives from, 406–407 MNE headquarters relocation in, 419–421 MNE management savvy and, 416 product market conditions in, 124–137 home-country nationals See parent-country nationals (PCNs) home replication strategy knowledge management and, 409–410 MNE management savvy and, 416 for MNEs, 397–398, 400–401 parent-country nationals and, 507–509 staffing approachs and, 496–497 homogeneous products, collusion and, 341 Hong Kong Chinese currency transactions in, 223–224 currency rates in, 222 economic freedom in, 47 foreign direct investment by, 194–195 international business in, 15–16 horizontal foreign direct investment, 177 hospitality industry, China tourism case study, 460–463 hostage taking, alliances and, 376–377 host countries corporate social responsibility in, 568–569 De Beers case study, 448–451 foreign direct investment costs and benefits, 187–188 local responsiveness pressures in, 396–397 MNE executives from, 406–407 MNE headquarters relocation to, 419–421 MNE management savvy and, 416 MNE structure and strategies and, 405–407 subsidiary restructuring and, 274–275 host-country nationals (HCNs) best fit vs best practices concerning, 511 compensation for, 503–505 defined, 495 human resources management and, 507–509 labor relations and, 506 performance appraisal of, 505 polycentric staffing approach and, 496 stereotyping concerning, 508–509 training and development for, 502 hubris, acquisitions and, 379–382, 383–384 human resource management (HRM) best fit vs best practice, 511 compensation and performance appraisal, 502–505 defined, 494 EADS case stduy, 493–495 expatriate failure and selection, 498–500 five “Cs” of, 513–515 institution-based view of, 506–509 international blunders in, 508 labor relations and, 505–506 management savvy and, 513–515 pay cuts vs force reductions, 512 repatriate training, 501–502 resource-based view, 506, 509–511 staffing, 495–500 training and development issues, 500–502 human rights, ethics and, 79 Hungary economic system in, 47 EU membership, 246 foreign direct investment incentives in, 126–127 IMF loans in, 216 MNE strategy and structure in, 405–407 venture capitalism in, 296–297 Huntington civilizations, 71–72 hypercompetitiveness, antidumping policies and, 353 I Iceland IMF loans in, 216 Schengen zone and, 243 imitability acquisitions, 374 alliances and, 373 competitive dynamics and, 347 corporate social responsibility and, 567 entrepreneurship and, 293 in human resource management, 509–511 management savvy and, 110–111 in MNEs, 408 VRIO framework, 103 immigration, EU bailouts and restrictions on, 246 imperialism, foreign direct investment and, 186–187 implicit knowledge, licensing vs FDI and, 182 import quotas, international trade and, 160–162 imports ban on US beef imports, 163, 313 country-of-origin labeling and, 270–271 defined, 143 foreign exchange rates and, 205–208 Geely case study, 456–458 NAFTA and, 248–249 small and medium-sized enterprises, 299–300 import tariffs, international trade and, 158–160 inbound logistics, marketing and, 474–476 income gap, free market capitalism vs corporate social responsiblity and, 560–561 independent directors, 533 India acquisitions by, 381–382 advertising restrictions in, 479–480 African market penetration by, 311–314 caste system in, 68–69 comparative advantage and international trade in, 164–166 economic structure in, education in, 70 host-country nationals compensation in, 505 international competition and, 345–346 microfinancing in, 297 MNEs in, 396 offshoring to, 105–106 research and development contracts in, 325–326 retail FDI in, 272–273 soft drink market in, 124 unemployment in, 513–514 indirect exports foreign market entry and, 321–324 small and medium-sized enterprises and, 300–301 individualism, 74 opportunism vs., 81, 83–84 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 629 Subject Index individual-level capabilities, international trade and, 164–166 Indonesia IMF loans in, 216–217 import quotas in, 160–162 industrial policy, 115–116 Industrial Revolution, 49 industry norms, deviation from, 17–18 infant industry argument against free trade, 162 inflation, foreign exchange rates and, 210 informal flexible matrix, in MNEs, 408 informal institutions, 35 alliances and acquisitions and, 370 corporate finance and governance, 539–542 corporate social responsibility, 562–566 debates concerning, 81–82 export competitiveness and, 142 firm behavior and, 39–40 foreign market entry and, 312–314 Greek economic crisis and, 260–262 human resource management, 507–509 management savvy and, 54–55 marketing and supply chain management and, 480 mergers and acquisitions, 386–387 MNE structure and, 405–407 origins of, 64–65 information asymmetries, 529 information technology infrastructure, in MNEs, 409 in-groups, opportunism vs individualism/collectivism, 84 initial public offerings (IPOs), 37 by state-owned enterprises, 52 initiation, in alliances, 377–378 innovation entrepreneurship and, 295–296 open innovation model, 411 in services, 482 transnational strategy and, 400–401 innovation-seeking investment, 315–317 inpatriation, expatriation vs., 511–512 inside directors, 532 institutional constraints, in alliances, 376 institutional distance, foreign market entry and, 317 institutional framework defined, 35 transaction costs, 38 institutional traditions, in Russia, 35 institution-based view alliances and acquisitions, 368–370 antitrust policies and, 355–356 competitive dynamics and, 343 corporate finance and governance, 538–542 corporate social responsibility, 561–566 cross-border mergers and acquisitions, 382 cultural differences and, 64 entrepreneurship and, 2, 303–304 foreign market entry, 314, 329–330 global business, 15–16, 38–40 government-firm disputes in EU and, 126–127 human resources management, 506–509 intellectual property, 46 management savvy and, 54–55 of marketing and supply chain management, 478–480 marketing vs relationship orientation and, 483 MNE management, 415–416 MNE strategy and structure and, 404–407 motion picture counterfeiting and, 128–129 OLI advantages and, 181 of Russia, 35 institutions See formal and informal institutions domestic and international competition and, 343–346 economic development and, 48–49 entrepreneurship and, 290–292, 301–302 ethics and respect for, 79 foreign exchange rates and, 225–226 international trade and, 145 role of, 36 in Russia, 35 instrumental perspective, corporate social responsibility and, 563–564 instutions, De Beers case study, 448–451 intangible resources and capabilities defined, 95–96 imitability of, 103 integration-responsiveness framework, multinational enterprises and, 396–404 intellectual property, defined, 45–46 intellectual property rights (IPR), 45–46, 136–137 Doha Round and, 239–240 economic development and, 49 free trade agreements and, 281–282 GATT agreement concerning, 237 Huawei case study, 438–444 Microsoft in China and, 136–137 interaction competition and, 339 mutual forbearance and, 343 interest rates, foreign exchange rates and, 210 intermediaries, foreign market entry and, 324 internalization foreign direct investment and, 180–181, 184 market imperfection and, 185 internal (voice-based) mechanisms, 534–537 internal relationships MNE management savvy and, 416 MNE structure and, 405–407 international assets, acquisition of, 383–384 international business (IB) Brazilian Embraer case study, 134 defined, 3–4 domestic resources vs international capabilities, 105 foreign market entry and, 312 small and medium-sized enterprises, 288–289, 298–301 stage model of, 302–303 international capabilities, domestic resources vs., 105 International Center for Settlement of Investment Disputes (ICSID), 126–127 international division structure, MNE use of, 401 international entrepreneurship, defined, 289 international lending, IMF role in, 216–218 International Monetary Fund (IMF) criticism of, 217–218 establishment of, 216–218 European bailouts and, 246–248 Greek bailout and, 216, 245–248, 261–262 international monetary system, evolution of, 214–218 international new ventures, 298 international premium, 12 international trade absolute advantage and, 146–148 classical theories vs realworld conditions, 164–166 corporate governance and, 540 country-of-origin labeling and, 270–271 economic arguments against, 162 economic development and, 143–145 European Union and, 243–244 euro zone and, 243–244 evaluation of theories concerning, 156–158 export competitiveness and, 143 foreign market entry and, 314 GDP and growth in, 143–145 global economic integration and, 235–236 leading trading nations, 144 management savvy and, 166–167 mercantilism and, 146 national competitive advantage and, 155–156 political arguments against, 162–163 productivity and balance of payments and, 210–213 product life cycle theory and, 150–152 real-world conditions in, 158–163 resource mobility and, 156–158 strategic trade theory, 152–154 theories of, 145–158 WTO impact on, 253–256 Internet book retailing and, 435–437 moderators on, 102 Russian Wikimart case study and, 428–430 investment barriers, foreign market entry and, 314 investor psychology currency rates and, 213–214 Islamic investment principles and, 287–289 Iran, Islamic law in, 44 Ireland, Schengen Agreement and, 243 Islamic law, 44 investment and, 287–289 Islamic values, 82 ISO 9000 quality management systems, 480 ISO 14001 standard, 568 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 630 Subject Index Israel competitive dynamics in, 351–352 diamond industry in, 342, 447–451 small and medium-sized enterprises in, 295–296 Italy EU origins and, 242, 244 intellectual piracy in, 46 Libyan crisis and, 42–43 J Japan bankruptcy laws in, 307–308 bookselling in, 435–437 competition policy in, 344 cultural context in, 71 earthquake and supply chain disruption in, 476–477 entrepreneurship in, 290 expatriate failure and selection in, 499–500 export competitiveness of, 141–142, 476 free market capitalism in, 558 human resources management in, 507–509 international business in, 16 labor relations with MNEs from, 506 lack of natural resources in, 48 luxury goods marketing in, 488–489 MNEs in, 406–407 Nomura-Lehman acquisition and, 390–391 regional economic integration and, 251–252 tariff barriers in, 158–160 voluntary export restraints in, 161 Jewish law, 44 jobs foreign direct investment and, 189–190 NAFTA impact on, 248–249 joint payoffs, prisoner’s dilemma and, 340 joint ventures (JVs) alliances and acquisitions and, 369–370 Brazilian Embraer case study, 133–134 defined, 183 foreign market entry and, 325–326 in Indian retail sector, 272–273 majority vs minority, 384–386 TNK-BP case study, 452–454 just-in-time inventory and delivery, 476 trust and, 477–478 K Keystone Pipeline, 90 Kimberly Process, 449–451 Kindle, offshore manufacturing of, 114–116 knowledge management in MNEs, 408–410 problems and solutions in, 410–412 knowledge spillovers, foreign direct investment and, 183–184 Korea, human resources management in, 497–498 KORUS free trade agreement, 142 Kuwait, sovereign wealth funds created by, 53 Kyoto Protocol, 569 L labor costs, foreign direct investment and, 175–176 labor relations for MNEs, 505–506 pay cuts vs force reductions, 512 laissez faire economic theory, 47 absolute advantage and, 146–148 language culture and, 65–68 expatriate failure and selection and role of, 499–500 expatriate training in, 500–501 foreign market entry and, 317 globalization and, 23 old-line vs emerging MNEs and training in, 329 regional integration and role of, 233–234 large-scale foreign market entry, 320 late-mover advantages, foreign market entry and, 318–319 Latin America anti-MNE actions in, 195 emerging economies and currency rates in, 212–213 foreign market entry from, 315 offshoring to, 109 regional economic integration in, 249–250 soft drink market in, 124 US Hispanics from, 470 Latvia, EU membership, 246 leadership structure, 532 lead innovation nations, product life cycle theory and, 151–152 lean manufacturing, 476 learning alliance performance and, 378–379 Huawei case study, 438–444 old-line vs emerging MNEs and, 328–329 learning by doing, in alliances, 375–376 learning race, alliances and, 372 legal systems, global business and, 43–44 “Lego” view of organization, 104 letter of credit (L/C), small and medium-sized enterprises, 299–300 leverage Huawei case study, 438–444 old-line vs emerging MNEs and, 328–329 leveraged buyouts (LBOs), 535–536 liability of foreignness, 16, 312–314, 326–327 liberalization, alliances and acquisitions and, 369–370 Libya, 433–434 political risk in, 42 licensing foreign direct investment vs., 181–182 foreign market entry and, 324–326 small and medium-sized enterprises, 299–301 lingua franca, 65–66, 73–74 linkage Huawei case study, 438–444 old-line vs emerging MNEs and, 328–329 Linux software, 136–137 Lisbon Treaty, 243 Lithuania, EU membership, 246 LLL (linkage, leverage, and learning) framework, 329 Huawei case study, 438–444 old-line vs emerging MNEs, 328–329 local content requirements, 161 local firms, competitive dynamics and, 351–352 localization (multidomestic) strategy, 398–400 knowledge management and, 409–410 marketing and, 468–471 staffing approaches and, 496–497 “local plus” compensation packages, 509 local responsiveness, MNEs and pressure for, 396–397 local tradition, ethics and respect for, 79 location acquisition and neutralization of, 183–184 cultural/institutional issues in foreign market entry and, 317 foreign direct investment and, 180–184 foreign market entry, 315–317 free trade competitiveness and, 166–167 London, corporate governance in, 541–542 long-term orientation, 76 De Beers case study, 447–451 managerial behavior and, 77 low-context cultures, 70–71 Luxembourg, EU origins and, 242 M Maastricht Treaty, 242–243 macroeconomic policies, euro zone and, 244 make-or-buy decision making, 476–477 Malaysia Asian regional economic integration and, 252 job migration to, 476 management control rights, foreign direct investment and, 177 management savvy acquisitions and, 379–382 competitive dynamics and antidumping, 353–358 corporate governance and finance and, 544–545 corporate social responsibility, 569–570 cultural intelligence and, 84–86 economic integration and, 256–257 entrepreneurship and, 303–304 foreign direct investment and, 195–196 foreign exchange rates and, 225–226 foreign market entry, 329–330 global matrix structure of MNEs and, 402–403 human resources management, 513–515 institution-based view and, 54–55 international trade and, 166–167 marketing and supply chain management, 483–485 mergers and acquisitions, 386–387 for MNEs, 415–416 resource-based view, 109–111 managerial human capital, 543 managerial motives, mergers and acquisitions and, 381–384 managers, defined, 528–532 manufacturing declines in, 482 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 631 Subject Index free trade agreements and, 280–282 marketing and supply chain management and, 481–482 maquiladora factories, 248–249 market-based strategies, in developed economies, 40 market commonality, 342 market dynamism, 344 market economy, 47–48 market failure, foreign direct investment, 184–186 market imperfections, foreign direct investment and, 181, 184–186 marketing China tourism case study, 460–463 defined, 468 distribution to supply chain management, 474–475 institution-based view, 478–480 international blunders in, 473, 484 of luxury goods, 488–489 management savvy and, 483–485 manufacturing vs services, 481–482 place, 474–475 price, 471–472 principles of, 468–474 product, 468–471 promotion, 472–474 supply chain management savvy, 475–476 market orientation, relationship orientation vs., 482–483 market-seeking firms, locations for, 315–317 market segmentation, defined, 471 Marxism, of foreign direct investment and, 186–187 masculinity, 75 managerial behavior and, 77 mass media, Russian image in, 35 meals, cultural differences concerning, 63–64 mercantilism, international trade and, 146–147 merchandise (goods), international trade and, 143 Mercosur, 249–250 merger mania, 385 mergers cross-border mergers, 368 defined, 367 institution-based view of, 369–370 by Japanese firms, 399 resource-based view of, 370–374 Mexico Asian regional economic integration and, 251–252 IMF loans to, 216 NAFTA and, 248–249 soft drink market in, 124 tax revenue in, 39 US Hispanics from, 470 Miami, Florida, 315 microfinancing, entrepreneurship and, 296–297 micro institutions, entrepreneurship and, 302 micro-macro link, 412 “middle-of-the-road” ethics principles, 79 cultural convergence vs divergence and, 83 mid-range emerging economies, mixed economy, 47 modes of entry See entry modes monetary policies, euro zone and, 243–244 monetary union, 242 money supply, foreign exchange rates and, 210 moral hazard, 51–52 IMF lending and, 217–218 mortgage loans, currency fluctuations and, 225 motion picture counterfeiting, 128–129 motivation, competitive dynamics and, 350 multi-brand stores, 272–273 Multifibre Arrangement (MFA), 237, 257 multilateral trading system, 236–237 Doha Round and, 240 EU-Korea FTA case study, 279–282 multimarket competition, 342 multinational enterprises (MNEs) acquisitions by, 381–382 compensation for expatriates in, 502–504 competitive dynamics and, 347–348 corporate control vs subsidiary initiatives, 413–414 corporate social responsibilities, 555–556 corporate social responsibility and, 568–570 cost reduction and local responsiveness pressures, 396–397 in Cuba, 60 customer-focused dimensions vs integration, responsiveness and learning, 415 defined, 3–4 direct selling by, 28–30 Disney case study, 395–396 equity/non-equity modes of foreign market entry and, 320–326 expatriate failure and selection, 498–500 expatriate’s role in, 498 expatriate training, 500–501 expatriation vs inpatriation at, 511–512 expropriation and nationalization of, 194–195 foreign direct investment and, 176, 179–181 foreign market entry by, 316–317 free market capitalism and, 559 global economic pyramid and, 9, 21–25 global/regional economic integration and, 257 global standardization strategy of, 400 global vs regional diversification of, 327–328 headquarters relocations by, 419–421 home replication strategy of, 397–398 host countries’ costs and benefits, 187–188, 190–192 host country incentives and, 126–127 host-country nationals compensation in, 504–505 institution-based view of, 404–407 internalization and, 184 joint venture equity and, 385–386 knowledge management in, 408–412 labor relations at, 505–506 local firms vs., 351–352 localization (multidomestic) strategy, 398–400 management savvy for, 415–416 market failure and, 185–186 marketing and supply chain management in, 481 market segmentation and, 471 in Middle East, 42–43 NAFTA and, 249 nationalization of, 186–187 nongovernmental organizations and, 23–24 old-line vs emerging MNEs, 328–329 organizational structures, 401–403 perspectives on, 18–19 productivity and balance of payments and, 210–213 product marketing and, 468–471 research and development globalization, 410 resource-based view of, 404, 407–408 in Russia, 313–314 semiglobalization and, 21 single MNE vs multiple national companies, 412–413 social stratification and, 69 staffing issues for, 495–500 standardization vs localization, 468–471 strategies and structures, 396–404 Swiss currency rates and, 230 taxation of, 39 third-party logistics and, 478 transnational strategy of, 400–401 Muslim population EU expansion and concern over, 246–248 Islamic investment principles and, 287–289 mutual forbearance, 342–343 competitive dynamics and, 347–348 mutually assured destruction (MAD), alliances and, 377 MyPlate dietary guidelines, 89–90 N NAFTA (North American Free Trade Agreement), 142 labor relations and, 506 regional economic integration and, 248–249 national companies, MNEs as, 412–413 national competitive advantage, international trade and, 155–156 national culture, 65 EADS case study, 493–495 nationalism acquisitions and, 383–384 alliance performance and, 378–379 nationality of executives, in MNEs, 406–407 nationalization, foreign direct investment and, 193–195 national security, free trade and, 162–163 natural resource-seeking firms, locations for, 315–317 nearshoring, German practice of, 176 negative perspective, corporate social responsibility and, 563–564 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 632 Subject Index Netherlands binding arbitration agreements in, 126–127 EU origins and, 242 net losses, tariff barriers and, 158–160 new trade theory, 172n.7 New York Convention of 1958, 126–127 New Zealand, Asian regional economic integration and, 250–252 Nieuwe Waterweg (New Channel) (Rotterdam), 479 Nigeria, 568–569 “9/11” attacks, 239, 271 non-discrimination, multilateral trading system, 236–237 non-equity modes, foreign market entry, 320–326 non-financial companies, foreign exchange market strategies, 220–221 non-intervention principle, corporate social responsibility vs., 568–569 non-resident firms, gross national product, non-shareholder stakeholders, 555 nongovernmental organizations (NGOs), 128 corporate social responsibility and, 556, 566–567 defined, 23–24 nontariff barriers (NTBs) free trade agreements and, 280–282 GATT agreement and, 237 international trade and, 160–162 normative pillars, 35–36 corporate social responsibility and, 566 norms, 36 for boards of directors, 533 corporate governance and, 539–542 ethical challenges and, 80–81 export competitiveness and, 142 MNEs human resource management and, 507–509 North Korea economic system in, 47 foreign direct investment in, 187 Norway per capita income in, 48 refusal of EU membership, 241 Schengen zone and, 243 stage model of entrepreneurship in, 303 “not invented here” syndrome, 411–412 O obesity, soft drink consumption and, 124–125 obsolescing bargain, foreign direct investment, 192 Occupy London, 541–542 Occupy Wall Street, 541–542 OECD, international competition studies, 345–346 offer rate, 219 offline advertising, 473–474 offshoring defined, 99–100 foreign direct investment vs., 193 resource-based view, 105–109 oil industry, in Libya, 42–43 OLI (ownership, location, and internationalization) advantages foreign direct investment and, 180–181 foreign market entry and, 320–321 old-line vs emerging MNEs, 328–329 oligarchs, 452–454 in Russia, 34 oligopoly, defined, 184 online advertising, 473–474 online shopping marketing and supply chain management and, 483–485 Russian Wikimart case study and, 428–430 onshoring, defined, 99–100 open innovation model, 411 opportunism, 38 in alliances, 372–374 alliances and, 376–377 foreign direct investment and, 185 individualism/collectivism vs., 81, 83–84 opportunity costs, theory of comparative advantage and, 150 options, alliances as, 372 organization acquisitions, 374 alliances and, 373 competitive dynamics and, 347 corporate social responsibility and, 567 entrepreneurship and, 293 in human resource management, 509–511 marketing and supply chain management and, 481 of MNEs, 401–404, 408 VRIO framework, 103–104 organizational culture, in MNEs, 408 organizational fit, acquisitions, 374 original brand manufacturers (OBMs), 106–109, 115 original design manufacturers (ODMs), 106–109, 115 original equipment manufacturers (OEMs), 106–109, 115 global account structure and, 415 outflow, foreign direct investment, 178–179 out-groups, opportunism vs individualism/collectivism, 84 outside (independent) directors, 532 outsourcing, 115–116 defined, 99 emerging economies and, 13–14 foreign direct investment vs., 192–193 international trade and, 164–166 Kindle case study, 114–116 private military companies and, 431–434 resource-based view, 105–109 third-party logistics and, 478 value chain analysis, 97–100 outward foreign direct investment (OFDI), 33–34 acquisitions and, 381–382 in Africa, 38 China and, 194–195 overseas management, ethics and, 78–79 ownership advantages, foreign direct investment and, 180–182 China structure for, 460–463 concentrated vs diffuse, 527 defined, 526–527 family ownership, 527–528 P Paraguay intellectual piracy in, 46 regional economic integration and, 250 parent-country nationals (PCNs) compensation for, 503 defined, 495 ethnocentric staffing approach and, 495–496 human resource management and, 507–509 partially owned subsidiaries, foreign market entry and, 322–324 partner councils, supply chain management and, 477–478 partner opportunism, alliances and, 372–374 patents competitive dynamics and, 346–347 defined, 45 Huawei case study, 438–444 trolling for, 441–444 pay cuts cultural attitudes concerning, 518–519 layoffs vs., 512 pegged currency rate defined, 213 gold standard and, 214 problems with, 221–222 pendulum view of globalization, 19–20 performance human resource management and appraisal of, 502–505 marketing vs relationship orientation and, 483 personal computer (PC) production international trade and, 151–152 outsourcing of, 115–116 Peru Andean Community and, 250 Asian regional economic integration and, 252 currency rate in, 212–213 Philippines offshoring to, 107 prices in, 208 phytosanitary measures, free trade agreements and, 281–282 “PIGS” (Portugal, Ireland/Italy, Greece and Spain) debt crisis, 20–21 bailout proposals for, 262 EU assistance for, 246 piracy, 46, 433–434 of software, 136–137 place, marketing and, 474–476 Plaza Accord of 1985, 222 plurilateral agreements, 281–282 Poland economic system in, 47 EU membership, 233–235, 246 political systems defined, 40 democracy, 40–41 European Union as, 245–248 totalitarianism, 41 political union, defined, 242 politics corporate governance and, 538–539 firm behavior and, 41 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 633 Subject Index foreign direct investment and, 186–187 free trade opposition and, 162–163, 166–167 global economic integration and, 235–236 in Libya case study, 42–43 regional economic integration and, 240–241 tariff barriers and, 158–160 uncertainty and, 36 “pollution haven” hypothesis, corporate social responsibility, 568 polycentric staffing decisions, 495–497 post-Bretton Woods system, 215–218 pound (British currency), managed float of, 213 power, alignment of supply chain and, 477–478 power distance, 74 pragmatic nationalism, foreign direct investment and, 187 predatory pricing, 344 premature return of expatriates, 498–499 price elasticity, 471–472 price fixing in book industry, 435–437 prices collusive price setting, 344 De Beers case study, 342 defined, 341 euro zone and, 244 marketing and, 471–472 “one size fits all” prices, 136–137 predatory pricing, 344 primary stakeholder groups, 556–557 principal-agent conflicts, 528, 531 reduction of, 539 principal-principal conflicts, 529–531, 539 principals, defined, 528 prisoner’s dilemma, 339–340 private equity, market for, 535–536 Wikimart start-up case, 428–430 private military companies (PMCs), 431–434 private ownership, economic development and, 49–52 private property ownership, economic development and, 34 private remittances, productivity and balance of payments and, 211–213 privatization, emergence of, 50–52 proactive strategy, 564–566 procurement free trade agreements and, 281–282 supply chain management and, 480 productivity foreign exchange rates and, 210–213 Greek economic crisis and loss of, 260–262 product life cycle, 115, 156–158 international trade and, 150–152 product positioning, Geely case study, 456–458 products and services, marketing and, 468–471 promotion, marketing and, 472–474 property rights economic development and, 49 global business and, 45 proprietary technology, alliances and, 376–377 protectionism antitrust laws and, 355–356 in Brazil, 170–171 economic arguments against, 162 foreign direct investment vs., 187 foreign market entry and, 321–324, 330 NAFTA and, 249 Protestantism, capitalism and, 82 psychological contract, for repatriates, 501–502 punishment, competition and, 341 punitive duties, WTO imposition of, 239 purchasing power parity (PPP) BRIC countries, defined, 5–7 foreign exchange rates, 208–210 investor psychology and, 213–214 in Russia, 33–34 Q Qaddafi, Moamar, 42–43 quantitative easing, 278 foreign exchange rates and, 210 Quebec separatism, 41 quota system, IMF contributions, 216 R radical view, of foreign direct investment, 186–187 radio frequency identification (RFID) tags, 481 rarity acquisitions, 374 competitive dynamics and, 347 corporate social responsibility, 566–567 entrepreneurship and, 292–293 in human resource management, 509–511 marketing and supply chain management and, 480–481 in MNEs, 408 principles of, 100–104 rational behavior, institutionbased view of global business and, 38–40 reactive strategy, 562–566 real options in alliances, 372, 376 minority joint ventures as, 385–386 reciprocity alliances and, 376–377 multinational strategy and structure, 404, 405–407 reduction in force (RIF) cultural attitudes concerning, 518–519 pay cuts vs., 512 regional diversification, foreign market entry and, 327–328 regional economic integration acquisitions and, 383–384 in Africa, 252 Asia Pacific region, 250–252 barriers and incentives for, 253 case study, 233–234 defined, 234 in Europe, 242–248 in Latin America, 249–250 management savvy and, 256–257 in North America, 248–249 pros and cons of, 240–241 types of, 241–242 regional trade agreements, EU-Korea FTA case study, 279–282 regulatory pillars, 35 corporate social responsibility and, 566 ethics and compliance with, 81 reinsurance, 565 related transactions, expropriation, 530 relational (collaborative) capability, 372–373 alliance performance and, 378–379 relationship orientation, 482–483 relative price differences, foreign exchange rates, 208–210 religion EU expansion and role of, 246 global business and, 68 repatriation, development for, 501–502 research and development foreign market entry and, 324–326 Geely case study, 456–458 Huawei case study, 441–444 multinational enterprises and, 410 reserve currencies, 223–224 “reservoir of good will,” ethics and, 78 resident firms, gross domestic product and, resource-based view acquisitions and, 373–374 competitive dynamics, 343, 346–349 corporate governance and financing, 542–543 corporate social responsibility, 566–568 domestic vs international capabilities, 104–105 entrepreneurship and, 292–293 foreign exchange strategies and, 220–221, 225 foreign market entry, 314, 329–330 global business, 16, 93–94, 109–111 human resources management, 506, 509–511 licensing vs FDI and, 182 mergers and acquisitions, 370–374 MNE management, 415–416 MNE strategy and structure and, 404, 407–408 offshoring vs not offshoring, 105–109 principles of, 94–96 resource mobility, international trade and, 156–158 resources defined, 94–95 value chain analysis, 96–100 VRIO framework, 100–104 resource similarity, 348–349 retail sector foreign direct investment restrictions in, 479–480 in India, foreign direct investment in, 272–273 luxury goods marketing in, 488–489 return on assets (ROA), human resources management and, 513–515 reverse innovation, 9–10 right-wing totalitarianism, 41 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 634 Subject Index risk management, 20–21 Brazilian Embraer case study, 133–134 currency risk and, 225 Romania, 243 foreign direct investment incentives in, 126–127 Ronen and Shenkar clusters, 71–72 Rotterdam, Netherlands, 479 rule of law economic development and, 34 regional economic integration and, 240–241 rule of origin concessions, free trade agreements and, 280–282 rules of the game See institutions Russia alliances in, 372 de facto reserve currency policy and, 223 economic structure in, 8, 49 economic system in, 47 emerging markets in, 33–34 entrepreneurship in, 290–292 foreign direct investment by, 194–195 foreign market entry by, 313–314 IMF loans to, 216 informal institutions in, 39–40, 55 innovation-seeking firms in, 316–317 intellectual piracy in, 46 mafia in, 207–208 marketing vs relationship orientation in, 483 outside directors in, 533 outward foreign direct investment in, 38 research and development contracts in, 325–326 TNK-BP joint venture, 452–454 Wikimart startup in, 428–430 WTO membership sought by, 256 S Saihan system, 437 sanitary measures, free trade agreements and, 281–282 Santiago Principles, 54 Sarbanes-Oxley (SOX) Act, 37, 539, 542–543, 548–550 Saudi Arabia cultural differences in, 63–64 Islamic law in, 44 theocratic totalitarianism in, 41 scale of entry, in foreign markets, 320 scenario planning, 20–21 Schengen Agreement, 233, 243–244, 245 secondary stakeholder groups, 556–557 self-regulation, private military companies, 433–434 semiglobalization, 21 separation of ownership and control, 527 serial entrepreneurs, 301–302 service industries export competitiveness in, 141 growth of, 482 international trade and, 143, 164–166, 280–282 marketing and supply chain management and, 481–482 severance arrangements, layoffs and, 513–514 Shanghai, China, foreign direct investment in, 316 shared capabilities, in alliances, 375–376 shared value, creation of, 559–560 shareholder capitalism, 536, 539–542 corporate social responsibility and, 557–559 shareholders defined, 525 expropriation, 530 sharia law, investment principles based on, 287–289 Sherman Act, 339, 354 shipping, third-party logistics in, 479 “shrimp-turtle” import case, 163 Sierra Leone, institutions and entrepreneurship in, 290 signaling, competitive dynamics and, 350–351 Silicon Valley, 316 simplification, as MNE strategy, 415 simultaneous production migration, 152 Singapore Asian regional economic integration and, 252 MNE strategy and structure in, 405–407 nontariff barriers in, 161–162 single-brand shops, 272–273 skills development, cultural intelligence and, 85 Skype, 411–412 Slovakia, EU membership, 246 Slovenia, EU membership, 246 small and medium-sized enterprises (SMEs) domestic markets and, 300–301 entrpreneurship and, 289 foreign market entry strategies, 299–300 globalization and, 288–289 growth of, 293–295 innovation in, 295–296 internationalization of, 298–301 management savvy and, 303–304 slow internationalizers vs “born global” startups, 302–303 small-scale foreign market entry, 320 Social Accountability 8000 standard, 89–90 social capital, 412 social complexity, 104 socialism, state-owned enterprises and, 50–52 social issue participation, 566 social mobility defined, 68 education and, 70 social networks, advertising on, 473–474 social responsibility, free trade and, 163 social stratification defined, 68–69 education and, 69–70 social structure, defined, 68–69 SOEs See state-owned enterprises solar industry, 115 strategic trade theory and, 154 solutions-based structure for MNEs, 415 South Africa, apartheid in, 569 South America See Latin America South Korea economic structure in, 8, 49 EU free trade agreement with, 279–282 foreign liability vs asset in, 326–327 IMF loans in, 216–217 international trade and, 145 Internet operations in, 328–329 sovereignty, foreign direct investment and, 188, 190 sovereign wealth funds (SWFs), 52–54 Soviet Union Cuba and, 59–60 manufacturing in, 482 Spain Cuba and, 60 FDI in Argentina by, 199–201 Special Drawing Rights (SDRs), 218, 223–224 specialization, theory of absolute advantage and, 146–148 Special System of Clearance and Custody (SELIC), 276–278 spot transactions, defined, 219 spouses, expatriate failure and selection and role of, 499–500 spread (currency trading), 219–220 Stability and Growth Pact (SGP), 261–262 staffing ethnocentric, polycentric, and geocentric approachs, 495–497 human resource management, 495–500 stage-by-stage production migration, 152 stage models foreign market entry and, 317 small and medium-sized enterprises as, 302–303 stakeholders defined, 554–555 firm perspective, 555–556 in mergers and acquisitions, 383–384 primary and secondary groups, 556–557 proactive strategies and, 565–566 standardization global strategy for, 400, 404 knowledge management and, 409–410 marketing and, 468–471 in promotion, 472–474 start-up companies financing for, 296–297 innovation in, 295–296 Russian Wikimart case study, 428–430 state-owned enterprises (SOEs), 47, 49–52, 61n.41 in China, 533 corporate governance and, 545 cross-border mergers and acquisitions, 382 in Cuba, 59–60 defined, 528 governance mechanisms, 537 Statute of Monopolies, 49 stereotyping, in human resources management, 508–509 stewardship theory, 543 stimulus packages, IMF loans as, 217–218 strategic alliances advantages and disadvantages, 370–371 defined, 367 resource-based view, 370–374 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 635 Subject Index strategic fit, acquisitions, 374, 383–384 strategic goals foreign market entry and, 317, 330 multinational strategy and structure, 404 strategic hedging defined, 220 limitations of, 226 strategic investment, 367 strategic trade policy, 153–154 strategic trade theory, 156–158, 172n.7 international trade and, 152–154 subprime mortgage crisis, 246 subsidiaries foreign market entry and, 322–324 initiatives, in MNEs, 413–414 restructuring in host country of, 274–275 subsidies Brazilian comparative advantage case study and, 171 Doha Round and, 239–240 international trade and, 160–162 strategic trade policy and, 152–154 sunk costs, foreign direct investment and, 192 supply and demand De Beers case study, 447–451 foreign exchange transactions, 206–208 price elasticity and, 471–472 supply chain adaptability in, 476–477 agility in, 475–476 alignment in, 477–478 Brazilian Embraer case study, 133–134 defined, 468 management savvy and, 483–485 manufacturing vs services, 481–482 shocks to, 475–476 supply chain management, 468 institution-based view, 478–480 marketing and, 474–476 sustainable capitalism, 555–556 sweatshops, ethics and, 81 Sweden economic system in, 47 free market capitalism in, 558 refusal of euro adoption, 241 Switzerland banking system, 207–208 cultural differences in emerging markets and, 63–64 currency rate in, 212, 225, 229–230 prices in, 208 refusal of EU membership, 241 Schengen zone and, 243 SWOT (strengths, weaknesses, opportunities, threats) analysis, 94 benchmarking in, 97–100 management savvy and, 109–111 value chain analysis and, 100 VRIO and, 100–104 synergistic motives, acquisitions and, 379–384 T tacit collusion, 339 tacit knowledge licensing vs FDI and, 182 in MNEs, 409, 412 Taiwan, economic structure in, 49 tangible resources and capabilities defined, 95–96 imitability of, 103 target exchange rates, 213 tariff barriers, international trade and, 158–160 tariffs export competitiveness and, 142 NAFTA and role of, 248–249 taxation in Brazil, 39 foreign market entry and, 317 multinational enterprises and, 412–413 in Russia, 34 of soft drinks, 124 technical ability, expatriate failure and selection and role of, 499–500 technical barriers to trade, free trade agreements and, 281–282 technology spillover, foreign direct investment and, 187–188 telecom industry, 472 alliances and acquisitions in, 365–367 television, competitive dynamics in, 349 Temporary Liquidity Guarantee Program (TLGP), 523 Thailand currency crisis in, 221 IMF loans in, 216–217 theocratic law, 43–44 theocratic totalitarianism, 41 theory of absolute advantage, 146–148, 156–158 theory of comparative advantage, 148–150, 156–158 theory of national competitive advantage, 155–156, 156–158 think global, act local management strategy, MNEs and, 416 third-country nationals (TCNs) compensation for, 503 defined, 495 human resources management and, 507–509 MNE executives as, 406–407 staffing approaches and, 496–497 third parties, foreign market entry and, 324 third-party logistics, supply chain management and, 477–479 “three Cs” of FDI, 191–192 top management team (TMT), 528 total cost of ownership, 472 totalitarianism economic development and, 49 global business and, 41–43 tourism, currency fluctuations and, 229–230 “Toyota Way,” 411–412 trade deficit, 143, 163–164 dollar fluctuations and, 223 productivity and balance of payments and, 210–213 trade embargoes, 163 trademarks, 46 Trade-Related Aspects of Intellectual Property Rights (TRIPS), 46, 128, 238, 281–282 trade surplus, 143, 163–164 Bretton Woods system and, 214 productivity and balance of payments and, 210–213 trade wars, antitrust laws and, 355–356 training defined, 500 for expatriates, 500–501 for host-country nationals, 502 “traits” entrepreneurs, 301–302 transaction costs, 37–38 entrepreneurship and, 298–299 foreign direct investment, 184–185 opportunism vs individualism/collectivism, 83–84 transnational strategy, 400–401 knowledge management and, 409–410 Trans-Pacific Partnership (TPP), 251–252 transportation hubs, third-party logistics and, 479 travel industry, China tourism case study, 460–463 Treaty of Rome, 242, 245 triad, in global economics, tribal totalitarianism, 41 triple bottom line, 557 trust alignment of supply chain and, 477–478 defined, 339 Tunisia, revolution in, 42 tunneling, 530, 544 Turkey EU membership, 246 IMF loans in, 216–217 turnkey projects, foreign market entry and, 324–326 two-stage decision model, value chain analysis, 97–100 U Ukraine IMF loans in, 216 intellectual piracy in, 46 marketing vs relationship orientation in, 483 uncertainty avoidance culture and, 75–76 institutions and, 36 managerial behavior and, 77 uncoupling, in alliances, 378 UN Declaration of Human Rights, 569 unemployment foreign direct investment and, 189–190 in Great Recession, 513–514 Union for Foreign Affairs and Security Policy, 243 Union of South American Nations (USAN/UNASUR), 250 unions, MNE relations with, 505–506 United Arab Emirates (UAE) FDI in US by, 193 free market capitalism in, 558 United Kingdom EU origins and, 245 foreign direct investment in, 189–190 free market capitalism in, 558 manufacturing in, 166–167 MNEs in, 405 refusal of euro adoption, 241 Schengen Agreement and, 243 service exports of, 141 social stratification in, 69 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Find more at http://www.downloadslide.com 636 Subject Index United Kingdom (cont.) state-owned enterprises in, 50–51 United States antitrust laws in, 354–356 Asian regional economic integration and, 251–252 China trade with, 253–256 competition policy in, 344 deficits in, 211–218, 222–224 economic system in, 47 export competitiveness of, 141–143, 476 free market capitalism in, 558 imports into, 143 Latin American regional economic integration and, 250 as lead innovation nation, 151–152 MNE strategy and structure in, 405–407 NAFTA impact in, 248–249 solar industry in, 154 sovereign wealth funds in, 53 trade deficit with China, 165–166, 206–208 trade with Canada, 163, 270–271 United States-Dominican Republic-Central America Free Trade Agreement (CAFTA), 250 unmet business objectives, expatriate failure and, 499 upstream vertical foreign direct investment, 177 Uruguay, regional economic integration and, 250 Uruguay Round, 237 US Agency for International Development (USAID), 142 US Agriculture Department, 89–90, 142 US Commerce Department, 142 US dollars balance of payments and value of, 210–213 Bretton Woods system and, 214 euro forward rate and, 219 fixed vs floating exchange rates and, 221–222 foreign exchange transactions in, 206–208 Latina American purchases of, 212–213 managed float of, 213 money supply and value of, 210 post-Bretton Woods system and, 215–218 strong vs weak dollar, 222–224 US Energy Department, 142 US Fish and Wildlife Service, 573–574 US International Revenue Service, 412–413 US Justice Department, 90 US Trade Representative, 128, 142, 270–271, 283 US Treasury bonds, Chinese holdings of, 223–224 US Treasury Department, 142, 215 US-China Strategic and Economic Dialogue, 53–54 V value acquisitions, 373–374 alliances and, 370–371 competitive dynamics and, 346–347 corporate social responsibility, 566–568 entrepreneurship and, 292–293 export competitiveness and, 141–142 in human resource management, 509–511 marketing and supply chain management, 480–481 in MNEs, 408 in VRIO framework, 101–102 value chain analysis, 96–100 outsourcing, 97–100 supply chain and, 474–476 Venezuela Cuba and, 59–60 regional economic integration and, 250 venture capitalists (VCs), start-up financing and, 296–297 vertical foreign direct investment, 177–178 Viagra, 316 Vickers Commission, 542 video conference, 234 videoconferencing, 411–412 Viet Kieu (overseas Vietnamese), 66–67 Vietnam Asian regional economic integration and, 252 cultural differences in, 66–67 economic system in, 47 WTO membership, 256 voice-based mechanisms, 534–536 voluntary activities, corporate social responsibility and, 565–566, 568, 569–570 voluntary export restraint, international trade and, 160–162 VRIO (value, rarity, imitability, organization) framework acquisitions and, 373–374 competitive dynamics, 346–349 corporate finance and governance, 543 corporate social responsibility, 566–568 defined, 94 entrepreneurship and, 292–293 foreign direct investment and, 180–181 foreign market entry and, 314 human resource management, 509–511 international trade and, 145 management savvy and, 109–111 marketing and supply chain management, 480–481 mergers and acquisitions and, 370–374 multinational enterprises and, 407–408 principles of, 100–104 W “Wal-Mart effect,” 273 war, competitive dynamics and, 339 Washington Consensus, 51–52 Western values cultural convergence vs divergence and, 81, 83 Eastern values vs., 81–82 whistleblowers layoff protection for, 514 norms and, 36 wholly owned subsidiaries (WOSs) alliances and acquisitions and, 369–370 foreign market entry and, 322–326 TNK-BP joint venture case, 452–454 Wikimart start-up case, 428–430 wine industry, foreign exchange rates and, 205–207 “winner’s curse,” mergers and acquisitions and, 381–382 win-win game foreign direct investment and, 186–187 international trade and, 145–147 “wolf” culture of Huawei, 408, 438–444 wolf management policies, corporate social responsibility and, 573–574 World Bank, establishment of, 216 World Trade Organization (WTO) antidumping laws and, 346 creation of, 235 dispute resolution mechanisms, 236–237, 238–239, 282 free trade agreements and, 279–282 history of, 237–238 viability of, 253–256 worldwide (global) mandate, 400 Y Yellowstone National Park, 573–574 yen (Japanese currency), 222 managed float of, 213 regional economic integration and, 251–252 yuan (Chinese currency) currency hedging and, 224–225 free float of, 213 international convertibility of, 223–224 undervaluation of, 208–210 US dollar vs., 222–224 Z Zaire, 342 zero-sum game, mercantilism as, 147 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it ... political resources, SMJ, 27 : 321 –345 21 M W Peng, S Lee, & J Tan, 20 01, The keiretsu in Asia, JIM, 7: 25 3 27 6 22 BW, 20 11, Land of war and opportunity, January 10: 46–54 23 BW, 20 08, Cisco’s brave... sourcing, SMJ, 29 : 120 7– 122 4 29 A Chintakananda, A York, H O’Neill, & M W Peng, 20 09, Structuring dyadic relationships between export producers and intermediaries, EJIM, 3: 3 02 327 12 S Lee, O Shenkar,... C Fey, 20 12, The liability of foreignness reconsidered, IBR, 21 : 26 9 28 0 Copyright 20 12 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due